G.R. No. 154402 - Heirs of Bernabe vs. Court of Appeals

The dispute originated from a complaint for specific performance filed by Titan Construction Corporation (Titan) against the Bernabe family, particularly focusing on an undivided one-half share in two parcels of land in La Huerta, ParaAaque, Metro Manila.
The agreement was embodied in two instruments:

An undated Deed of Sale of Real Estate whereby the defendants (co-owners) allegedly sold their one-half share for P17,700,000.00 with specific conditions regarding payment and title transfer;
Later, a set of compromises leading to three separate Deeds of Conditional Sale, executed on 3 March 1994, entered into by Titan and the remaining defendants.

Under the Deed of Sale of Real Estate, Titan was to pay an initial P1,000,000.00 as down payment, with the balance due within 60 days after certain conditions were met, such as obtaining a right of way, executing an agreement with a development corporation, and surrendering the titles.
In August 1990, Titan received a cancellation letter from the defendants’ counsel, alleging non-compliance by Titan; the defendants contended that only a portion of the co-owners had signed the deed.
Subsequently, a compromise agreement was reached between Titan and the remaining defendants (Patricio, Cecilia, and Antonio), resulting in the execution of new deeds (the three Deeds of Conditional Sale) which carried different terms, particularly regarding the purchase price and conditions for title transfer.

Antonio, one of the original defendants, later executed a Special Power of Attorney (SPA) empowering his children (Jose III and Shirley Ann) to act on his behalf in executing the Deed of Conditional Sale.
After Antonio’s death on 16 August 1994, his heirs—Evelyn Cruz and their children (Jose III, Shirley Ann, Gregory, and Michael)—became parties to the case as petitioners.
Titan filed a supplemental complaint asserting that:

Antonio had already received a substantial portion of the down payment for his share,
Additional payments had been made and expenditures incurred by Titan for segregating and titling the property,
Petitioners (the heirs) were refusing to execute the formal deed of sale.

The Regional Trial Court (RTC) of Makati City ruled in Titan’s favor on 1 December 1998, ordering petitioners to execute a registrable deed of absolute sale subject to the payment of the balance purchase price (P3,431,058.42).
The RTC modified its decision in a subsequent order on 15 February 1999, specifically directing that the order be rendered against the heirs of Antonio by virtue of compromise agreements.
The decision and subsequent orders were affirmed by the Court of Appeals in a decision dated 22 January 2002, and petitioners’ motion for reconsideration was denied on 16 June 2002.

Petitioners argued that both the Deed of Sale of Real Estate and the Deed of Conditional Sale merely represented contracts to sell—not consummated contracts of sale—emphasizing that ownership would only pass upon full payment.
Titan contended that:

A perfected contract of sale existed based on the Deed of Sale, despite its defective form,
The subsequent condition-filled Deed of Conditional Sale elaborated that title would only transfer upon full payment,
Titan had partially performed its obligations by making substantial payments and by effecting the segregation and titling of the property.

Whether, under a deed of conditional sale, may the vendee (Titan) compel the vendors (the Bernabe heirs) to execute a registerable deed of sale on the ground of having made a substantial portion of the down payment, despite the stipulation that the deed of absolute sale would only be executed upon full payment.
Whether the vendors may seek rescission of the contract for failure of the vendee to pay the agreed full purchase price, taking into account that the contract is a contract to sell where title retention is conditioned upon complete payment.
Whether the subsequent Deed of Conditional Sale, which superseded the original Deed of Sale of Real Estate, effectively transformed the nature of the parties’ obligations into those pertaining to a contract to sell rather than a contract of sale.