Case Summary (G.R. No. 230832)
Key Dates
– September 17, 1960: Dominador Ramones executes a conditional sale to Bias Mejia for six hectares.
– February 17, 1965: Remaining 6.3 hectares sold to Pablo Benitez.
– 2005: Titles are split into TCT Nos. T-225549 and T-225550.
– March 23, 2005: First Deed of Conditional Sale between petitioners and Nestor.
– April 11, 2007: New Deed of Conditional Sale executed.
– February 5, 2010: Nestor issues a “Rescission of Deed of Conditional Sale.”
– October 12, 2011: Petitioners file Civil Case No. 4263 seeking nullification, specific performance, and damages.
– April 12, 2013: RTC dismisses petitioners’ complaint with prejudice.
– May 26, 2016: Court of Appeals reverses and orders payment under Maceda Law.
– February 7, 2017: CA denies reconsideration.
– November 12, 2018: Supreme Court renders final decision.
Applicable Law
– 1987 Philippine Constitution (contracts clause)
– 1997 Rules of Court, Rule 9, Section 3 (default and notices); Rule 41, Section 1 (appeal)
– Civil Code: Articles 1169 (demand and delay), 1191 (rescission), 1592 (sale of immovable), 2209 (interest for delay)
– Republic Act No. 6552 (Maceda Law): protects residential buyers on installment contracts; excludes industrial/commercial lots
– Jurisprudence: Lim v. CA (contract to sell vs. sale), Luzon Brokerage v. Maritime Building (vendor’s right to cancel), University of the Philippines v. De Los Angeles (notice requirement)
Procedural History and Issues
Petitioners sought nullification of Nestor’s rescission notice, specific performance of the conditional sale, and damages. The RTC dismissed the complaint, finding fraud and unclean hands. The CA treated the agreement as a contract to sell, applied the Maceda Law protection, and ordered petitioners to pay P4,432,500 within 60 days or vacate. The Supreme Court addressed: (1) the right of a defaulted party to file an appellee’s brief; (2) the true nature of the contract; (3) the applicability of the Maceda Law; and (4) the validity of Nestor’s cancellation.
Appellee’s Brief Requirement
Under Rule 9, Section 3(a) of the 1997 Rules of Court, a defaulting party retains the right to notice of subsequent proceedings. Jurisprudence affirms that a party declared in default may appeal and file an appellant’s brief; by parity of reasoning, such a party may also file an appellee’s brief if the appellate outcome is favorable. The CA properly required Nestor to submit his brief; the trial court’s default order does not restrict appellate procedure.
Characterization as Contract to Sell
The April 11, 2007 instrument expressly provides that “upon full payment of the agreed consideration the Vendor shall execute the Deed of Absolute Sale.” Under Lim v. CA and later cases, this reservation of ownership until full payment classifies the instrument as a contract to sell. In such contracts, full payment is a positive suspensive condition and title remains with the seller until the condition is met.
Inapplicability of the Maceda Law
Republic Act No. 6552 protects only residential buyers on installment, expressly excluding industrial and commercial lots. Petitioners’ acquisition of six hectares for commercial subdivision falls outside the law’s coverage. While the Maceda Law grants residential buyers grace periods and refunds, it reaffirms vendors’ unqualified right to cancel commercial contracts upon buyer default.
Right to Cancel and Notice Requirement
Jurisprudence (Luzon Brokerage v. Maritime Building) recognizes a vendor’s right to cancel a contract to sell commercial property upon default without affording statutory grace periods. However, extrajudicial cancellation must be communicated—either by demand or notice—to the buyer, and remains provisional until validated by a court. Notice allows the buyer to contest the cancellation.
Invalidity of Nestor’s
...continue readingCase Syllabus (G.R. No. 230832)
Facts
- The subject property is Lot No. 371 in Magdum, Tagum City, Davao del Norte, originally 123,099 sqm, covered by Original Certificate of Title No. (P-1324) P-232 registered in the name of Dominador Ramones and his spouse Maria Ramones.
- Dominador executed on September 17, 1960 a Contract of Sale in favor of Bias Mejia for the western portion of the lot, originally 7,309 sqm but agreed reduced to 6 hectares; the title remained in Dominador’s name.
- On February 17, 1965 a Deed of Absolute Sale conveyed the remaining 6.3 ha to Pablo Benitez, and Dominador’s OCT remained uncancelled.
- Bias Mejia died and was succeeded by his son Nestor C. Mejia, who in 2005 occupied the 12.3-ha parcel under OCT No. (P-1324) P-232 and possessed both the 1960 Contract of Sale and the 1965 Deed of Sale.
- Nestor and Renato Padillo (President of Royal Plains View, Inc.) agreed to split the 12.3-ha tract into two parcels, generating TCT Nos. T-225549 and T-225550, both still in spouses Ramones’ names; the corporation retained T-225549 and delivered T-225550 to Casimiro Benitez.
- On March 23, 2005, a Deed of Conditional Sale was executed by Nestor (vendor) and Royal Plains View, Inc. via Rosemarie Padillo (vendee), covering TCT No. T-225549 for ₱8,000,000 with ₱500,000 down payment and thirty-six monthly installments of ₱208,333.30 (June 2005–May 2008).
- The March 2005 deed was revoked and on April 11, 2007 a new Deed of Conditional Sale provided that ₱1,972,000 had been paid and ₱150,000 would be paid in forty monthly installments (July 2007–June 2010); a verbal “gentlemen’s agreement” purportedly provided for dividing the 60,000-sqm lot equally.
- Nestor later discovered that he had no TCT originals; he learned that the corporation had lost TCT No. T-225549 and that he had sold the entire tract to spouses Harris and Caroline Egina for ₱12,000,000, issuing eight derivative TCTs which were subsequently cancelled and original TCTs reinstated but held by the Tagum City Registry pending litigation.
- When Renato Padillo attempted to reach Nestor in late 2009, Nestor vanished and on February 5, 2010 he executed a notarized “Rescission of Deed of Conditional Sale” alleging default by petitioners.
- Petitioners Royal Plains View, Inc. and/or Renato Padillo faced suits by individual lot buyers and on October 12, 2011 filed in the RTC of Tagum City Civil Case No. 4263 a Complaint for Declaration of Nullity of the Rescission instrument, for Specific Performance and sums of money against Nestor and heirs of spouses Ramones; Nestor defaulted and the Ramones heirs were dropped; petitioners presented ex parte evidence.
Ruling of the Regional Trial Court
- On April 12, 2013, the RTC dismissed petitioners