Case Summary (G.R. No. 201883)
Factual Background
The respondents, Emmanuel and Tita Manzano, were the registered owners of a parcel of land measuring 35,281 square meters in Bagong Barrio, Caloocan City, covered by TCT No. 160752. On June 1, 2001, the Manzanos, through Franklin Estabillo, their attorney-in-fact, entered into an agreement with the petitioners for the sale of the property for Php900,000. The arrangement included a reservation fee of Php100,000, which the petitioners paid upon execution of the agreement, along with subsequent payments. However, the petitioners failed to complete the full payment by the March 2001 deadline, leading to complications regarding the ownership of the property.
Legal Proceedings Initiated by Petitioners
On May 23, 2002, the petitioners filed a complaint for specific performance and damages against the respondents, seeking to compel the Manzanos to complete the sale and to annul Carmelita Aquino's subsequent purchase of the property in May 2002. The petitioners claimed prior rights to the property based on their agreement with the Manzanos. In response, the respondents argued that no valid sale occurred, as the petitioners did not fulfill the payment terms, which designated the contract as a mere "contract to sell."
RTC Ruling
The Regional Trial Court (RTC) found in favor of the petitioners, holding that the agreement constituted a contract of sale, thereby invoking Article 1544 of the Civil Code. The RTC concluded that Aquino was a buyer in bad faith due to her knowledge of the petitioners' prior agreement and their registered adverse claim. As a result, the RTC ordered the Manzanos to execute a deed of sale and cancelled the title in favor of Aquino.
Court of Appeals Decision
Upon appeal, the Court of Appeals (CA) reversed the RTC's decision, ruling that the agreement between the Manzanos and the petitioners was merely a contract to sell, not a contract of sale. The CA highlighted that the transfer of title was contingent upon full payment, which the petitioners did not complete. Consequently, the CA found that Article 1544 of the Civil Code did not apply, as it addresses cases of double sales rather than contracts to sell where ownership has not yet transferred.
Arguments Presented by the Parties
The petitioners contended that the CA erred by not applying Article 1544 and argued that their annotation of an adverse claim was equivalent to the registration of ownership. The respondents, particularly Aquino, asserted that since the agreement was a contract to sell, the full payment was required before any ownership could transfer and that their purchase was valid.
Supreme Court Ruling
The Supreme Court upheld the CA's decision, concluding that the contract was a contract to sell, and thus, Article 1544 was inapplicable due to the absence of a valid sale or double sale scenario. The Court emphasized that the failure to pay the full purchase price rendered the petitioners' contract ineffective, and acknowledged that only one valid sale occurred – the one made to Aquino. The petitioners were ruled not to have a superior right to the property.
Legal Implications and Remedies
The decision underscored that specific performance is inappropriate in c
...continue readingCase Syllabus (G.R. No. 201883)
Background of the Case
- This case involves a Petition for Review on Certiorari filed by petitioners Desiderio and Teresa Domingo, challenging the decision of the Court of Appeals (CA) which reversed the earlier ruling of the Regional Trial Court (RTC) of Caloocan City.
- The CA's ruling, given on January 4, 2012, was contested by the petitioners, leading to this Supreme Court petition.
Factual Antecedents
- Respondents Emmanuel and Tita Manzano were the registered owners of a 35,281-square meter land parcel in Caloocan City, covered by Transfer Certificate of Title (TCT) No. 160752.
- On June 1, 2001, the Manzanos, through their attorney Franklin Estabillo, executed a notarized agreement with the petitioners, wherein Desiderio Domingo agreed to purchase the property for ₱900,000.00, providing an initial reservation fee of ₱100,000.00.
- Despite making multiple payments totaling ₱345,000.00, the petitioners failed to pay the remaining balance by the March 2001 deadline.
- Notably, the Manzanos remained in possession of the property throughout this period.
- In December 2001, after petitioners attempted to settle the remaining balance, Tita Manzano refused the payment, declaring the property was no longer for sale and forfeiting previous payments.
- Subsequently, Carmelita Aquino purchased the property on May 7, 2002, leading to petitioners filing an adverse claim on the new title issued to Aquino.
Ruling of the Regional Trial Court
- The RTC ruled that the petitioners had a prior right to the property based on their agreement with the Manzanos, classifying it as a contract