G.R. No. 127206 - Gil vs. Court of Appeals

Concepcion Palma Gil and her sister Nieves Palma Gil (married to Angel Villarica) were co-owners of a commercial land (Lot No. 59-C, 829 sqm) in Davao City, with a two-storey commercial building constructed by the latter couple.
On October 13, 1953, Concepcion filed a suit for specific performance in Court of First Instance of Davao City (Civil Case No. 1160), to compel Nieves to cede an undivided portion (256.2 sqm) of the property. The court ruled in favor of Concepcion on April 7, 1954, ordering delivery of the portion. Nieves appealed, but the Court of Appeals affirmed and the decision became final and executory.

Nieves refused to execute the deed of transfer; consequently, the court issued a writ of execution authorizing the sheriff to execute the deed.
The sheriff subdivided the property into four lots: Lot 59-C-1 (218 sqm), 59-C-2 (38 sqm), 59-C-3 (14 sqm), and 59-C-4 (560 sqm). He then executed a deed of transfer to Concepcion over Lots 59-C-1 and 59-C-2 summing 256.2 sqm.

On October 24, 1956, Concepcion executed a deed of absolute sale over Lot 59-C-1 (stated as 256 sqm, though only 218 sqm per subdivision plan) to Iluminada Pacetes for P21,600, with P7,500 downpayment and the balance payable upon issuance and delivery of the certificate of title in vendee’s name.
The deed required Concepcion to procure within 120 days the certificate of title for Lot 59-C-1 in the vendee’s name; in the meantime, Pacetes could collect rental income starting December 1, 1956.

Nieves litigated to compel the sheriff’s compliance and also filed complaints challenging the sheriff’s deed of transfer; these cases went to Court of Appeals and eventually to the Supreme Court, which set aside the sheriff’s deed on August 31, 1961, remanding for further proceedings.
Meanwhile, Iluminada filed complaint for unlawful detainer against Angel and Nieves; judgment awarded possession and monthly rental in her favor, final and executory on October 4, 1956, but not enforced promptly.
Trial court found that Nieves had waived the benefits of the Supreme Court’s 1961 decision due to mortgage over Lot 59-C-4, and upheld the sale to Pacetes in an order dated February 17, 1964. Nieves unsuccessfully appealed.

Iluminada Pacetes filed a complaint in 1965 to revive and execute the unlawful detainer decision; it was dismissed on January 26, 1965, on the ground that the deed was executory and sale was not perfected due to nonpayment of balance.
In 1966, Pacetes sold Lots 59-C-1 and 59-C-2 to Constancio Maglana, who in turn sold the same to Emilio Matulac; TCTs were issued in their names respectively.
Angel Villarica died in 1974; his heirs, including Nieves, executed extrajudicial settlement waiving interest over the property covered by TCT No. 7450.

The Supreme Court in 1974 denied certiorari petition of Nieves, approving the trial court rulings confirming the sale to Pacetes and others, thus rendering the decision final.
Pacetes filed a complaint for recovery of possession (Civil Case No. 8836) in 1975 against Nieves; the trial court dismissed it, ruling the action barred by previous decision in Civil Case No. 4413.
Iluminada consigned to the court in 1977 part payment of the balance of the purchase price (P11,983); the court issued a writ of execution ordering eviction of Nieves that same year; the CA later upheld that she was the real party-in-interest.
TCTs were issued in the names of Iluminada Pacetes (No. 61514), Constancio Maglana (No. 73412), and Emilio Matulac (No. 80631).
Emilio Matulac obtained writ of execution in 1982; buildings were demolished in June 1982; subsequent motions to annul the proceedings were denied.
The heirs of Concepcion Palma Gil (including petitioners Perla Palma Gil, Vicente Hizon Jr., and Angel Palma Gil) filed Civil Case No. 15,356 in 1982 for cancellation of the deeds of sale and TCTs alleging that the sale was null and void for failure to pay the balance of the purchase price and that the deed of sale was executory only.

The trial court in 1993 ruled in favor of the defendants, declaring bound by the Supreme Court’s decisions affirming the sales from Concepcion to Pacetes, then Maglana, then Matulac.
Petitioners filed appeal with the Court of Appeals assigning errors mostly disputing the validity of subsequent sales and the cancellation of TCTs.
The CA, in a decision dated March 19, 1996, affirmed the trial court ruling dismissing the complaint, holding that the deed of sale was an absolute sale, ownership was transferred, and payments made were timely pursuant to Articles 1191 and 1592 of the New Civil Code.
Petitioners moved for reconsideration before the CA, which was denied in October 1996.

Petitioners sought review on certiorari to the Supreme Court disputing the Court of Appeals ruling, arguing among others that payment of balance was not made within the agreed period and subsequent buyers were not in good faith.
Respondents argued petitioners failed to join indispensable parties (other heirs of Concepcion), and that the previous Supreme Court rulings were res judicata and binding.
The Supreme Court noted the petitioners failed to include all heirs as parties in their suit, which rendered the proceeding fatally defective.
On the merits, the Court ruled the deed of sale was absolute, citing that reciprocal obligations apply, that the delay in payment was excused by the heirs’ failure to transfer the title, and that partial consignation and eventual procurement of ownership by Iluminada defeated any right to rescind.
The Court affirmed the dismissal of the petitioners' complaint and denied the petition for review for lack of merit.

Whether the petitioners, as heirs of Concepcion Palma Gil, can annul the sales and cancel the titles covering the properties sold to Iluminada Pacetes and subsequently transferred to Constancio Maglana and Emilio Matulac on the basis that the deed of sale was executory and that the balance of the purchase price was not paid within the prescribed time.

Whether Iluminada Pacetes and subsequent buyers were purchasers in good faith entitled to ownership and possession of the property despite delay in payment of the balance.

Whether the petitioners’ complaint could be entertained despite the failure to implead all indispensable heirs of the deceased Concepcion Palma Gil.