G.R. No. 138639 - City-Lite Realty Corp. vs. Court of Appeals

Case Summary (G.R. No. 138639)

Parties and Setting of the Transaction

F.P. HOLDINGS was the registered owner of the Violago Property. The property was marketed through a sales brochure issued to the general public. The brochure indicated an asking price of P6,250.00 per square meter, with terms of payment negotiable, and it identified Meldin Al G. Roy and Metro Drug Inc. as the contact persons, with an address at 5/F Metro House, 345 Sen. Gil Puyat Avenue, Makati City. The brochure also specified that the front portion consisting of 9,192 square meters was the portion relevant to the litigation.

Communications Leading to the Claimed Agreement

On 22 August 1991, respondent Meldin Al G. Roy sent a sales brochure, a location plan, and a copy of Transfer Certificate of Title No. T-19599 to Atty. Gelacio Mamaril, a practicing lawyer and a licensed real estate broker. Atty. Mamaril forwarded the documents to CITY-LITE, through Antonio Teng, Executive Vice-President, and Atty. Victor P. Villanueva, Legal Counsel.

On 19 September 1991, CITY-LITE conveyed to Metro Drug (Attention: Meldin Al Roy) its interest to purchase a portion, specifically “one-half (1/2)” of the front lot. Roy was later understood to have responded that it would take time to subdivide and that F.P. HOLDINGS was not receptive to a sale of only half of the front lot. Atty. Mamaril then wrote Roy expressing CITY-LITE’s desire to buy the entire front lot, but with a reduced asking price and installment terms.

Roy replied with a counter offer dated 25 September 1991, proposing major terms and conditions: the price would remain P6,250.00 per square meter or a total of P57,450,000.00, and payment would be made through a P15.0 Million downpayment and a balance payable within six (6) months from the downpayment date without interest. Roy asked CITY-LITE to advise in writing by 26 September 1991 if the terms were acceptable so that formal discussions could begin.

Meeting and Written Acceptance by CITY-LITE

On 26 September 1991, CITY-LITE’s officers and Atty. Mamaril met Roy at the Manila Mandarin Hotel in Makati. After discussions, the parties reached agreement on the condition that CITY-LITE would submit acceptance in writing of Roy’s letter containing the terms and conditions. That same afternoon, Atty. Mamaril and Antonio Teng conveyed CITY-LITE’s formal acceptance of Roy’s terms in separate letters, both dated 26 September 1991.

Despite CITY-LITE’s acceptance and demand, F.P. HOLDINGS refused to execute the deed of sale in favor of CITY-LITE.

Adverse Claim and Lis Pendens

To protect its alleged vendee interest, CITY-LITE caused the annotation of an adverse claim on the title of the property with the Register of Deeds of Quezon City. The adverse claim was annotated under Entry No. PE-1001 on 27 September 1991, as a memorandum of encumbrance on Transfer Certificate of Title No. T-19599.

On 30 September 1991, CITY-LITE’s counsel demanded in writing that Metro Drug (Attention: Meldin Al Roy) execute the proper deed of conveyance under pain of court action. On 4 October 1991, F.P. HOLDINGS filed a petition for the cancellation of the adverse claim, docketed as LRC Case No. 91-10257. The adverse claim was dismissed by the RTC-Br. 84 on 2 December 1991, which held that CITY-LITE’s adverse claim had factual basis and was not “sham and frivolous.”

F.P. HOLDINGS then caused the resurvey and segregation of the property and sought new titles. On 17 January 1992, Transfer Certificate of Title No. T-51671 was issued. After the dismissal of the petition to cancel the adverse claim, CITY-LITE instituted a complaint against F.P. HOLDINGS initially for specific performance and damages and caused the annotation of a second notice of lis pendens on the new certificate of title. The property was then transferred to VIEWMASTER during the pendency of the suit, and a new title, Transfer Certificate of Title No. T-52398, was issued. The lis pendens was carried over to the new title.

CITY-LITE amended its complaint with leave of court to implead VIEWMASTER as a necessary party and the Register of Deeds as a nominal defendant, adding the prayer for cancellation of VIEWMASTER’s certificate of title. The amended case was raffled to Branch 85 of the Regional Trial Court of Quezon City.

Trial Court Decision in Favor of CITY-LITE

On 4 October 1995, the trial court rendered judgment in favor of CITY-LITE. It ordered F.P. HOLDINGS to execute a deed of sale of the property in favor of CITY-LITE for a total consideration of P55,056,250.00, payable as follows: P15 Million as downpayment immediately upon execution of the deed of sale, and the balance within six (6) months, without interest.

The court directed the Register of Deeds of Quezon City to cancel Transfer Certificate of Title No. T-52398 or any subsequent title affecting the subject property, and to issue a new one in CITY-LITE’s name upon presentation of the deed of sale and the required documents. It also ordered the defendants, except VIEWMASTER and the Register of Deeds, to pay CITY-LITE, jointly and severally, P800,000.00 as nominal damages, P250,000.00 as attorney’s fees, and the costs.

Issues Raised on Appeal and Motion for Reconsideration

On 30 October 1995, VIEWMASTER filed a motion for reconsideration, questioning the trial court’s conclusion that a perfected contract of sale existed, arguing that there was no definite agreement as to the manner of payment of the purchase price, and invoking Toyota Shaw Inc. v. Court of Appeals.

The trial court denied the motion for reconsideration. On 20 October 1998, the Court of Appeals reversed the trial court decision and set it aside. On 10 May 1999, the Court of Appeals denied CITY-LITE’s motion for reconsideration.

Parties’ Contentions Before the Supreme Court

In its petition, CITY-LITE argued that the Court of Appeals erred in holding that no contract of sale had been perfected due to an alleged lack of definite agreement on the manner of paying the purchase price. CITY-LITE also contended that respondents Metro Drug and Meldin Al G. Roy had authority to sell the property and that Roy’s role was not limited to that of a mere liaison or contact person.

The Court held that these arguments did not warrant reversal.

Legal Basis and Reasoning on Authority to Sell Land

The Court focused on whether a valid sale through an agent could arise, given the statutory requirement for written authority. Under Art. 1874 of the Civil Code, when the sale of land or any interest therein is made through an agent, “the authority of the latter shall be in writing; otherwise, the sale shall be void.”

CITY-LITE anchored the alleged authority of Metro Drug and Meldin Al G. Roy on evidentiary circumstances: testimonies of CITY-LITE’s witnesses and Roy’s and Metro Drug’s admissions; the sales brochure identifying Roy as a contact person; the presence of a guard at the property stating that Metro Drug was the authorized agent; and the supposed common knowledge among brokers that Metro Drug, through Roy, was authorized to sell the property.

The Court emphasized, however, that Art. 1874 requires written authority for an agent’s authority to sell land. The absence or presence of such authority was evaluated based on the written memorandum issued by the president of F.P. HOLDINGS, requesting Metro Drug’s assistance. That memorandum stated that F.P. HOLDINGS would appreciate Metro Drug’s assistance in referring buyers, that Metro Drug should proceed to hold preliminary negotiations with interested buyers, and that it should endorse formal offers to F.P. HOLDINGS for final evaluation and appraisal.

The Court read this memorandum as meaning that Roy and/or Metro Drug was meant only to assist F.P. HOLDINGS by referring prospects and conducting preliminary negotiations, whil

Case Syllabus (G.R. No. 138639)

Parties and Procedural Posture

CITY-LITE REALTY CORPORATION (CITY-LITE) filed a petition for review on certiorari to annul the 20 October 1998 Decision of the Court of Appeals.
The Court of Appeals reversed the Regional Trial Court of Quezon City decision that had declared a contract of sale perfected and had ordered conveyance in favor of CITY-LITE.
F. P. HOLDINGS AND REALTY CORPORATION (F.P. HOLDINGS)—formerly Sparta Holdings Inc.—appeared as an adverse party and was the registered owner of the subject property.
The respondents included Metro Drug Inc., Meldin Al G. Roy, Viewmaster Construction Corp., and the Register of Deeds of Quezon City.
The trial court had rendered judgment in favor of CITY-LITE in Civil Case No. Q-92-11068 and ordered execution of the deed of sale.
The Court of Appeals thereafter denied CITY-LITE’s motion for reconsideration on 10 May 1999, prompting the present petition.

Key Factual Antecedents

F.P. HOLDINGS owned a parcel of land along E. Rodriguez Avenue, Quezon City, known as the “Violago Property” or “San Lorenzo Ruiz Commercial Center,” with an area of 71,754 square meters, more or less, under Transfer Certificate of Title No. T-19599.
F.P. HOLDINGS offered the property for sale to the general public through a sales brochure.
The brochure identified the front portion of the property as 9,192 square meters, which became the subject of the dispute.
The brochure stated that the total area for sale excluded 5,000 square meters covering an existing chapel and adjoining areas to be donated to the Archdiocese of Manila, reducing the saleable area to 66,754 square meters.
The brochure’s advertised asking price was P6,250.00 per square meter, with terms of payment negotiable, and it specified a broker’s commission of 2.0% of selling price.
The brochure named Meldin Al G. Roy and Metro Drug Inc. as the contact parties, with an indicated address at 5/F Metro House, 345 Sen. Gil Puyat Avenue, Makati City.
On 22 August 1991, Meldin Al G. Roy sent the brochure and other documents, including the title copy, to Atty. Gelacio Mamaril, a practicing lawyer and licensed real estate broker.
Atty. Mamaril forwarded the documents to Antonio Teng and Atty. Victor P. Villanueva, officials of CITY-LITE.
On 19 September 1991, CITY-LITE conveyed its interest to purchase a portion or one-half of the front lot, but Roy later communicated that subdivision would take time and F.P. HOLDINGS was not receptive to a purchase of only half.
Atty. Mamaril then communicated CITY-LITE’s desire to buy the entire front lot, conditioned on a reduction in the asking price and installment payment.
Roy issued a counteroffer dated 25 September 1991, stating the price as P6,250.00 per square meter or P57,450,000.00, with P15.0 Million downpayment and the balance payable within six months from downpayment without interest, and requesting written acceptance by September 26, 1991.
On 26 September 1991, CITY-LITE’s officers and Atty. Mamaril met Roy at the Manila Mandarin Hotel in Makati to consummate the transaction.
After discussions, the parties purportedly reached an agreement subject to written submission by CITY-LITE of acceptance to the terms in Roy’s letter.
That same afternoon, Atty. Mamaril and Antonio Teng sent separate written acceptances dated 26 September 1991 to Roy.
F.P. HOLDINGS refused to execute the deed of sale despite demand, leading CITY-LITE to register an adverse claim with the Register of Deeds of Quezon City.
The adverse claim was annotated under Entry No. PE-1001 dated 27 September 1991.
On 30 September 1991, CITY-LITE’s counsel demanded that Metro Drug (ATTN: MELDIN AL ROY) comply by executing the proper deed under pain of court action.
On 4 October 1991, F.P. HOLDINGS filed a petition to cancel the adverse claim (LRC Case No. 91-10257) which was dismissed on 2 December 1991.
After dismissal of the adverse claim petition, F.P. HOLDINGS caused resurvey and segregation and obtained a new title, Transfer Certificate of Title No. T-51671, on 17 January 1992.
CITY-LITE instituted a complaint for specific performance and damages and annotated a second notice of lis pendens on the new certificate of title.
During the pendency of the suit, the property was transferred to VIEWMASTER CONSTRUCTION CORP., and Transfer Certificate of Title No. T-52398 was issued.
Due to the conveyance, the complaint was amended with leave of court to implead VIEWMASTER as a necessary part