Dignos vs.

Court of Appeals, and Jabil

158 SCRA 378
February 1988
FACTS:
In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos (spouses Dignos)
sold their parcel of land in Opon, LapuLapu to herein private respondent Antonio Jabil for the sum of
P28,000 payable for two installments, with an assumption of indebtedness with the First Insular Bank of
Cebu in the sum of P12,000 and the next installment of P4,000 to be paid in September 1965. In
November 1965, the spouses Dignos sold the same parcel of land for P35,000 to defendants Luciano
Cabigas and Jovita L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in their
favor an Absolute Deed of Sale duly registered in the Office of the Register of Deeds.
Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of Cebu which
rendered its Decision in August 1975 declaring the 2nd sale to the spouses Cabigas null and void ab
initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also ordered Jabil to pay the remaining
P16,000 to the spouses Dignos and to reimburse the spouses Cabigas a reasonable amount
corresponding the expenses in the construction of hollow block fences in the said parcel of land. The
spouses Dignos were also ordered to return the P35,000 to the spouses Cabigas.
Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in July 1981 the
CFI of Cebus Decision except for the part of Jabil paying the expenses of the spouses Cabigas for
building a fence. The spouses Dignos contested that the contract between them and Jabil was merely a
contract to sell and not a deed of sale.
ISSUE:
Is the contract between the parties a contract of sale or a contract to sell?
COURT RULING:
The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all the elements of
a valid contract of sale are present in the document and that the spouses Dignos had no right to sell
the land in question because an actual delivery of its possession has already been made in favor of
Jabil as early as March 1965. It was also found that the spouses Dignos never notified Jabil by notarial
act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale.
There is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners that he
was already waiving his rights to the land in question.

G.R. No. 102909 September 6, 1993

SPOUSES VICENTE and LOURDES PINGOL, petitioners,
vs.
HON. COURT OF APPEALS and HEIRS OF FRANCISCO N. DONASCO, namely: MELINDA D.
PELAYO, MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D. PELAYO, YOLANDA D.
CACERES and MARY DONASCO, respondents.
Bernardo S. Chan for petitioners.
Orlando A. Galope for respondents.

DAVIDE, JR., J.:

An action denominated as one for specific performance and damages was brought by the private
respondents against the petitioners before the Regional Trial Court (RTC) of Caloocan City which,
after due trial, rendered a decision in favor of the petitioners. On appeal, the respondent Court
reversed the trial court's decision.
It is from this judgment that the petitioners have appealed to this Court by way of a petition for review
on certiorari.
The material facts of this case are simple and undisputed.
Petitioner Vicente Pingol is the owner of Lot No. 3223 of the Cadastral Survey of Caloocan, with an
area of 549 square meters, located at Bagong Barrio, Caloocan City and more particularly described
in Transfer Certificate of Title (TCT) No. 7435 of the Registry of Deeds of Caloocan City. On 17
February 1969, he executed a "DEED OF ABSOLUTE SALE OF ONE-HALF OF (1/2) [OF] AN
UNDIVIDED PORTION OF A PARCEL OF LAND" in favor of Francisco N. Donasco which was
acknowledged before a notary public. The parcel of land referred to herein is Lot No. 3223 and the
pertinent portions of the document read as follows:
That for and in consideration of the sum of TWENTY THOUSAND AND FIVE
HUNDRED THIRTY (P20,530.00) PESOS, Philippine Currency, the VENDOR hereby
these presents SELL, CONVEY AND CONVEY by way of Absolute Sale the one-half
(1/2) portion, equivalent to Two Hundred Seventy Four and point Fifty (274.50)
square meters, to VENDEE, the above-mentioned property, his heirs, assigns and
successors-in- interest;
That the VENDOR hereby confesses and acknowledges the receipt of TWO
THOUSAND (P2,000.00) PESOS from VENDEE as advanced (sic) and partial
payment to the above-cited consideration of the Sale herein mentioned, leaving
therefor a balance of Eighteen Thousand and Five Hundred Thirty (P18,530) Pesos
to be paid in several equal installments within a period of six (6) years, beginning
January, 1970;

That after computing the above-mentioned equal installments, the VENDEE agrees
and undertakes to pay unto the VENDOR a monthly amount equivalent to Two
Hundred Fifty Seven (sic) and Thirty Six Centavos (P257.36) within a period of
Seventy One (71) months and on the Seven Two [sic] (72) month, the amount of
(P257.44) as the last and final installment thereof;
That the VENDEE agrees that in case of default in the payment of the installment
due the same shall earn a legal rate of interest, and to which the VENDOR likewise
agrees;
That the VENDEE undertakes to pay unto the VENDOR the herein monthly
installment within the first five (5) days of each month and the same shall be made
available and to be paid at the residence of the VENDOR, payment to be made
either directly to the VENDOR, his wife or his authorized representative or factor;
That in case of partition of the above-described property between herein VENDOR
and VENDEE the same shall be divided into two (2) equal parts, the VENDOR gets
the corner facing J. De Jesus and Malolos Avenue and the VENDEE shall get the
portion with fifteen 15 meters frontage facing J. De Jesus Street only. 1
Pursuant to the contract, Donasco paid P2,000.00 to Pingol. The one-half portion, designated as Lot
No. 3223-A, was then segregated from the mother lot, and the parties prepared a subdivision plan
(Exhibit "C") which was approved by the Land Registration Commission. 2
Francisco immediately took possession of the subject lot and constructed a house thereon. In
January 1970, he started paying the monthly installments but was able to pay only up to 1972.
On 13 July 1984, Francisco Donasco died. At the time of his demise, he had paid P8,369.00, plus
the P2,000.00 advance payment, leaving a balance of P10,161.00 on the contract price. 3 Lot No.
3223-A remained in the possession of Donasco's heirs.
On 19 October 1988, the heirs of Francisco Donasco filed an action for "Specific Performance and
Damages, with Prayer for Writ of Preliminary Injunction" against the spouses Vicente and Lourdes
Pingol (petitioners herein) before the RTC of Caloocan City. The action was docketed as Civil Case
No. 13572 and raffled off to Branch 125 of the said court.
In their complaint, 4 the plaintiffs (private respondents herein) averred that after the death of their father,
they offered to pay the balance of P10,161.00 plus the stipulated legal rate of interest thereon to Vicente
Pingol but the latter rebuffed their offer and has "been demanding for a bigger and unreasonable amount,
in complete variance to what is lawfully due and payable." They stated that they had "exerted earnest
efforts to forge or reach an amicable and peaceful settlement with the defendants" for the payment of the
property in question but to no avail. They further alleged that the defendants were committing "acts of
forcible entry and encroachment" upon their land and asked that a writ of preliminary injunction be issued
to restrain the defendants from the acts complained of.
Plaintiffs then prayed that the defendants be ordered, inter alia:

a. . . . to accept the amount of P10,161.00, more or less, plus the stipulated legal rate
of interest due thereon, as full and complete payment of the balance for the agreed
price/consideration on the one- half (1/2) portion of the parcel of land . . .; [and]
b. . . . to execute the final deed of sale on the one-half (1/2) portion of the lot . . . in
accordance with the partition reflected in the survey and subdivision plan, . . . . 5
In their answer with counterclaim, 6 defendants admitted the execution of the aforementioned deed of
sale, the segregation of the portion sold and the preparation and approval of the subdivision plan, but set
up the following special and affirmative defenses: (1) plaintiffs' cause of action had already prescribed; (2)
the deed of sale embodied a conditional contract of sale "as the consideration is to be paid on installment
basis within a period of six years beginning January, 1970"; (3) the subdivision plan was prepared on the
assumption that Francisco Donasco would be able to comply with his obligation; (4) when Francisco died,
he had not fully paid the total consideration agreed upon; and (5) considering the breach by Francisco of
his contractual obligation way back in 1976, the sale was deemed to have been cancelled and the
continuous occupancy of Francisco after 1976 and by his heirs thereafter was by mere tolerance of
Vicente Pingol. They then asked that the plaintiffs be ordered to vacate the premises and to pay them
attorney's fees and a reasonable compensation for the use of the land.
In their Reply and Answer to Counterclaim, 7 the plaintiffs pointed out that there is no provision in the
deed of sale for its cancellation in case of default in the payment of the monthly installments and invoked
Article 1592 of the New Civil Code. They specifically denied the allegations in the counterclaim.
The issues having been joined, the case was then tried on the merits.
On 22 January 1990, the trial court rendered a decision 8 dismissing the complaint and ordering the
plaintiffs to pay the defendants P350.00 as reasonable monthly rental for the use of the premises from the
filing of the complaint, P10,000.00 by way of attorney's fees, and the costs of the suit. It held that: (1) the
deed of absolute sale in question, marked and offered in evidence as Exhibit "A," is a contract to sell, not
a contract of sale, since Vicente Pingol had no intention to part with the ownership of the loan unless the
full amount of the agreed price had been paid; (2) the contract was deemed to have been cancelled from
the moment the late father of the plaintiffs defaulted in the payment of the monthly installments; (3) title
and ownership over the lot did not pass to Francisco Donasco and his heirs since the contract to sell was
never consummated; and (5) assuming, arguendo, that the plaintiffs have a cause of action for specific
performance, such action had already prescribed since the complaint was filed only on 19 October 1988
or more than ten years from the time that they could have lawfully demanded performance. 9
Plaintiffs elevated the case to the Court of Appeals where the appeal was docketed as CA-G.R. CV
No. 25967. On 12 November 1991, the said court rendered a decision 10 reversing the appealed
decision and decreeing as follows:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE
and another one is rendered:
(1) Ordering appellee-vendor Vicente Pingol to accept the sum of P10,161.00, plus
the legal interest due thereon from the date of institution of this action on October 19,
1988;
(2) Upholding the validity of the "DEED OF ABSOLUTE SALE OF ONE- HALF (1/2)
(of) AN UNDIVIDED PORTION OF A PARCEL OF LAND" (Exh. A), and by virtue and

on the strength of which declaring the "Heirs of the Deceased Francisco N. Domingo"
as the owners of the 274.50 sq. m. land, denominated as Lot 3223-A, (LRC) Psd146255 under the technical description (exh. D) and reflected in the Plan of
Subdivision Survey which was approved By Commissioner of Land Registration on
August 13, 1971 (exh. C), representing one-half portion [of] lot 3223, situated at the
corner of Malolos Avenue and G. de Jesus St., Bagong Barrio, Caloocan City, and
covered by TCT No. 7435 of the Registry of Deeds of Caloocan City (exh. B); and
(3) Ordering the defendants-appellees to pay the costs.
SO ORDERED. 11
The Court of Appeals ruled that the deed of sale in question reveals the clear intention of Vicente
Pingol to part with the ownership of the one-half portion of the land by way of an absolute sale; that
the failure to fully pay the agreed price was not a ground for the cancellation of the sale; and that the
plaintiffs' action is imprescriptible since it is akin to an action to quiet title to property in one's
possession. 12
Dissatisfied with the decision of the Court of Appeals, the defendants, hereinafter referred to as the
petitioners, filed this petition for certiorari on 9 January 1992. Plaintiffs, hereinafter referred to as the
private respondents, filed their comment thereto on 10 September 1992 to which the petitioners filed
a reply 11 November 1992. We gave due course to the petition and required the parties to submit
their respective memoranda, 13 which they subsequently complied with.
Petitioners contend that the Court of Appeals erred:
I
IN HOLDING THAT THE DOCUMENT (EXHIBIT "A") DENOMINATED AS
"ABSOLUTE DEED OF SALE OF ONE-HALF () OF AN UNDIVIDED PORTION OF
A PARCEL OF LAND" IS AN ABSOLUTE DEED OF SALE SUFFICIENT TO
CONFER OWNERSHIP ON THE VENDEE AND HIS SUCCESSORS-IN-INTEREST,
DESPITE THE FACT THAT BY ITS TERMS AND CONDITIONS, LIKE THE PRICE
BEING PAYABLE ON INSTALLMENTS WITHIN A FIXED PERIOD, THE SAME IS A
CONDITIONAL DEED OF SALE.
II
IN HOLDING THAT NOTWITHSTANDING THE FACT THAT THE VENDEE FAILED
TO COMPLY WITH THE TERMS OF THE CONTRACT (EXHIBIT "A")
SPECIFICALLY TO COMPLETE THE PAYMENT OF THE CONSIDERATION ON
THE DATE STIPULATED IN THE CONTRACT WHICH WAS SUPPOSED TO BE
IN JANUARY 1976, COMPLETE PAYMENT THEREOF CAN STILL BE ENFORCED
IN AN ACTION INSTITUTED BY THE HEIRS OF THE VENDEE FILED
ON OCTOBER 19, 1988 OR A PERIOD OF MORE THAN TWELVE (12) YEARS
FROM THE TIME COMPLETE PAYMENT SHOULD HAVE BEEN MADE;
III

IN HOLDING THAT THE PRIVATE RESPONDENTS' ACTION IS ONE WHICH IS AN

OFFER TO COMPLETE THE PAYMENT LEFT UNPAID BY PRIVATE
RESPONDENTS' FATHER WHICH DOES NOT PRESCRIBE;
IV
IN HOLDING THAT PRIVATE RESPONDENTS' CAUSE OF ACTION HAS NOT
PRESCRIBE. 14
The decisive issue in this case is whether Exhibit "A" embodies a contract of sale or a contract to
sell. The distinction between the two is important for in a contract of sale, the title passes to the
vendee upon the delivery of the thing sold, whereas in a contract to sell, by agreement, ownership is
reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the
vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded,
whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such
payment being a positive suspensive condition, failure of which is not a breach but an event that
prevented the obligation of the vendor to convey title from becoming
effective. 15
A perusal of Exhibit "A" leads to no other conclusion than that it embodies a contract of sale. The
plain and clear tenor of the "DEED OF ABSOLUTE SALE OF ONE-HALF (1/2) [OF] AN UNDIVIDED
PORTION OF A PARCEL OF LAND" is that "the VENDOR hereby . . . SELL, CONVEY AND
CONVEY by way Absolute Sale the one-half (1/2) portion . . . to the VENDEE . . . his heirs, assigns
and successors-in-interest." That the vendor, petitioner Vicente Pingol, had that clear intention was
further evidenced by his failure to reserve his title thereto until the full payment of the price.
In Dignos vs. Court of Appeals, 16 we held that a deed of sale is absolute in nature although
denominated as a "Deed of Conditional Sale" where there is no stipulation in the deed that title to the
property sold is reserved in the seller until the full payment of the price, nor is there a stipulation giving the
vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.
Exhibit "A" contains neither stipulation. What is merely stated therein is that "the VENDEE agrees that in
case of default in the payment of the installments due the same shall earn a legal rate of interest, and to
which the VENDOR likewise agrees."
Furthermore, as found by the Court of Appeals, the acts of the parties, contemporaneous and
subsequent to the contract, clearly show that an absolute deed of sale was intended, by the parties
and not a contract to sell:
[P]ursuant to the deed, the vendor delivered actual and constructive possession of
the property to the vendee, who occupied and took such possession, constructed a
building thereon, had the property surveyed and subdivided and a plan of the
property was prepared and submitted to the Land Registration Commission
which approved it preparatory to segregating the same and obtaining the
corresponding TCT in his name. Since the sale, appellee continuously possessed
and occupied the property as owner up to his death on July 13, 1984 and his heirs,
after his death, continued the occupancy and possession of the property up to the
present. Those contemporaneous and subsequent events are demonstrative acts
that the vendor since the sale recognized the vendee as the absolute owner of the

property sold. All those attributes of ownership are admitted by defendants in their
answer, specifically in paragraphs 7 and 9 of their special and affirmative defenses. 17
The contract here being one of absolute sale, the ownership of the subject lot was transferred to the
buyer upon the actual and constructive delivery thereof. The constructive delivery of the subject lot
was made upon the execution of the deed of sale 18 while the actual delivery was effected when the
private respondents took possession of and constructed a house on Lot No. 3223-A.
The delivery of the object of the contract divested the vendor of the ownership over the same and he
cannot recover the title unless the contract is resolved or rescinded pursuant to Article 1592 of the
New Civil Code which provides that:
In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay, even after the expiration of the period, as long
as no demand for rescission of the contract has been made upon him either judicially
or by a notarial act. After the demand, the court may not grant him a new term.
Both the trial court and the Court of Appeals did not find that a notarial or judicial rescission of the
contract had been made. Although Vicente Pingol asserts that he had declared to Francisco
Donasco that he was cancelling the contract, he did not prove that his demand for rescission was
made either judicially or by a notarial act.
Petitioners fault the respondent Court for holding that the action of the petitioners is not barred by
the statute of limitations. They argue that the private respondents' action, being based upon a written
contract, has prescribed since it was brought only in 1988 or more than ten years from the time
when the latter could have lawfully demanded performance. 19
We disagree.
Although the private respondents' complaint before the trial court was denominated as one for
specific performance, it is in effect an action to quiet title. In this regard, the following excerpt
from Bucton vs. Gabar 20 isapropos:
The real and ultimate basis of petitioners' action is their ownership of one- half of the
lot coupled with their possession thereof, which entitles them to a conveyance of the
property. In Sapto, et al. v. Fabiana [103 Phil. 683, 686-87 (1958)], this Court,
speaking thru Mr. Justice J.B.L. Reyes, explained that under the circumstances no
enforcement of the contract is needed, since the delivery of possession of the land
sold had consummated the sale and transferred title to the purchaser, and that,
actually, the action for conveyance is one to quiet title, i.e., to remove the cloud upon
the appellee's ownership by the refusal of the appellants to recognize the sale made
by their predecessors.
That a cloud has been cast on the title of the private respondents is indubitable. Despite the fact that
the title had been transferred to them by the execution of the deed of sale and the delivery of the
object of the contract, the petitioners adamantly refused to accept the tender of payment by the
private respondents and steadfastly insisted that their obligation to transfer title had been rendered
ineffective.

A vendee in an oral contract to convey land who had made part payment thereof, entered upon the
land and had made valuable improvements thereon, is entitled to bring suit to clear his title against
the vendor who had refused to transfer the title to him. It is not necessary that the vendee has an
absolute title, an equitable title being sufficient to clothe him with personality to bring an action to
quiet title. 21
Prescription thus cannot be invoked against the private respondents for it is aphoristic that an action
to quiet title to property in one's possession is
imprescriptible. 22 The rationale for this rule has been aptly stated thus:
The owner of real property who is in possession thereof may wait until his
possession is invaded or his title is attacked before taking steps to vindicate his right.
A person claiming title to real property, but not in possession thereof, must act
affirmatively and within the time provided by the statute. Possession is a continuing
right as is the right to defend such possession. So it has been determined that an
owner of real property in possession has a continuing right to invoke a court of equity
to remove a cloud that is a continuing menace to his title. Such a menace is
compared to a continuing nuisance or trespass which is treated as successive
nuisances or trespasses, not barred by statute until continued without interruption for
a length of time sufficient to affect a change of title as a matter of law. 23
Private respondents shall, however, be liable to pay the legal rate of interest on the unpaid balance
of the purchase price from the date default or on 6 January 1976, when the entire balance should
have been paid, pursuant to the provision in the deed of sale.
WHEREFORE, except as above modified, the Decision appealed from is hereby AFFIRMED. As
modified, the interest on the unpaid balance of P10,161.00, at the legal rate, shall be computed from
6 January 1976. Upon the payment by the private respondents to the petitioners of the said amount
and the interest thereon, the latter are ordered to deliver Transfer Certificate of Title No. 7435 to the
Register of Deeds of Caloocan City who shall cancel the same and issue two new transfer
certificates of title in lieu thereof, one of which shall be in the name of the herein private respondents
covering Lot No. 3223-A and the other in the name of the petitioners covering the remainder of the
lot.
SO ORDERED.

[G.R. No. 103577. October 7, 1996]

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A.

CORONEL, ANNABELLE C. GONZALES (for herself and on
behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A.
CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS
MABANAG, petitioners, vs.
THE
COURT
OF
APPEALS,
CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ,
assisted by GLORIA F. NOEL as attorney-in-fact, respondents.
DECISION
MELO, J.:

The petition before us has its roots in a complaint for specific performance
to compel herein petitioners (except the last named, Catalina Balais
Mabanag) to consummate the sale of a parcel of land with its improvements
located along Roosevelt Avenue in Quezon City entered into by the parties
sometime in January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in
this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter
referred to as Coronels) executed a document entitled Receipt of Down Payment

(Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as

Ramona) which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 - Total amount
50,000.00 - Down payment
-----------------------------------------P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT
No. 119627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father,
Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the
down payment above-stated.
On our presentation of the TCT already in or name, We will immediately execute the
deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall
immediately pay the balance of theP1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon
execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property
registered in the name of their deceased father upon receipt of the Fifty Thousand
(P50,000.00) Pesos down payment;
3. Upon the transfer in their names of the subject property, the Coronels will execute
the deed of absolute sale in favor of Ramona and the latter will pay the former the
whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz

(hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of
Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2).
On February 6, 1985, the property originally registered in the name of the Coronels
father was transferred in their names under TCT No. 327043 (Exh. D; Exh 4)
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to
intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One
Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid
Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)
For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona
by depositing the down payment paid by Concepcion in the bank in trust for Ramona
Patricia Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific
performance against the Coronels and caused the annotation of a notice of lis
pendens at the back of TCT No. 327403 (Exh. E; Exh. 5).
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering
the same property with the Registry of Deeds of Quezon City (Exh. F; Exh. 6).
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject
property in favor of Catalina (Exh. G; Exh. 7).
On June 5, 1985, a new title over the subject property was issued in the name of
Catalina under TCT No. 351582 (Exh. H; Exh. 8).
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83,
RTC, Quezon City) the parties agreed to submit the case for decision solely
on the basis of documentary exhibits.Thus, plaintiffs therein (now private
respondents) proffered their documentary evidence accordingly marked as
Exhibits A through J, inclusive of their corresponding submarkings. Adopting
these same exhibits as their own, then defendants (now petitioners)
accordingly offered and marked them as Exhibits 1 through 10, likewise
inclusive of their corresponding submarkings.Upon motion of the parties, the
trial court gave them thirty (30) days within which to simultaneously submit

their respective memoranda, and an additional 15 days within which to submit

their corresponding comment or reply thereto, after which, the case would be
deemed submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge
Reynaldo Roura, who was then temporarily detailed to preside over Branch 82
of the RTC of Quezon City. OnMarch 1, 1989, judgment was handed down by
Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon
City branch, disposing as follows:
WHEREFORE, judgment for specific performance is hereby rendered ordering
defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel
of land embraced in and covered by Transfer Certificate of Title No. 327403 (now
TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the
improvements existing thereon free from all liens and encumbrances, and once
accomplished, to immediately deliver the said document of sale to plaintiffs and upon
receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the
purchase price amounting toP1,190,000.00 in cash. Transfer Certificate of Title No.
331582 of the Registry of Deeds for Quezon City in the name of intervenor is hereby
canceled and declared to be without force and effect. Defendants and intervenor and
all other persons claiming under them are hereby ordered to vacate the subject
property and deliver possession thereof to plaintiffs. Plaintiffs claim for damages and
attorneys fees, as well as the counterclaims of defendants and intervenors are hereby
dismissed.
No pronouncement as to costs.
So Ordered.
Macabebe, Pampanga for Quezon City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioners before the new
presiding judge of the Quezon City RTC but the same was denied by Judge
Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and to render
anew decision by the undersigned Presiding Judge should be denied for the following
reasons: (1) The instant case became submitted for decision as of April 14, 1988 when

the parties terminated the presentation of their respective documentary evidence and
when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they
were allowed to file memoranda at some future date did not change the fact that the
hearing of the case was terminated before Judge Roura and therefore the same should
be submitted to him for decision; (2) When the defendants and intervenor did not
object to the authority of Judge Reynaldo Roura to decide the case prior to the
rendition of the decision, when they met for the first time before the undersigned
Presiding Judge at the hearing of a pending incident in Civil Case No. Q-46145 on
November 11, 1988, they were deemed to have acquiesced thereto and they are now
estopped from questioning said authority of Judge Roura after they received the
decision in question which happens to be adverse to them; (3) While it is true that
Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he
was in all respects the Presiding Judge with full authority to act on any pending
incident submitted before this Court during his incumbency. When he returned to his
Official Station at Macabebe, Pampanga, he did not lose his authority to decide or
resolve cases submitted to him for decision or resolution because he continued as
Judge of the Regional Trial Court and is of co-equal rank with the undersigned
Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to
whom a case is submitted for decision has the authority to decide the case
notwithstanding his transfer to another branch or region of the same court (Sec. 9,
Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision dated March 1,
1989 rendered in the instant case, resolution of which now pertains to the undersigned
Presiding Judge, after a meticulous examination of the documentary evidence
presented by the parties, she is convinced that the Decision of March 1, 1989 is
supported by evidence and, therefore, should not be disturbed.
IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul
Decision and Render Anew Decision by the Incumbent Presiding Judge dated March
20, 1989 is hereby DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)

Petitioners thereupon interposed an appeal, but on December 16, 1991,

the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.)
rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last
pleading, private respondents Reply Memorandum, was filed on September
15, 1993. The case was, however, re-raffled to undersigned ponente only
on August 28, 1996, due to the voluntary inhibition of the Justice to whom the
case was last assigned.
While we deem it necessary to introduce certain refinements in the
disquisition of respondent court in the affirmance of the trial courts decision,
we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution of
the other issues in the case at bar is the precise determination of the legal
significance of the document entitled Receipt of Down Payment which was
offered in evidence by both parties. There is no dispute as to the fact that the
said document embodied the binding contract between Ramona Patricia
Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other,
pertaining to a particular house and lot covered by TCT No. 119627, as
defined in Article 1305 of the Civil Code of the Philippines which reads as
follows:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
While, it is the position of private respondents that the Receipt of Down
Payment embodied a perfected contract of sale, which perforce, they seek to
enforce by means of an action for specific performance, petitioners on their
part insist that what the document signified was a mere executory contract to
sell, subject to certain suspensive conditions, and because of the absence of
Ramona P. Alcaraz, who left for the United States of America, said contract
could not possibly ripen into a contract of absolute sale.
Plainly, such variance in the contending parties contention is brought
about by the way each interprets the terms and/or conditions set forth in said
private instrument. Withal, based on whatever relevant and admissible
evidence may be available on record, this Court, as were the courts below, is

now called upon to adjudge what the real intent of the parties was at the time
the said document was executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected
by mere consent. The essential elements of a contract of sale are the
following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a contract to
sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or
consent to transfer ownership of the property subject of the contract to sell
until the happening of an event, which for present purposes we shall take as
the full payment of the purchase price. What the seller agrees or obliges
himself to do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In other words the full
payment of the purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller without further remedies by the
prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had
occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a
contract to sell where the ownership or title is retained by the seller and is not to pass
until the full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force.

Stated positively, upon the fulfillment of the suspensive condition which is

the full payment of the purchase price, the prospective sellers obligation to sell
the subject property by entering into a contract of sale with the prospective
buyer becomes demandable as provided in Article 1479 of the Civil Code
which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor of the promise is supported by a consideration distinct
from the price.
A contract to sell may thus be defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself to sell
the said property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as
a conditional contract of sale where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is
present, although it is conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive condition is not fulfilled, the
perfection of the contract of sale is completely abated (cf. Homesite and
Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the
suspensive condition is fulfilled, the contract of sale is thereby perfected, such
that if there had already been previous delivery of the property subject of the
sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which
is the full payment of the purchase price, ownership will not automatically
transfer to the buyer although the property may have been previously
delivered to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.

It is essential to distinguish between a contract to sell and a conditional

contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in
the case at bench. In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfillment of the
suspensive condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but the
latter, of course, may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely affect
the sellers title thereto. In fact, if there had been previous delivery of the
subject property, the sellers ownership or title to the property is automatically
transferred to the buyer such that, the seller will no longer have any title to
transfer to any third person. Applying Article 1544 of the Civil Code, such
second buyer of the property who may have had actual or constructive
knowledge of such defect in the sellers title, or at least was charged with the
obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyers title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property subject
of the sale.
With the above postulates as guidelines, we now proceed to the task of
deciphering the real nature of the contract entered into by petitioners and
private respondents.
It is a canon in the interpretation of contracts that the words used therein
should be given their natural and ordinary meaning unless a technical
meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586
[1992]). Thus, when petitioners declared in the said Receipt of Down Payment
that they -Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by
TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.

without any reservation of title until full payment of the entire purchase price,
the natural and ordinary idea conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it
becomes more manifest that there was a clear intent on the part of petitioners
to transfer title to the buyer, but since the transfer certificate of title was still in
the name of petitioners father, they could not fully effect such transfer
although the buyer was then willing and able to immediately pay the purchase
price. Therefore, petitioners-sellers undertook upon receipt of the down
payment from private respondent Ramona P. Alcaraz, to cause the issuance
of a new certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter and to
execute the deed of absolute sale whereupon, the latter shall, in turn, pay the
entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers
herein made no express reservation of ownership or title to the subject parcel
of land. Furthermore, the circumstance which prevented the parties from
entering into an absolute contract of sale pertained to the sellers themselves
(the certificate of title was not in their names) and not the full payment of the
purchase price. Under the established facts and circumstances of the case,
the Court may safely presume that, had the certificate of title been in the
names of petitioners-sellers at that time, there would have been no reason
why an absolute contract of sale could not have been executed and
consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not
merely promise to sell the property to private respondent upon the fulfillment
of the suspensive condition. On the contrary, having already agreed to sell the
subject property, they undertook to have the certificate of title change to their
names and immediately thereafter, to execute the written deed of absolute
sale.
Thus, the parties did not merely enter into a contract to sell where the
sellers, after compliance by the buyer with certain terms and conditions,
promised to sell the property to the latter.What may be perceived from the
respective undertakings of the parties to the contract is that petitioners had
already agreed to sell the house and lot they inherited from their father,
completely willing to transfer ownership of the subject house and lot to the

buyer if the documents were then in order. It just so happened, however, that
the transfer certificate of title was then still in the name of their father. It was
more expedient to first effect the change in the certificate of title so as to bear
their names. That is why they undertook to cause the issuance of a new
transfer of the certificate of title in their names upon receipt of the down
payment in the amount of P50,000.00. As soon as the new certificate of title is
issued in their names, petitioners were committed to immediately execute the
deed of absolute sale. Only then will the obligation of the buyer to pay the
remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly
entered into so as to protect the seller against a buyer who intends to buy the
property in installment by withholding ownership over the property until the
buyer effects full payment therefor, in the contract entered into in the case at
bar, the sellers were the ones who were unable to enter into a contract of
absolute sale by reason of the fact that the certificate of title to the property
was still in the name of their father. It was the sellers in this case who, as it
were, had the impediment which prevented, so to speak, the execution of an
contract of absolute sale.
What is clearly established by the plain language of the subject document
is that when the said Receipt of Down Payment was prepared and signed by
petitioners Romulo A. Coronel,et. al., the parties had agreed to a conditional
contract of sale, consummation of which is subject only to the successful
transfer of the certificate of title from the name of petitioners father,
Constancio P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact,
fulfilled on February 6, 1985 (Exh. D; Exh. 4). Thus, on said date, the
conditional contract of sale between petitioners and private respondent
Ramona P. Alcaraz became obligatory, the only act required for the
consummation thereof being the delivery of the property by means of the
execution of the deed of absolute sale in a public instrument, which petitioners
unequivocally committed themselves to do as evidenced by the Receipt of
Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly
applies to the case at bench. Thus,

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the happening of
the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance of a
certificate of title in petitioners names was fulfilled on February 6, 1985, the
respective obligations of the parties under the contract of sale became
mutually demandable, that is, petitioners, as sellers, were obliged to present
the transfer certificate of title already in their names to private respondent
Ramona P. Alcaraz, the buyer, and to immediately execute the deed of
absolute sale, while the buyer on her part, was obliged to forthwith pay the
balance of the purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their
petition, petitioners conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names
from our deceased father Constancio P. Coronel, the transfer certificate of title
immediately upon receipt of the downpayment above-stated". The sale was still
subject to this suspensive condition. (Emphasis supplied.)

(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale
subject to a suspensive condition. Only, they contend, continuing in the same
paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first transferring the
title to the property under their names, there could be no perfected contract of
sale. (Emphasis supplied.)
(Ibid.)
not aware that they have set their own trap for themselves, for Article 1186 of
the Civil Code expressly provides that:

Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more
controlling than these mere hypothetical arguments is the fact that
the condition herein referred to was actually and indisputably fulfilled on
February 6, 1985, when a new title was issued in the names of petitioners as
evidenced by TCT No. 327403 (Exh. D; Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by the
document denominated as Receipt of Down Payment (Exh. A; Exh. 1), the
parties entered into a contract of sale subject to the suspensive condition that
the sellers shall effect the issuance of new certificate title from that of their
fathers name to their names and that, on February 6, 1985, this condition was
fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which pertinently
provides Art. 1187. The effects of conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation . . .
In obligations to do or not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.
the rights and obligations of the parties with respect to the perfected contract
of sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 1985. As of that point
in time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on January
19, 1985 because they were then not yet the absolute owners of the inherited
property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring
ownership as follows:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights
and obligations to the extent and value of the inheritance of a person are transmitted
through his death to another or others by his will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the
decedent Constancio P. Coronel are compulsory heirs who were called to
succession by operation of law.Thus, at the point their father drew his last
breath, petitioners stepped into his shoes insofar as the subject property is
concerned, such that any rights or obligations pertaining thereto became
binding and enforceable upon them. It is expressly provided that rights to the
succession are transmitted from the moment of death of the decedent (Article
777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners claim that succession may not be declared
unless the creditors have been paid is rendered moot by the fact that they
were able to effect the transfer of the title to the property from the decedents
name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack
of capacity to enter into an agreement at that time and they cannot be allowed
to now take a posture contrary to that which they took when they entered into
the agreement with private respondent Ramona P. Alcaraz. The Civil Code
expressly states that:
Art. 1431. Through estoppel an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person
relying thereon.
Having represented themselves as the true owners of the subject property at
the time of sale, petitioners cannot claim now that they were not yet the
absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected
contract of sale between them and Ramona P. Alcaraz, the latter breach her
reciprocal obligation when she rendered impossible the consummation thereof
by going to the United States of America, without leaving her address,
telephone number, and Special Power of Attorney (Paragraphs 14 and 15,
Answer with Compulsory Counterclaim to the Amended Complaint, p. 2;

Rollo, p. 43), for which reason, so petitioners conclude, they were correct in
unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the
contract of sale in the instant case. We note that these supposed grounds for
petitioners rescission, are mere allegations found only in their responsive
pleadings, which by express provision of the rules, are deemed controverted
even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
Court). The records are absolutely bereft of any supporting evidence to
substantiate petitioners allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong,
110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere
allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United States
of America on February 6, 1985, we cannot justify petitioners-sellers act of
unilaterally and extrajudicially rescinding the contract of sale, there being no
express stipulation authorizing the sellers to extrajudicially rescind the
contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda.
De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of
Ramona P. Alcaraz because although the evidence on record shows that the
sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been
dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and
in behalf of her daughter, if not also in her own behalf. Indeed, the down
payment was made by Concepcion D. Alcaraz with her own personal Check
(Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence
showing that petitioners ever questioned Concepcions authority to represent
Ramona P. Alcaraz when they accepted her personal check. Neither did they
raise any objection as regards payment being effected by a third
person. Accordingly, as far as petitioners are concerned, the physical absence
of Ramona P. Alcaraz is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default,
insofar as her obligation to pay the full purchase price is
concerned. Petitioners who are precluded from setting up the defense of the
physical absence of Ramona P. Alcaraz as above-explained offered no proof
whatsoever to show that they actually presented the new transfer certificate of

title in their names and signified their willingness and readiness to execute the
deed of absolute sale in accordance with their agreement. Ramonas
corresponding obligation to pay the balance of the purchase price in the
amount of P1,190,000.00 (as buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving
reciprocal obligations may be considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time
the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.
xxx
In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon
him. From the moment one of the parties fulfill his obligation, delay by the other
begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of sale
between petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B.
Mabanag, gave rise to a case of double sale where Article 1544 of the Civil
Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof to the person who presents
the oldest title, provided there is good faith.
The record of the case shows that the Deed of Absolute Sale dated April
25, 1985 as proof of the second contract of sale was registered with the

Registry of Deeds of Quezon City giving rise to the issuance of a new

certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus,
the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to
pass to the buyer, the exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b) should there be no
inscription by either of the two buyers, when the second buyer, in good faith,
acquires possession of the property ahead of the first buyer. Unless, the
second buyer satisfies these requirements, title or ownership will not transfer
to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the
subject, now a distinguished member of the Court, Justice Jose C. Vitug,
explains:
The governing principle is prius tempore, potior jure (first in time, stronger in
right). Knowledge by the first buyer of the second sale cannot defeat the first buyers
rights except when the second buyer first registers in good faith the second sale
(Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register, since knowledge
taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No.
58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129
SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act in good faith in registering his deed
of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R.
No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was
annotated on the title of the subject property only on February 22, 1985,
whereas, the second sale between petitioners Coronels and petitioner
Mabanag was supposedly perfected prior thereto or on February 18,
1985. The idea conveyed is that at the time petitioner Mabanag, the second
buyer, bought the property under a clean title, she was unaware of any
adverse claim or previous sale, for which reason she is a buyer in good faith.
We are not persuaded by such argument.

In a case of double sale, what finds relevance and materiality is not

whether or not the second buyer in good faith but whether or not said second
buyer registers such second sale in good faith, that is, without knowledge of
any defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag
could not have in good faith, registered the sale entered into on February 18,
1985 because as early as February 22, 1985, a notice of lis pendens had
been annotated on the transfer certificate of title in the names of petitioners,
whereas petitioner Mabanag registered the said sale sometime in April,
1985. At the time of registration, therefore, petitioner Mabanag knew that the
same property had already been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous buyer is claiming title
to the same property. Petitioner Mabanag cannot close her eyes to the defect
in petitioners title to the property at the time of the registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers the sale after he has acquired knowledge that
there was a previous sale of the same property to a third party or that another person
claims said property in a previous sale, the registration will constitute a registration in
bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349
[1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43
Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and
Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between
petitioners and Catalina B. Mabanag on February 18, 1985, was correctly
upheld by both the courts below.
Although there may be ample indications that there was in fact an agency
between Ramona as principal and Concepcion, her mother, as agent insofar
as the subject contract of sale is concerned, the issue of whether or not
Concepcion was also acting in her own behalf as a co-buyer is not squarely
raised in the instant petition, nor in such assumption disputed between mother
and daughter. Thus, We will not touch this issue and no longer disturb the
lower courts ruling on this point.

WHEREFORE, premises considered, the instant petition is hereby

DISMISSED and the appealed judgment AFFIRMED.
SO ORDERED.

[G.R. No. 97347. July 6, 1999]

JAIME G. ONG, petitioner, vs. THE HONORABLE COURT OF APPEALS,
SPOUSES MIGUEL K. ROBLES and ALEJANDRO M.
ROBLES, respondents.
DECISION
YNARES-SANTIAGO, J.:

Before us is a petition for review on certiorari from the judgment rendered by the Court of
Appeals which, except as to the award of exemplary damages, affirmed the decision of the
Regional Trial Court of Lucena City, Branch 60, setting aside the Agreement of Purchase and
Sale entered into by herein petitioner and private respondent spouses in Civil Case No. 85-85.
On May 10, 1983, petitioner Jaime Ong, on the one hand, and respondent spouses Miguel K.
Robles and Alejandra Robles, on the other hand, executed an Agreement of Purchase and Sale
respecting two parcels of land situated at Barrio Puri, San Antonio, Quezon. The terms and
conditions of the contract read:

1. That for and in consideration of the agreed purchase price of TWO MILLION
PESOS (P2,000,000.00), Philippine currency, the mode and manner of payment is as
follows:
A. The initial payment of SIX HUNDRED THOUSAND PESOS (P600,000.00) as
verbally agreed by the parties, shall be broken down as follows:
1. P103,499.91 shall be paid, and as already paid by the BUYER to the SELLERS on
March 22, 1983, as stipulated under the Certification of undertaking dated March 22,
1983 and covered by a check voucher of even date.
2. That the sum of P496,500.09 shall be paid directly by the BUYER to the Bank of
Philippine Islands to answer for the loan of the SELLERS which as of March 15,
1983 amounted to P537,310.10, and for the interest that may accrued (sic) from

March 15, 1983, up to the time said obligation of the SELLERS with the said bank
has been settled, provided however that the amount in excess of P496,500.09, shall be
chargeable from the time deposit of the SELLERS with the aforesaid bank.
B. That the balance of ONE MILLION FOUR HUNDRED THOUSAND
(P1,400,000.00) PESOS shall be paid by the BUYER to the SELLERS in four (4)
equal quarterly installments of THREE HUNDRED FIFTY THOUSAND PESOS
(P350,000.00), the first to be due and payable on June 15, 1983, and every quarter
thereafter, until the whole amount is fully paid, by these presents promise to sell to
said BUYER the two (2) parcels of agricultural land including the rice mill and the
piggery which are the most notable improvements thereon, situated at Barangay Puri,
San Antonio Quezon, x x x.
2. That upon the payment of the total purchase price by
the BUYER the SELLERS bind themselves to deliver to the former a good and
sufficient deed of sale and conveyance for the described two (2) parcels of land, free
and clear from all liens and encumbrances.
3. That immediately upon the execution of this document, the SELLERS shall deliver,
surrender and transfer possession of the said parcels of land including all the
improvements that may be found thereon, to the BUYER, and the latter shall take over
from the SELLER the possession, operation, control and management of the
RICEMILL and PIGGERY found on the aforesaid parcels of land.
4. That all payments due and payable under this contract shall be effected in the
residence of the SELLERS located at Barangay Puri, San Antonio, Quezon unless
another place shall have been subsequently designated by both parties in writing.
x x x x x x x x x.[1]
On May 15, 1983, petitioner Ong took possession of the subject parcels of land together
with the piggery, building, ricemill, residential house and other improvements thereon.
Pursuant to the contract they executed, petitioner paid respondent spouses the sum of
P103,499.91[2] by depositing it with the United Coconut Planters Bank. Subsequently, petitioner
deposited sums of money with the Bank of Philippine Islands (BPI),[3] in accordance with their
stipulation that petitioner pay the loan of respondents with BPI.
To answer for his balance of P1,400,000.00 petitioner issued four (4) post-dated Metro Bank
checks payable to respondent spouses in the amount of P350,0000.00 each, namely: Check No.
157708 dated June 15, 1983,[4] Check No. 157709 dated September 15,1983,[5] Check No. 157710

dated December 15, 1983[6] and Check No. 157711 dated March 15, 1984.[7] When presented for
payment, however, the checks were dishonored due to insufficient funds. Petitioner promised to
replace the checks but failed to do so. To make matters worse, out of the P496,500.00 loan of
respondent spouses with the Bank of the Philippine Islands, which petitioner, as per agreement,
should have paid, petitioner only managed to dole out no more than P393,679.60. When the bank
threatened to foreclose the respondent spouses mortgage, they sold three transformers of the rice
mill worth P51,411.00 to pay off their outstanding obligation with said bank, with the knowledge
and conformity of petitioner.[8] Petitioner, in return, voluntarily gave the spouses authority to
operate the rice mill.[9] He, however, continued to be in possession of the two parcels of land
while private respondents were forced to use the rice mill for residential purposes.
On August 2, 1985, respondent spouses, through counsel, sent petitioner a demand letter
asking for the return of the properties. Their demand was left unheeded, so, on September 2,
1985, they filed with the Regional Trial Court of Lucena City, Branch 60, a complaint for
rescission of contract and recovery of properties with damages. Later, while the case was still
pending with the trial court, petitioner introduced major improvements on the subject properties
by constructing a complete fence made of hollow blocks and expanding the piggery. These
prompted the respondent spouses to ask for a writ of preliminary injunction. [10] The trial court
granted the application and enjoined petitioner from introducing improvements on the properties
except for repairs.[11]
On June 1, 1989 the trial court rendered a decision, the dispositive portion of which reads as
follows:

IN VIEW OF THE FOREGOING, judgment is hereby rendered:

a) Ordering that the contract entered into by plaintiff spouses Miguel K. Robles and
Alejandra M. Robles and the defendant, Jaime Ong captioned Agreement of Purchase
and Sale, marked as Exhibit A set aside;
b) Ordering defendant, Jaime Ong to deliver the two (2) parcels of land which are the
subject matter of Exhibit A together with the improvements thereon to the spouses
Miguel K. Robles and Alejandro M. Robles;
c) Ordering plaintiff spouses, Miguel Robles and Alejandra Robles to return to Jaime
Ong the sum of P497,179.51;
d) Ordering defendant Jaime Ong to pay the plaintiffs the sum of P100,000.00 as
exemplary damages; and
e) Ordering defendant Jaime Ong to pay the plaintiffs spouses Miguel K. Robles and
Alejandra Robles the sum of P20,000.00 as attorneys fees and litigation expenses.

The motion of the plaintiff spouses Miguel K. Roles and Alejandra Robles for the
appointment of receivership is rendered moot and academic.
SO ORDERED.[12]
From this decision, petitioner appealed to the Court of Appeals, which affirmed the decision
of the Regional Trial Court but deleted the award of exemplary damages. In affirming the
decision of the trial court, the Court of Appeals noted that the failure of petitioner to completely
pay the purchase price is a substantial breach of his obligation which entitles the private
respondents to rescind their contract under Article 1191 of the New Civil Code. Hence, the
instant petition.
At the outset, it must be stated that the issues raised by the petitioner are generally factual in
nature and were already passed upon by the Court of Appeals and the trial court. Time and again,
we have stated that it is not the function of the Supreme Court to assess and evaluate all over
again the evidence, testimonial and documentary, adduced by the parties to an appeal,
particularly where, such as in the case at bench, the findings of both the trial court and the
appellate court on the matter coincide. There is no cogent reason shown that would justify the
court to discard the factual findings of the two courts below and to superimpose its own.[13]
The only pertinent legal issues raised which are worthy of discussion are: (1) whether the
contract entered into by the parties may be validly rescinded under Article 1191 of the New Civil
Code; and (2) whether the parties had novated their original contract as to the time and manner
of payment.
Petitioner contends that Article 1191 of the New Civil Code is not applicable since he has
already paid respondent spouses a considerable sum and has therefore substantially complied
with his obligation.He cites Article 1383 instead, to the effect that where specific performance is
available as a remedy, rescission may not be resorted to.
A discussion of the aforesaid articles is in order.
Rescission, as contemplated in Articles 1380, et seq., of the New Civil Code, is a remedy
granted by law to the contracting parties and even to third persons, to secure the reparation of
damages caused to them by a contract, even if this should be valid, by restoration of things to
their condition at the moment prior to the celebration of the contract. [14] It implies a contract,
which even if initially valid, produces a lesion or a pecuniary damage to someone.[15]
On the other hand, Article 1191 of the New Civil Code refers to rescission applicable to
reciprocal obligations. Reciprocal obligations are those which arise from the same cause, and in
which each party is a debtor and a creditor of the other, such that the obligation of one is
dependent upon the obligation of the other.[16] They are to be performed simultaneously such that
the performance of one is conditioned upon the simultaneous fulfillment of the other. Rescission

of reciprocal obligations under Article 1191 of the New Civil Code should be distinguished from
rescission of contracts under Article 1383.Although both presuppose contracts validly entered
into and subsisting and both require mutual restitution when proper, they are not entirely
identical.
While Article 1191 uses the term rescission, the original term which was used in the old
Civil Code, from which the article was based, was resolution. [17] Resolution is a principal action
which is based on breach of a party, while rescission under Article 1383 is a subsidiary action
limited to cases of rescission for lesion under Article 1381 of the New Civil Code, which
expressly enumerates the following rescissible contracts:
1. Those which are entered into by guardians whenever the wards whom they represent suffer
lesion by more than one fourth of the value of the things which are the object thereof;
2. Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the
preceding number;
3. Those undertaken in fraud of creditors when the latter cannot in any manner collect the
claims due them;
4. Those which refer to things under litigation if they have been entered into by the defendant
without the knowledge and approval of the litigants or of competent judicial authority;
5. All other contracts specially declared by law to be subject to rescission.

Obviously, the contract entered into by the parties in the case at bar does not fall under any
of those mentioned by Article 1381. Consequently, Article 1383 is inapplicable.
May the contract entered into between the parties, however, be rescinded based on Article
1191?
A careful reading of the parties Agreement of Purchase and Sale shows that it is in the nature
of a contract to sell, as distinguished from a contract of sale. In a contract of sale, the title to the
property passes to the vendee upon the delivery of the thing sold; while in a contract to sell,
ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price.[18] In a contract to sell, the payment of the purchase price is a
positive suspensive condition, the failure of which is not a breach, casual or serious, but a
situation that prevents the obligation of the vendor to convey title from acquiring an obligatory
force.[19]
Respondents in the case at bar bound themselves to deliver a deed of absolute sale and clean
title covering the two parcels of land upon full payment by the buyer of the purchase price of
P2,000,000.00.This promise to sell was subject to the fulfillment of the suspensive condition of
full payment of the purchase price by the petitioner. Petitioner, however, failed to complete

payment of the purchase price. The non-fulfillment of the condition of full payment rendered the
contract to sell ineffective and without force and effect. It must be stressed that the breach
contemplated in Article 1191 of the New Civil Code is the obligors failure to comply with an
obligation already extant, not a failure of a condition to render binding that obligation. [20] Failure
to pay, in this instance, is not even a breach but merely an event which prevents the vendors
obligation to convey title from acquiring binding force.[21] Hence, the agreement of the parties in
the case at bench may be set aside, but not because of a breach on the part of petitioner for
failure to complete payment of the purchase price. Rather, his failure to do so brought about a
situation which prevented the obligation of respondent spouses to convey title from acquiring an
obligatory force.
Petitioner insists, however, that the contract was novated as to the manner and time of
payment.
We are not persuaded. Article 1292 of the New Civil Code states that, In order that an
obligation may be extinguished by another which substitutes the same, it is imperative that it be
so declared in unequivocal terms, or that the old and the new obligations be on every point
incompatible with each other.
Novation is never presumed, it must be proven as a fact either by express stipulation of the
parties or by implication derived from an irreconcilable incompatibility between the old and the
new obligation.[22] Petitioner cites the following instances as proof that the contract was novated:
the retrieval of the transformers from petitioners custody and their sale by the respondents to
MERALCO on the condition that the proceeds thereof be accounted for by the respondents and
deducted from the price of the contract; the take-over by the respondents of the custody and
operation of the rice mill; and the continuous and regular withdrawals by respondent Miguel
Robles of installment sums per vouchers (Exhs. 8 to 47) on the condition that these installments
be credited to petitioners account and deducted from the balance of the purchase price.
Contrary to petitioners claim, records show that the parties never even intended to novate
their previous agreement. It is true that petitioner paid respondents small sums of money
amounting to P48,680.00, in contravention of the manner of payment stipulated in their
contract. These installments were, however, objected to by respondent spouses, and petitioner
replied that these represented the interest of the principal amount which he owed them.
[23]
Records further show that petitioner agreed to the sale of MERALCO transformers by private
respondents to pay for the balance of their subsisting loan with the Bank of Philippine
Islands. Petitioners letter of authorization reads:

xxxxxxxxx
Under this authority, it is mutually understood that whatever payment received from
MERALCO as payment to the transformers will be considered as partial payment of
the undersigneds obligation to Mr. and Mrs. Miguel K. Robles.

The same will be utilized as partial payment to existing loan with the Bank of
Philippine Islands.
It is also mutually understood that this payment to the Bank of Philippine Islands will be
reimbursed to Mr. and Mrs. Miguel K. Robles by the undersigned. [Underscoring supplied][24]
It should be noted that while it was agreed that part of the purchase price in the sum of
P496,500.00 would be directly deposited by petitioner to the Bank of Philippine Islands to
answer for the loan of respondent spouses, petitioner only managed to deposit
P393,679.60. When the bank threatened to foreclose the properties, petitioner apparently could
not even raise the sum needed to forestall any action on the part of the bank. Consequently, he
authorized respondent spouses to sell the three (3) transformers. However, although the parties
agreed to credit the proceeds from the sale of the transformers to petitioners obligation, he was
supposed to reimburse the same later to respondent spouses. This can only mean that there was
never an intention on the part of either of the parties to novate petitioners manner of payment.
Petitioner contends that the parties verbally agreed to novate the manner of payment when
respondent spouses proposed to operate the rice mill on the condition that they will account for
its earnings. We find that this is unsubstantiated by the evidence on record. The tenor of his letter
dated August 12, 1984 to respondent spouses, in fact, shows that petitioner had a little
misunderstanding with respondent spouses whom he was evidently trying to appease by
authorizing them to continue temporarily with the operation of the rice mill. Clearly, while
petitioner might have wanted to novate the original agreement as to his manner of payment, the
records are bereft of evidence that respondent spouses willingly agreed to modify their previous
arrangement.
In order for novation to take place, the concurrence of the following requisites is
indispensable: (1) there must be a previous valid obligation; (2) there must be an agreement of
the parties concerned to a new contract; (3) there must be the extinguishment of the old contract;
and (4) there must be the validity of the new contract. [25] The aforesaid requisites are not found in
the case at bench. The subsequent acts of the parties hardly demonstrate their intent to dissolve
the old obligation as a consideration for the emergence of the new one. We repeat to the point of
triteness, novation is never presumed, there must be an express intention to novate.
As regards the improvements introduced by petitioner to the premises and for which he
claims reimbursement, we see no reason to depart from the ruling of the trial court and the
appellate court that petitioner is a builder in bad faith. He introduced the improvements on the
premises knowing fully well that he has not paid the consideration of the contract in full and over
the vigorous objections of respondent spouses. Moreover, petitioner introduced major
improvements on the premises even while the case against him was pending before the trial
court.

The award of exemplary damages was correctly deleted by the Court of Appeals inasmuch
as no moral, temperate, liquidated or compensatory damages in addition to exemplary damages
were awarded.
WHEREFORE, the decision rendered by the Court of Appeals is hereby AFFIRMED with
the MODIFICATION that respondent spouses are ordered to return to petitioner the sum of
P48,680.00 in addition to the amounts already awarded. Costs against petitioner.
SO ORDERED.