Case Summary (G.R. No. 214115)
Key Dates
– February 4, 1964: Provincial Board Resolution No. 168 donating 210 parcels to the City of Cebu.
– June 26, 1965 & August 5, 1965: Public auctions awarding respondents their bids.
– August 6, 1965: Complaint for nullification filed by then Governor Espina; writ of preliminary injunction issued.
– July 15, 1974: Court-approved compromise returning donated lands to petitioner.
– July 25, 1994: Petitioners’ complaint for specific performance and damages filed.
– March 31, 2009: RTC decision in favor of respondents.
– April 14, 2014: Court of Appeals decision affirming the RTC.
– February 15, 2023: Supreme Court decision under the 1987 Constitution.
Applicable Law
– 1987 Philippine Constitution (property rights, due process).
– Civil Code of the Philippines:
• Article 1315 (perfection of contract by consent)
• Article 1458 (elements of a valid contract of sale).
– Rules of Court, Rule 45 (certiorari limited to questions of law).
Donation and Auction Proceedings
By Resolution No. 168 (1964), the Province of Cebu donated 210 parcels in Fuente Osmeña and Lahug to the City of Cebu. The City Council, via Ordinance No. 522, authorized public auctions. On June 26 and July 19, 1965, and August 5, 1965, the city conducted three biddings. Respondents were awarded 300 sqm of Lot 526-B for ₱24,300 and Lot 1072 for ₱78,893.84, with down payments totaling 20% and balances payable in equal installments over three years. Contracts of Purchase and Sale were executed on August 11 and 12, 1965.
Judicial Challenge and Injunction
On August 6, 1965, Governor Rene Espina filed Civil Case No. 238-BC to nullify the provincial donation. The Court of First Instance issued a writ of preliminary injunction the same day, served on the City of Cebu on August 9–10, 1965, enjoining further conveyances of the donated parcels.
1974 Compromise Agreement
On June 25, 1974, the Province and City of Cebu entered a court-approved compromise. All donated lands, except those already used for public purposes, were returned to the Province. The Province assumed liabilities for parcels already sold, and the City remitted ₱187,948.93—representing buyers’ deposits—to the Province, including respondents’ payments.
Failure to Execute Deeds and Filing of 1994 Action
Despite compromise terms, the Province failed to execute deeds of sale for respondents’ awarded parcels. On July 25, 1994, respondents filed a complaint for specific performance and damages, asserting perfected contracts, full payment (including a confirmed ₱1994 balance received by the Province), and estoppel against the Province.
Trial Court Findings (2009)
The RTC declared:
- Contracts of sale were validly perfected at the public auctions on June 26 and August 5, 1965, prior to the injunction.
- Respondents made and the Province eventually accepted full payment, as acknowledged by Governor Pablo Garcia in 2001.
- Respondents were co-owners of the disputed portions.
- The Province and PVB were jointly liable to execute deeds of sale; pay fair market value for overlapping conveyance to PVB; and pay moral, exemplary damages and attorney’s fees.
Court of Appeals Ruling (2014)
The CA affirmed the RTC in toto, emphasizing:
– A consensual contract of sale is perfected upon meeting of minds (object and price) at public auction, regardless of later formalization.
– Full payment was tendered, accepted, and acknowledged in writing by the Province.
– Laches did not apply, and damages were proper given the Province’s refusal to acknowledge title.
Issues on Review
The Province raised only questions of law under Rule 45, contesting:
- Validity of contracts purportedly executed after the injunction.
- Sufficiency and validity of tender and consignment.
- Respondents’ alleged laches.
- Awards of moral and exemplary damages.
- Award of attorney’s fees at 35% of the property’s value.
Supreme Court Analysis – Contract Perfection
Relying on Province of Cebu v. Heirs of Morales (2008) and Civil Code Articles 1315, 1458, the Court held that:
– A sale by public auction is perfected at the fall of the hammer or customary announcement.
– Consent, determinate subject matter, and certain price were present at both auctions.
– Formal contracts and deeds are part of consummation, not perfection.
Payment and Tender of Balance
The Supreme Court concurred with the CA that respondents fully paid the down payments and balance:
– Initial deposits wer
Case Syllabus (G.R. No. 214115)
Facts of the Case
- On February 4, 1964, the Provincial Board of Cebu donated 210 parcels of land—including Lot No. 526-B (Banilad Estate, Fuente Osmeña) and Lot No. 1072 (La Guardia, Lahug)—to the City of Cebu under Resolution No. 168.
- The City Council enacted Ordinance No. 522 authorizing the sale of the donated parcels by public auction.
- Three auctions were held on June 26, July 19, and August 5, 1965.
- During the June 26, 1965 auction, respondents (lessees of a 300 sqm portion of Lot 526-B) won their bid at ₱24,300.00, paid a ₱4,860.00 down payment, and agreed to pay the ₱19,440.00 balance in equal installments over three years. A Contract of Purchase and Sale was executed on August 12, 1965.
- During the August 5, 1965 auction, respondents won Lot 1072 for ₱78,893.84, paid a ₱15,778.77 down payment, and agreed to pay the ₱63,115.07 balance over three years. A Contract of Purchase and Sale was executed on August 11, 1965.
- On August 6, 1965, Governor Rene Espina filed Civil Case No. 238-BC to nullify the donation; the Court of First Instance issued a preliminary injunction on the same day, served August 9–10, 1965, enjoining conveyance of the donated lands.
- On June 25, 1974, the City and the Province entered into a compromise (approved July 15, 1974) returning the donated lands to the Province except those already used for public purposes; the Province assumed liability for sales to third parties and received ₱187,948.93 in deposits.
- Respondents attempted to pay the installment balances but were refused by the City Treasurer owing to the injunction; on August 1, 1994, they tendered the full balance to the Province, later confirmed by Governor Pablo P. Garcia in a July 12, 2001 letter.
- The Province failed to execute deeds of sale for the subject lots in respondents’ favor, prompting respondents to file a complaint for specific performance and damages on July 25, 1994.
Procedural History
- July 25, 1994: respondents filed an action for specific performance with damages in the Regional Trial Court (RTC), Branch 10, Cebu City.
- April 31, 2009: RTC rendered a Decision declaring respondents co-owners of the 300 sqm portion of Lot 526-B (Lot 2-B-2, Psd-072217-025026) and Lot 1072, ordering the Province to execute deeds of sale, Philippine Veterans Bank (intervenor) to