G.R. No. 152526 - Spouses Jimenez vs. Jordana

Case Summary (G.R. No. 152526)

Transaction Chronology and Competing Interests Over the Property

The property then belonged to Madeliene S. Bunye, whose ownership was evidenced by TCT No. 17133. On December 27, 1993, Jordana wrote Bunye offering to purchase the property for P12,300,000.00, payable in cash on January 31, 1994, and requesting that Bunye accept the offer and that he remit P500,000.00 as earnest money within five days from receipt of her acceptance. On December 28, 1993, Bunye wrote Jordana accepting the offer and requesting him to remit the earnest money within five days from receipt of her letter. Jordana received this acceptance on December 29, 1993, and he had until January 3, 1994 to remit the earnest money.

Jordana remitted the P500,000.00, but Bunye refused to receive it. On January 3, 1994, Bunye wrote Jordana confirming her rejection of the earnest money and stating that she could no longer accept the P12,300,000.00 offer because the property was worth more. She apologized for any inconvenience and added that she was willing to sell the property for P16,000,000.00. The decision later described that, unbeknownst to Jordana, Bunye executed a Special Power of Attorney on December 29, 1993, authorizing Lourdes Cuerva to sell the property and execute the appropriate contract.

Cuerva, acting as attorney-in-fact, offered to sell the property to Spouses Ramon R. Jimenez Jr. and Annabelle L. Jimenez for P14,350,000.00, and the couple agreed. On August 5, 1994, Bunye, through Cuerva as Seller, and petitioners as Buyers, executed a Contract to Sell for P14,350,000.00, with P4,500,000.00 payable upon execution and the balance due on or before March 30, 1995. The contract contained an undertaking that upon completion of payment, the seller would execute a Deed of Absolute Sale in favor of the buyers free from liens and would surrender documents necessary to formalize title.

Petitioners paid the down payment of P4,500,000.00 on August 5, 1994, and Cuerva issued a receipt. To protect their alleged rights, petitioners executed an Affidavit of Adverse Claim, which was annotated on August 15, 1994, at the dorsal portion of TCT No. 171333. On March 1, 1995, petitioners informed Cuerva that they would pay the remaining purchase price earlier on March 3, 1995 at 8:00 a.m. On March 7, 1995, Cuerva wrote petitioners that she was no longer the attorney-in-fact because Bunye was in the United States, and she suggested that they communicate with her at her U.S. address.

On March 10, 1995, the Register of Deeds cancelled petitioners’ adverse claim. On March 14, 1995, petitioners wrote Bunye in the United States stating they had deposited the balance of the purchase price in her account at Asian Bank, Greenbelt Branch. They then requested Bunye to execute the necessary Deed of Absolute Sale and deliver the owner’s duplicate of the title under their names within five days from receipt. Meanwhile, Jordana instituted his own case.

Jordana’s Complaint, Lis Pendens, and Petitioners’ Intervention

More than a year after Bunye rejected Jordana’s earnest money, on March 15, 1995, Jordana filed a complaint for Specific Performance and Damages with the Regional Trial Court of Makati City docketed as Civil Case No. 95-443, naming Bunye as defendant. Jordana alleged, among others, that a perfected contract existed between him and Bunye and that Bunye, despite demand, refused to execute a Deed of Absolute Sale.

On the same day, Jordana filed a Notice of Lis Pendens for annotation on the dorsal portion of TCT No. 171333. The Register of Deeds refused to annotate it, stating that the action was personal and that no formal deed of sale had been executed between Jordana and Bunye over the property. On March 17, 1995, Jordana, through counsel, wrote Bunye in the United States informing her of the filing of the complaint. Petitioner-spouses, for their part, on March 19, 1995, wrote Bunye suggesting that she execute a special power of attorney authorizing Cuerva to execute the Deed of Absolute Sale even before her return. Bunye agreed and appointed an attorney-in-fact, Ernesto del Rosario.

On March 23, 1995, Bunye wrote petitioners indicating that she had received the notice of Jordana’s claim and that she would return to the Philippines upon receipt of the relevant power of attorney documents. On March 24, 1995, Jordana filed a Very Urgent Ex-Parte Motion praying for an immediate order directing the Register of Deeds to annotate the Lis Pendens. Summons and complaint were served on Bunye through her security guard on March 23, 1995 since Bunye was then in the United States.

On March 28, 1995, petitioners filed a Motion for Leave to Intervene in Civil Case No. 95-443. Jordana opposed the motion. Petitioners also opposed Jordana’s attempt to compel annotation of Lis Pendens. Later, on March 30, 1995, Jordana executed a Notice of Adverse Claim annotated on March 31, 1995 at the dorsal portion of TCT No. 171333. On April 5, 1995, TCT No. 171333 was cancelled on the basis of the absolute deed executed by Bunye pendente lite in favor of petitioners dated March 30, 1995, and the Register of Deeds issued TCT No. 200308 to petitioners. Jordana’s adverse claim was carried over as Entry No. 18053.

Mortgage and the Amended Pleadings Involving Petitioners and the Bank

On June 13, 1995, petitioners secured a loan from Urban Bank in the amount of P12,000,000.00 and executed a Real Estate Mortgage, which was annotated on June 14, 1995 on TCT No. 200308. On September 12, 1995, Jordana filed an Amended Complaint impleading petitioners as parties-defendants. Petitioners moved to dismiss on the grounds that the amended complaint did not state a cause of action against them and that the claim was barred by laches. Jordana opposed.

Before the trial court resolved that motion, Jordana sought leave to file a Supplement to Amended Complaint impleading Urban Bank. The trial court granted leave and admitted the supplement. The trial court eventually issued, on February 1, 2000, an order granting Urban Bank’s motion to dismiss and granting petitioners’ motion for reconsideration, holding that the Amended Complaint and Supplement to Amended Complaint did not state causes of action against the parties.

Appellate Ruling: Real Action for Recovery of Property and Knowledge Defeating Good Faith

The Court of Appeals disagreed. It held that the trial court erred in dismissing the supplement and that Jordana alleged a sufficient cause of action against petitioners. The appellate court characterized Jordana’s action as one involving recovery of real property, not a personal action. It further held that Jordana and Bunye entered into a Contract of Sale, not merely a Contract to Sell, and that the contract was perfected by their consent. As a result, Bunye allegedly relinquished ownership to Jordana.

On the supposed double sale, the Court of Appeals ruled that petitioners could not claim good faith because they had prior knowledge of Jordana’s claim. It noted that the absolute deed in favor of petitioners was executed during the pendency of Jordana’s complaint, and thus their knowledge and participation negated good faith. The Court of Appeals remanded the case to the trial court for further proceedings, while stressing that its resolution on the nature of the transaction was provisional and would be finally settled based on evidence.

Issues Raised by Petitioners and the Supreme Court’s Focus

Petitioners raised multiple issues: whether Jordana alleged a sufficient cause of action against them; whether Jordana and Bunye executed a contract of sale or a contract to sell; whether Jordana made a valid tender and consignation of payment; whether petitioners registered the title in good faith; and whether Jordana was guilty of laches. The Supreme Court treated these questions as pointing to one main issue: the nature and sufficiency of Jordana’s cause of action against petitioners.

Governing Doctrine on Cause of Action and Dismissal

The Court reiterated that cause of action is the act or omission by which a party violates a right of another. It identified elements as: (i) the plaintiff’s legal right; (ii) the defendant’s correlative obligation to respect that legal right; and (iii) the defendant’s act or omission violating it. The Court also emphasized that the nature and existence of a cause of action are determined by the material averments in the complaint and the relief sought, not by defenses in the answer or motion to dismiss. A motion to dismiss hypothetically admits the truth of material allegations and the inferences that fairly arise from them. If, admitting the allegations, the court can grant the relief prayed for, the complaint is sufficient.

The Court further stated that, generally, it looks only at material allegations. In some cases, it may consider annexes or documents attached, related pleadings, and admissions in the record. The Court added that the existence of a cause of action does not require proof of the allegations at the outset. Instead, the veracity of facts and the strength of defenses are issues for trial. It also invoked the rule that ambiguities may be clarified through recourse to annexes or related submissions.

Substantive Law on Contracts of Sale and Perfection

Under Article 1458 of the Civil Code, the Court identified the elements of a valid contract of sale as: (i) consent of the parties; (ii) a determinate subject matter; and (iii) a price certain in money or its equivalent. Since a contract of sale is consensual, it is perfected upon the meeting of minds regarding the object and the consideration. From perfection, each party may compel performance. The Court also cited Article 1475, which gives parties to a perfected contract of sale reciprocal rights to demand performance and to observe forms if warranted.

The Court addressed the case as a whole by using these principles to determine whether Jordana’s complaint, as against petitioners, alleged facts that—if hypothetically

Case Syllabus (G.R. No. 152526)

Parties and Procedural Posture

Ramon R. Jimenez Jr. and Annabelle L. Jimenez appeared as petitioners, assailing a Court of Appeals decision in CA-GR CV No. 66455.
Juan Jose Jordana appeared as respondent in a Rule 45 Petition for Review before the Supreme Court.
The Court of Appeals granted respondent’s appeal from the February 1, 2000 order of the trial court, which had dismissed respondent’s Supplement to Amended Complaint as to the petitioners.
The Court of Appeals set aside the trial court’s order and remanded the records for further proceedings.
The Supreme Court denied the petition and affirmed the Court of Appeals decision.

Property and Transaction Background

The subject matter was a residential parcel in Adelfa Street, Ayala Alabang Village, Alabang, Muntinlupa, Metro Manila, covered by TCT No. 17133.
Madeliene S. Bunye owned the property and, on December 27, 1993, offered negotiations to sell at P12,300,000.00 with terms requiring earnest money.
Bunye accepted respondent’s offer on December 28, 1993, and respondent thereafter remitted P500,000.00 as earnest money, but Bunye refused to receive it.
Bunye later communicated that she would no longer accept the original offer, and she offered a higher price of P16,000,000.00.
Bunye executed a Special Power of Attorney on December 29, 1993, authorizing Lourdes Cuerva to sell and execute the necessary contract.
Cuerva offered the property to spouses Jimenez for P14,350,000.00, and they agreed.
On August 5, 1994, Bunye (through Cuerva as attorney-in-fact) and the spouses Jimenez executed a Contract to Sell with a downpayment of P4,500,000.00, with the balance payable on or before March 30, 1995.
After paying the downpayment, the spouses Jimenez executed an Affidavit of Adverse Claim and had it annotated on August 15, 1994 at the dorsal portion of TCT No. 171333.

Respondent’s First Offer and Claim

Respondent offered to buy the property on December 27, 1993, requiring payment of earnest money within five days from acceptance.
Respondent alleged that an exchange of letters and their correspondence showed a definite offer and unqualified acceptance as to the object and consideration.
Respondent specifically averred that Bunye breached by refusing to complete the sale after respondent’s demand.
Respondent later asserted that, prior to the second sale, a perfected contract of sale had already existed and that Bunye was bound to execute a deed of sale.

Second Sale to Petitioners

The spouses Jimenez and Bunye’s attorney-in-fact executed the August 5, 1994 agreement and paid the downpayment.
The adverse claim annotated by the spouses Jimenez was later cancelled on March 10, 1995.
On March 30, 1995, Bunye executed a deed of absolute sale pendente lite in favor of the spouses Jimenez.
As a consequence, TCT No. 171333 was cancelled and TCT No. 200308 was issued to the spouses Jimenez on April 5, 1995.
Respondent’s adverse claim was carried over in the new title as an entry, reflecting continued assertion of respondent’s claim.

RTC Complaint and Attempts to Secure Lis Pendens

Respondent filed a complaint for Specific Performance and Damages against Bunye in the Regional Trial Court of Makati City, Civil Case No. 95-443, on March 15, 1995.
Respondent alleged in the complaint that he and Bunye had entered into a perfected contract and that Bunye refused to execute a deed of absolute sale despite his readiness and offer to comply.
Respondent filed a Notice of Lis Pendens on March 15, 1995, but the Register of Deeds refused annotation on the ground that the action was personal and no formal deed of sale had been executed.
Bunye stated that she would prepare for execution of the deed when she arrived from the United States.
Respondent filed a very urgent ex-parte motion for the annotation of lis pendens, and the trial court record showed competing positions on annotation.

Intervention and Amended Pleadings

The spouses Jimenez filed a Motion for Leave to Intervene on March 28, 1995 in Civil Case No. 95-443.
Respondent opposed the intervention, while petitioners contested the efforts to compel lis pendens annotation.
Respondent later filed an Amended Complaint on September 12, 1995, impleading the spouses Jimenez as parties-defendants.
The spouses Jimenez filed a Motion to Dismiss the amended complaint, asserting failure to state a cause of action and laches.
Respondent, after the motions, filed a Motion for Leave to File Supplement to Amended Complaint, impleading Urban Bank as an additional defendant.
The trial court admitted the Supplement to Amended Complaint on July 2, 1996, upon respondent’s request.
The trial court later issued an order on February 1, 2000, granting the motion to dismiss by Urban Bank and granting the spouses Jimenez’s motion for reconsideration, concluding that no causes of action were stated against them.

Court of Appeals Ruling

The Court of Appeals ruled that the trial court had erred in dismissing the Supplement to Amended Complaint as to the spouses Jimenez.
The appellate court held that respondent had alleged a sufficient cause of action against the petitioners.
The Court of Appeals characterized the action as real, not personal, and treated it as involving recovery of real property.
The Court of Appeals found that respondent and Bunye entered into a contract of sale, not merely a contract to sell, and that it had been perfected by mere consent.
The Court of Appeals held that Bunye, having perfected the sale, had effectively relinquished ownership such that a later conv