Title
Coronel vs. Court of Appeals
Case
G.R. No. 103577
Decision Date
Oct 7, 1996
Petitioners sold land to Ramona, later resold to Catalina. SC ruled first sale valid, second sale invalid due to prior notice and lack of good faith.
conditional contract of sale
ownership dispute
first buyer

Case Summary (G.R. No. 103577)

Factual Background

The parties executed on January 19, 1985 a document entitled “Receipt of Down Payment” reflecting a total purchase price of P1,240,000.00 and a down payment of P50,000.00 purportedly received from Ramona Patricia Alcaraz. The instrument stated that upon receipt of the down payment the sellers would effect the transfer of the title then registered in their deceased father’s name into their own names, present the title, execute a deed of absolute sale, and thereupon the buyer would pay the balance of P1,190,000.00. On the same date the down payment was made by Concepcion D. Alcaraz, mother of Ramona, by personal check. Petitioners caused the transfer of the title into their names on February 6, 1985. Thereafter petitioners sold the property to Catalina B. Mabanag, who paid P300,000.00 on February 18, 1985 and later caused registration of a deed dated April 25, 1985 that resulted in a new title issued in her name on June 5, 1985. Plaintiffs caused annotation of a notice of lis pendens on petitioners’ title on February 22, 1985 and thereafter filed a complaint for specific performance.

Documentary Evidence and Submission

Both sides agreed to submit the controversy on documentary evidence only, adopting the same exhibits offered by the parties. The trial court accepted the joint submission and permitted memoranda. The central document submitted and contested by the parties was the “Receipt of Down Payment” which both sides treated as evidencing the agreement between the parties concerning the sale of the particular house and lot covered by the relevant transfer certificate of title.

Trial Court Proceedings and Judgment

At trial the parties’ case was decided on the documentary record and memoranda. On March 1, 1989 the trial court rendered judgment in favor of Concepcion D. Alcaraz and Ramona Patricia Alcaraz ordering specific performance: petitioners were ordered to execute a deed of absolute sale in favor of plaintiffs over the parcel described in the title, the intervenor’s title was declared void, intervenor and petitioners were ordered to vacate and deliver possession, and plaintiffs’ claim for damages and attorneys’ fees and petitioners’ counterclaims were dismissed.

Trial Court Posture and Motion for Reconsideration

Petitioners moved for reconsideration and for annulment and rendition of a new decision by the incumbent presiding judge, arguing among other things the authority of the judge who rendered the decision. The trial court denied the motion on July 12, 1989, ruling that the case had been submitted for decision to the judge who rendered the judgment and that the decision was supported by the evidence.

Court of Appeals Disposition

The Court of Appeals affirmed the trial court’s judgment on December 16, 1991, adopting the findings that the parties had entered into a contract of sale subject to a suspensive condition, that the suspensive condition was fulfilled on February 6, 1985, and that petitioners’ subsequent sale to Catalina B. Mabanag gave rise to a double sale actionable in favor of plaintiffs.

Issues Presented on Petition for Review

The petition to the Supreme Court raised the fundamental question whether the instrument styled “Receipt of Down Payment” constituted a mere executory contract to sell, subject to the buyer’s full payment as a suspensive condition, or whether it embodied a conditional contract of sale that became perfected when the suspensive condition specified by the parties was fulfilled. Subsidiary issues included whether petitioners validly rescinded the contract because of Ramona’s absence, whether petitioners lacked capacity to contract before formal succession proceedings, and whether the second buyer acquired title in good faith.

Parties’ Contentions

Petitioners contended that the instrument was an executory contract to sell reserving title until full payment; they argued that because the buyer was absent and did not provide contact details or a power of attorney the contract could not be consummated and was properly rescinded. Petitioners also asserted lack of capacity earlier to enter into sale because succession had not been declared and claimed the second sale to Catalina B. Mabanag preceded any annotation of lis pendens, suggesting good faith acquisition by the second buyer. Private respondents maintained that the instrument evidenced a perfected contract of sale or, in any event, a conditional contract of sale whose suspensive condition was the transfer of title into petitioners’ names and that the condition had been fulfilled on February 6, 1985, thereby compelling specific performance and invalidating the second sale.

Supreme Court Ruling

The Supreme Court dismissed the petition and affirmed the judgments of the courts below. The Court held that the “Receipt of Down Payment” constituted a conditional contract of sale which became obligatory upon fulfillment of the suspensive condition — the issuance of a transfer certificate of title in petitioners’ names — which occurred on February 6, 1985. Accordingly the reciprocal obligations to present the title and execute a deed of absolute sale and to pay the balance of the purchase price became demandable as of that date. The Court declared the subsequent transfer to Catalina B. Mabanag to be subject to the rule on double sale and ruled for the prior buyer.

Legal Basis and Reasoning on Nature of the Contract

The Court analyzed the instrument against the statutory definitions and principles in Art. 1305 and Art. 1458 and relevant jurisprudence distinguishing a contract to sell from a conditional contract of sale and from a mere executory contract. The Court explained that a unilateral reservation of title pending full payment characterizes a contract to sell, whereas the instrument before the Court manifested an intention by petitioners to sell the property and to cause the transfer of title into their names so they could thereupon execute the absolute deed of sale. The Court emphasized that the impediment to immediate consummation was petitioners’ need to have the title registered in their names, not the buyer’s failure to pay the full price. Therefore the parties had agreed a suspensive condition relating to transfer of title, and when that condition was fulfilled the contract perfected and reciprocal obligations became demandable in accordance with Art. 1475, Art. 1181, and Art. 1187.

On Petitioners’ Allegation of Rescission and Buyer’s Absence

The Court rejected petitioners’ claim of a valid extrajudicial rescission grounded on the alleged absence of Ramona Patricia Alcaraz because the allegation was unsupported by evidence, and allegations in responsive pleadings are deemed controverted. The Court further held that petitioners had no contractual right to rescind extrajudicially in the absence of an express stipulation authorizing such remedy. The Court found petitioners estopped from asserting absence or lack of authority where they had accepted the down payment made by Concepcion D. Alcaraz by personal check and had dealt with her as the buyer’s representative without objection; accordingly the physical absence of Ramona did not justify rescission and did not render the buyer in default under Art. 1169.

Succession, Capacity, and Estoppel

Petitioners’ contention that they lacked capacity to contract because succession had not been declared was deemed untenable. The Court applied Art. 774 and Art. 777 to explain that heirs called to succession by operation of law step into the decedent’s rights upon death and that petitioners had represented themselves as owners at the time of the agreement; under Art. 1431 they were estopped from now denying that representation.

Application of the Double Sale Rule

The Court applied Art. 1544 to the facts because two sales were proved. The Court held that the dispositive inquiry is whether the second buyer registered the purported second sale in good faith and prior to any r

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