Law School is a marathon

Sps Jose vs. Aguado

G.R. No. 193787               April 7, 2014

SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE, with deceased Jose C. Roque represented by his substitute heir JOVETTE ROQUE-LIBREA, Petitioners,
vs.
MA. PAMELA P. AGUADO, FRUCTUOSO C. SABUG, JR., NATIONAL COUNCIL OF CHURCHES IN THE PHILIPPINES (NCCP), represented by its Secretary General SHARON ROSE JOY RUIZ-DUREMDES, LAND BANK OF THE PHILIPPINES (LBP), represented by Branch Manager EVELYN M. MONTERO, ATTY. MARIO S.P. DIAZ, in his Official Capacity as Register of Deeds for Rizal, Morong Branch, and CECILIO U. PULAN, in his Official Capacity as Sheriff, Office of the Clerk of Court, Regional Trial Court, Binangonan, Rizal, Respondents.

On July 21, 1977, petitioners-spouses Jose C. Roque and Beatriz dela Cruz Roque (Sps. Roque) and the original owners of the then unregistered Lot 18089 – namely, Velia R. Rivero (Rivero), Magdalena Aguilar, Angela Gonzales, Herminia R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R. Topacio, and Augusto Rivero (Rivero, et al.) – executed a Deed of Conditional Sale of Real Property (1977 Deed of Conditional Sale) over a 1,231-sq. m. portion of Lot 18089 (subject portion) for a consideration of P30,775.00. The parties agreed that Sps. Roque shall make an initial payment of P15,387.50 upon signing, while the remaining balance of the purchase price shall be payable upon the registration of Lot 18089, as well as the segregation and the concomitant issuance of a separate title over the subject portion in their names. After the deed’s execution, Sps. Roque took possession and introduced improvements on the subject portion which they utilized as a balut factory.

On August 12, 1991, Fructuoso Sabug, Jr. (Sabug, Jr.), former Treasurer of the National Council of Churches in the Philippines (NCCP), applied for a free patent over the entire Lot 18089 and was eventually issued OCT No. M-5955 in his name on October 21, 1991. On June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in representation of Rivero, et al., executed a Joint Affidavit (1993 Joint Affidavit), acknowledging that the subject portion belongs to Sps. Roque and expressed their willingness to segregate the same from the entire area of Lot 18089.

On December 8, 1999, however, Sabug, Jr., through a Deed of Absolute Sale (1999 Deed of Absolute Sale), sold Lot 18089 to one Ma. Pamela P. Aguado (Aguado) for P2,500,000.00, who, in turn, caused the cancellation of OCT No. M-5955 and the issuance of TCT No. M-96692 dated December 17, 1999 in her name. On June 16, 2003, Sps. Roque filed a complaint for reconveyance, annulment of sale, deed of real estate mortgage, foreclosure, and certificate of sale, and damages before the RTC, docketed as Civil Case No. 03-022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of Morong, Rizal, and Sheriff Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been erroneously included in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land Bank, both covering Lot 18089 in its entirety.

Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank secured by a mortgage over Lot 18089. When she failed to pay her loan obligation, Land Bank commenced extra-judicial foreclosure proceedings and eventually tendered the highest bid in the auction sale. Upon Aguado’s failure to redeem the subject property, Land Bank consolidated its ownership, and TCT No. M-115895 was issued in its name on July 21, 2003.

On June 16, 2003, Sps. Roque filed a complaint for reconveyance, annulment of sale, deed of real estate mortgage, foreclosure, and certificate of sale, and damages before the RTC, docketed as Civil Case No. 03-022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of Morong, Rizal, and Sheriff Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been erroneously included in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land Bank, both covering Lot 18089 in its entirety.

Issue:  WON the CA erred in not ordering the reconveyance of the subject portion in Sps. Roque’s favor.

Held:

The essence of an action for reconveyance is to seek the transfer of the property which was wrongfully or erroneously registered in another person’s name to its rightful owner or to one with a better right. Thus, it is incumbent upon the aggrieved party to show that he has a legal claim on the property superior to that of the registered owner and that the property has not yet passed to the hands of an innocent purchaser for value.

Examining its provisions, the Court finds that the stipulation above-highlighted shows that the 1977 Deed of Conditional Sale is actually in the nature of a contract to sell and not one of sale contrary to Sps. Roque’s belief. In this relation, it has been consistently ruled that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the purchase price, the contract is only a contract to sell even if their agreement is denominated as a Deed of Conditional Sale, as in this case. This treatment stems from the legal characterization of a contract to sell, that is, a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the subject property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, such as, the full payment of the purchase price. Likewise stated, in a contract to sell, ownership is retained by the vendor and is not to pass to the vendee until full payment of the purchase price. Explaining the subject matter further, the Court, in Ursal v. CA, held that:

In contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the suspensive condition, that is, the full payment of the purchase price by 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. Prior to the existence of the contract of sale, the seller is not obligated to transfer the ownership to the buyer, even if there is a contract to sell between them.

Here, it is undisputed that Sps. Roque have not paid the final installment of the purchase price. As such, the condition which would have triggered the parties’ obligation to enter into and thereby perfect a contract of sale in order to effectively transfer the ownership of the subject portion from the sellers to the buyers (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter cannot validly claim ownership over the subject portion even if they had made an initial payment and even took possession of the same.

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.

There is no double sale in such case. Title to the property will transfer 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 intending buyer.

On the matter of double sales, suffice it to state that Sps. Roque’s reliance on Article 1544 of the Civil Code has been misplaced since the contract they base their claim of ownership on is, as earlier stated, a contract to sell, and not one of sale. In Cheng v. Genato, the Court stated the circumstances which must concur in order to determine the applicability of Article 1544, none of which are obtaining in this case, viz.:

(a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter, and must be valid sales transactions;

(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the same seller.

NFF Industrial Corp vs. G&L Associated

G.R. No. 178169, January 12, 2015

NFF INDUSTRIAL CORPORATION, Petitioner, v. G & L ASSOCIATED BROKERAGE AND/OR GERARDO TRINIDAD, Respondent.

Petitioner NFF Industrial Corporation is engaged in the business of manufacturing bulk bags, while respondent G & L Associated Brokerage, Inc. (respondent company) is among its customers. Respondent Gerardo Trinidad is the general manager of respondent company.

According to petitioner, on July 20, 1999, respondent company ordered 1,000 pieces of bulk bags from petitioner, at P380.00 per piece, or a total purchase price of P380,000.00, payable within 30 days from delivery, covered by Purchase Order No. 97-002 dated July 29, 1999.5 In the said Purchase Order, an instruction was made that the bulk bags were for immediate delivery to “G & L Associated Brokerage, Inc., c/o Hi-Cement Corporation, Norzagaray, Bulacan.” Shortly thereafter, respondent company ordered an additional 1,000 pcs. of bulk bags, thus for a total of 2,000 pcs, at the same price per bag and with the same terms of payment as well as the same instructions for delivery.

Petitioner alleged that the deliveries were duly acknowledged by representatives of respondent company. Petitioner also averred that all the delivery receipts were rubber stamped, dated and signed by the security guard-on-duty, as well as other representatives of respondent company. All deliveries made were likewise covered by sales invoices. Based on the said invoices, the total sales price is P760,000.00. All the sales invoices were duly served upon, and received by respondent company’s representative, one Marian Gabay.

According to respondents, the Purchase Order specifically provides that the bulk bags were to be delivered at Hi-Cement Corporation to Mr. Raul Ambrosio, respondent company’s checker and authorized representative assigned thereat. Subsequently, however, the ordered bulk bags were not delivered to respondent company, the same not having been received by the authorized representative in conformity with the terms of the Purchase Order.

Meanwhile, thirty (30) days elapsed from the time the last alleged delivery was made but no payment was effected by respondent company. This prompted petitioner to send a demand letter dated October 27, 1999 to respondent company. As respondent company failed to respond to the demand letter, petitioner followed up its claim from the former through a series of telephone calls. Again, since no concrete answer was provided by respondent company, petitioner sent another demand letter dated November 23, 1999; and finally, a third demand letter dated October 2, 2001. As the demands remained unheeded, petitioner filed a complaint for sum of money against respondents on December 19, 2001.

Issue: WON there was valid delivery on the part of petitioner in accordance with law, which would give rise to an obligation to pay on the part of respondent for the value of the bulk bags.

Held:

The resolution of the issue at bar necessitates a scrutiny of the concept of “delivery” in the context of the Law on Sales. Under the Civil Code, the vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. The ownership of thing sold is considered acquired by the vendee once it is delivered to him in the following wise:

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered 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.

Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.

Thus, ownership does not pass by mere stipulation but only by delivery. Manresa explains, “the delivery of the thing signifies that title has passed from the seller to the buyer." Moreover, according to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right. The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place. Here, emphasis is placed on Article 1497 of the Civil Code, which contemplates what is known as real or actual delivery, when the thing sold is placed in the control and possession of the vendee.

In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the concept of “delivery” was elucidated, to wit:

Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. 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 the vendee."

Suntay vs. Suntay

G.R. No. 208462               December 10, 2014

SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY, Petitioners, 
vs.
KEYSER MERCANTILE, INC., Respondent.

On October 20, 1989, Eugenia Gocolay, chairperson and president of respondent Keyser Mercantile, Inc. (Keyser), entered into a contract to sell with Bayfront Development Corporation (Baxfront) for the purchase on installment basis of a condominium unit in Bayfront Tower Condominium located at A. Mabini Street, Malate, Manila. The subject of the sale was Unit G of the said condominium project consisting of 163.59 square meters with the privilege to use two (2) parking slots covered by Condominium Certificate of Title (CCT)No. 15802. This Contract to Sell was not registered with the Register of Deeds of Manila. Thus, the subject unit remained in the name of Bayfront with a clean title.

On July 7, 1990, petitioner spouses Carlos and Rosario Suntay (Spouses Suntay) also purchased several condominium units on the 4th floor of Bayfront Tower Condominium through another contract to sell. Despite payment of the full purchase price, however, Bayfront failed to deliver the condominium units. When Bayfront failed to reimburse the full purchase price, Spouses Suntay filed an action against it before the Housing and Land Use Regulatory Board (HLURB) for violation of P.D. No. 957 and P.D. No. 1344, rescission of contract, sum of money, and damages.

In its decision, dated April 23 1994, the HLURB rescinded the Contract to Sell between Bayfront and Spouses Suntay and ordered Bayfront to pay Spouses Suntay the total amount of 2,752,068.60 as purchase price with interest. Consequently, on November 16, 1994, the HLURB issued a writ of execution.

Upon the application of Spouses Suntay, the Sheriffs of the RTC of Manila levied Bayfront’s titled properties, including the subject condominium Unit G and the two parking slots. Considering that CCT No. 15802 was still registered under Bayfront with a clean title, the sheriffs deemed it proper to be levied. The levy on execution in favor of Spouses Suntay was duly recorded in the Register of Deeds of Manila on January 18, 1995.

The auction sale was conducted on February 23, 1995, and Spouses Suntay were the highest bidder. Consequently, on March 1, 1995, the Certificate of Sale in favor of Spouses Suntay was issued. This was duly annotated at the back of CCT No. 15802 on April 7, 1995. Meanwhile, the Deed of Absolute Sale between Bayfront and Keyser involving the subject property was finally executed on November 9, 1995. The latter allegedly paid the full purchase price sometime in 1991. When Keyser was about to register the said deed of absolute sale in February 1996, it discovered the Notice of Levy and the Certificate of Sale annotated at the back of CCT No. 15802 in favor of Spouses Suntay. Nevertheless, on March 12, 1996, the Register of Deeds cancelled the title of Bayfront and issued CCT No. 26474 in the name of Keyser but carried over the annotation of the Suntays.

Issue: 1. WON the case has prescribed?

          2. WON the sale was valid?

Held:

1.     The defense of prescription is unavailing. In Fulton Insurance Company v. Manila Railroad Company, this Court ruled that the filing of the first action interrupted the running of the period, and then declared that, at any rate, the second action was filed within the balance of the remaining period. Applying Article 1155 of the New Civil Code in that case, the interruption took place when the first action was filed in the Court of First Instance of Manila. The interruption lasted during the pendency of the action until the order of dismissal for alleged lack of jurisdiction became final.

In the present case, the prescriptive period was interrupted when HLURB Case No. REM-032196-9152 was filed on March 21, 1996. The interruption lasted during the pendency of the action and until the judgment of dismissal due to lack of jurisdiction was rendered on the September 23, 2005. Thus, the filing of Civil Case No. 06-114716 on March 24, 2006 was squarely within the prescriptive period of four (4) years.

2.     In this case, the contract to sell between Keyser and Bayfront was executed on October 20, 1989, but the deed of absolute sale was only made on November 9, 1995 and registered on March 12, 1996. The Notice of Levy in favor of Spouses Suntay was registered on January 18, 1995, while the Certificate of Sale on April 7, 1995, both dates clearly ahead of Keyser’s registration of its Deed of Absolute Sale. Evidently, applying the doctrine of primus tempore, potior jure (first in time, stronger in right), Spouses Suntay have a better right than Keyser.

In the case of Uy v. Spouses Medina which dealt with essentially the same issues, the Court wrote:

Considering that the sale was not registered earlier, the right of petitioner over the land became subordinate and subject to the preference created over the earlier annotated levy in favor of Swift. The levy of execution registered and annotated on September 1, 1998 takes precedence over the sale of the land to petitioner on February 16, 1997, despite the subsequent registration on September 14, 1998 of the prior sale. Such preference in favor of the levy on execution retracts to the date of levy for to hold otherwise will render the preference nugatory and meaningless.

The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the property involved was duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien continues until the debt is paid, or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.