THIRD DIVISION

G.R. No. 138018 - July 26, 2002

RIDO MONTECILLO, Petitioner, vs. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA

ABUCAY, Respondents.

CARPIO, J.:

The Case

On March 24, 1993, the Regional Trial Court of Cebu City, Branch 18, rendered a Decision1 declaring the deed
of sale of a parcel of land in favor of petitioner null and void ab initio. The Court of Appeals,2 in its July 16, 1998
Decision3 as well as its February 11, 1999 Order4 denying petitioner's Motion for Reconsideration, affirmed the
trial court's decision in toto. Before this Court now is a Petition for Review on Certiorari5 assailing the Court of
Appeals' decision and order.

The Facts

Respondents Ignacia Reynes ("Reynes" for brevity) and Spouses Abucay ("Abucay Spouses" for brevity) filed
on June 20, 1984 a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo
("Montecillo" for brevity). Reynes asserted that she is the owner of a lot situated in Mabolo, Cebu City, covered
by Transfer Certificate of Title No. 74196 and containing an area of 448 square meters ("Mabolo Lot" for
brevity). In 1981, Reynes sold 185 square meters of the Mabolo Lot to the Abucay Spouses who built a
residential house on the lot they bought.

Reynes alleged further that on March 1, 1984 she signed a Deed of Sale of the Mabolo Lot in favor of
Montecillo ("Montecillo's Deed of Sale" for brevity). Reynes, being illiterate,6 signed by affixing her thumb-
mark7 on the document. Montecillo promised to pay the agreed P47,000.00 purchase price within one month
from the signing of the Deed of Sale. Montecillo's Deed of Sale states as follows:

"That I, IGNACIA T. REYNES, of legal age, Filipino, widow, with residence and postal address at Mabolo,
Cebu City, Philippines, for and in consideration of FORTY SEVEN THOUSAND (P47,000.00) PESOS,
Philippine Currency, to me in hand paid by RIDO MONTECILLO, of legal age, Filipino, married, with
residence and postal address at Mabolo, Cebu City, Philippines, the receipt hereof is hereby
acknowledged, have sold, transferred, and conveyed, unto RIDO MONTECILLO, his heirs, executors,
administrators, and assigns, forever, a parcel of land together with the improvements thereon, situated at
Mabolo, Cebu City, Philippines, free from all liens and encumbrances, and more particularly described as
follows:

A parcel of land (Lot 203-B-2-B of the subdivision plan Psd-07-01-00 2370, being a portion of Lot 203-B-2,
described on plan (LRC) Psd-76821, L.R.C. (GLRO) Record No. 5988), situated in the Barrio of Mabolo, City of
Cebu. Bounded on the SE., along line 1-2 by Lot 206; on the SW., along line 2-3, by Lot 202, both of Banilad
Estate; on the NW., along line 4-5, by Lot 203-B-2-A of the subdivision of Four Hundred Forty Eight (448)
square meters, more or less.

of which I am the absolute owner in accordance with the provisions of the Land Registration Act, my title being
evidenced by Transfer Certificate of Title No. 74196 of the Registry of Deeds of the City of Cebu, Philippines.
That This Land Is Not Tenanted and Does Not Fall Under the Purview of P.D. 27."8 (Emphasis supplied)

Reynes further alleged that Montecillo failed to pay the purchase price after the lapse of the one-month period,
prompting Reynes to demand from Montecillo the return of the Deed of Sale. Since Montecillo refused to return
the Deed of Sale,9 Reynes executed a document unilaterally revoking the sale and gave a copy of the
document to Montecillo.

Subsequently, on May 23, 1984 Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire
Mabolo Lot, at the same time confirming the previous sale in 1981 of a 185-square meter portion of the lot.
This Deed of Sale states:
"I, IGNACIA T. REYNES, of legal age, Filipino, widow and resident of Mabolo, Cebu City, do hereby confirm
the sale of a portion of Lot No. 74196 to an extent of 185 square meters to Spouses Redemptor Abucay and
Elisa Abucay covered by Deed per Doc. No. 47, Page No. 9, Book No. V, Series of 1981 of notarial register of
Benedicto Alo, of which spouses is now in occupation;

That for and in consideration of the total sum of FIFTY THOUSAND (P50,000) PESOS, Philippine Currency,
received in full and receipt whereof is herein acknowledged from SPOUSES REDEMPTOR ABUCAY and
ELISA ABUCAY, do hereby in these presents, SELL, TRANSFER and CONVEY absolutely unto said Spouses
Redemptor Abucay and Elisa Abucay, their heirs, assigns and successors-in-interest the whole parcel of land
together with improvements thereon and more particularly described as follows:

TCT No. 74196

A parcel of land (Lot 203-B-2-B of the subdivision plan psd-07-01-002370, being a portion of Lot 203-B-2,
described on plan (LRC) Psd 76821, LRC (GLRO) Record No. 5988) situated in Mabolo, Cebu City, along
Arcilla Street, containing an area of total FOUR HUNDRED FORTY EIGHT (448) Square meters.

of which I am the absolute owner thereof free from all liens and encumbrances and warrant the same against
claim of third persons and other deeds affecting said parcel of land other than that to the said spouses and
inconsistent hereto is declared without any effect.

In witness whereof, I hereunto signed this 23rd day of May, 1984 in Cebu City, Philippines."10

Reynes and the Abucay Spouses alleged that on June 18, 1984 they received information that the Register of
Deeds of Cebu City issued Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot.

Reynes and the Abucay Spouses argued that "for lack of consideration there (was) no meeting of the
minds"11 between Reynes and Montecillo. Thus, the trial court should declare null and void ab
initio Montecillo's Deed of Sale, and order the cancellation of Certificate of Title No. 90805 in the name of
Montecillo.

In his Answer, Montecillo, a bank executive with a B.S. Commerce degree,12 claimed he was a buyer in good
faith and had actually paid the P47,000.00 consideration stated in his Deed of Sale. Montecillo, however,
admitted he still owed Reynes a balance of P10,000.00. He also alleged that he paid P50,000.00 for the
release of the chattel mortgage which he argued constituted a lien on the Mabolo Lot. He further alleged that
he paid for the real property tax as well as the capital gains tax on the sale of the Mabolo Lot.

In their Reply, Reynes and the Abucay Spouses contended that Montecillo did not have authority to discharge
the chattel mortgage, especially after Reynes revoked Montecillo's Deed of Sale and gave the mortgagee a
copy of the document of revocation. Reynes and the Abucay Spouses claimed that Montecillo secured the
release of the chattel mortgage through machination. They further asserted that Montecillo took advantage of
the real property taxes paid by the Abucay Spouses and surreptitiously caused the transfer of the title to the
Mabolo Lot in his name.

During pre-trial, Montecillo claimed that the consideration for the sale of the Mabolo Lot was the amount he
paid to Cebu Ice and Cold Storage Corporation ("Cebu Ice Storage" for brevity) for the mortgage debt of
Bienvenido Jayag ("Jayag" for brevity). Montecillo argued that the release of the mortgage was necessary
since the mortgage constituted a lien on the Mabolo Lot.

Reynes, however, stated that she had nothing to do with Jayag's mortgage debt except that the house
mortgaged by Jayag stood on a portion of the Mabolo Lot. Reynes further stated that the payment by
Montecillo to release the mortgage on Jayag's house is a matter between Montecillo and Jayag. The mortgage
on the house, being a chattel mortgage, could not be interpreted in any way as an encumbrance on the Mabolo
Lot. Reynes further claimed that the mortgage debt had long prescribed since the P47,000.00 mortgage debt
was due for payment on January 30, 1967.

The trial court rendered a decision on March 24, 1993 declaring the Deed of Sale to Montecillo null and void.
The trial court ordered the cancellation of Montecillo's Transfer Certificate of Title No. 90805 and the issuance
of a new certificate of title in favor of the Abucay Spouses. The trial court found that Montecillo's Deed of Sale
had no cause or consideration because Montecillo never paid Reynes the P47,000.00 purchase price, contrary
to what is stated in the Deed of Sale that Reynes received the purchase price. The trial court ruled that
Montecillo's Deed of Sale produced no effect whatsoever for want of consideration. The dispositive portion of
the trial court's decision reads as follows:

"WHEREFORE, in view of the foregoing consideration, judgment is hereby rendered declaring the deed of sale
in favor of defendant null and void and of no force and effect thereby ordering the cancellation of Transfer
Certificate of Title No. 90805 of the Register of Deeds of Cebu City and to declare plaintiff Spouses Redemptor
and Elisa Abucay as rightful vendees and Transfer Certificate of Title to the property subject matter of the suit
issued in their names. The defendants are further directed to pay moral damages in the sum of P20,000.00
and attorney's fees in the sum of P2,000.00 plus cost of the suit.

xxx"

Not satisfied with the trial court's Decision, Montecillo appealed the same to the Court of Appeals.

Ruling of the Court of Appeals

The appellate court affirmed the Decision of the trial court in toto and dismissed the appeal13 on the ground that
Montecillo's Deed of Sale is void for lack of consideration. The appellate court also denied Montecillo's Motion
for Reconsideration14 on the ground that it raised no new arguments.

Still dissatisfied, Montecillo filed the present petition for review on certiorari.

The Issues

Montecillo raises the following issues:

1. "Was there an agreement between Reynes and Montecillo that the stated consideration of P47,000.00 in the
Deed of Sale be paid to Cebu Ice and Cold Storage to secure the release of the Transfer Certificate of Title?"

2. "If there was none, is the Deed of Sale void from the beginning or simply rescissible?"15

The Ruling of the Court

The petition is devoid of merit.

First issue: manner of payment of the P47,000.00 purchase price.

Montecillo's Deed of Sale does not state that the P47,000.00 purchase price should be paid by Montecillo to
Cebu Ice Storage. Montecillo failed to adduce any evidence before the trial court showing that Reynes had
agreed, verbally or in writing, that the P47,000.00 purchase price should be paid to Cebu Ice Storage. Absent
any evidence showing that Reynes had agreed to the payment of the purchase price to any other party, the
payment to be effective must be made to Reynes, the vendor in the sale. Article 1240 of the Civil Code
provides as follows:

"Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it."

Thus, Montecillo's payment to Cebu Ice Storage is not the payment that would extinguish16 Montecillo's
obligation to Reynes under the Deed of Sale.

It militates against common sense for Reynes to sell her Mabolo Lot for P47,000.00 if this entire amount would
only go to Cebu Ice Storage, leaving not a single centavo to her for giving up ownership of a valuable property.
This incredible allegation of Montecillo becomes even more absurd when one considers that Reynes did not
benefit, directly or indirectly, from the payment of the P47,000.00 to Cebu Ice Storage.

The trial court found that Reynes had nothing to do with Jayag's mortgage debt with Cebu Ice Storage. The
trial court made the following findings of fact:

"x x x. Plaintiff Ignacia Reynes was not a party to nor privy of the obligation in favor of the Cebu Ice and Cold
Storage Corporation, the obligation being exclusively of Bienvenido Jayag and wife who mortgaged their
residential house constructed on the land subject matter of the complaint. The payment by the defendant to
release the residential house from the mortgage is a matter between him and Jayag and cannot by implication
or deception be made to appear as an encumbrance upon the land."17

Thus, Montecillo's payment to Jayag's creditor could not possibly redound to the benefit18 of Reynes. We find
no reason to disturb the factual findings of the trial court. In petitions for review on certiorari as a mode of
appeal under Rule 45, as in the instant case, a petitioner can raise only questions of law.19 This Court is not the
proper venue to consider a factual issue as it is not a trier of facts.

Second issue: whether the Deed of Sale is void ab initio or only rescissible.
Under Article 1318 of the Civil Code, "[T]here is no contract unless the following requisites concur: (1) Consent
of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the
obligation which is established." Article 1352 of the Civil Code also provides that "[C]ontracts without cause x x
x produce no effect whatsoever."

Montecillo argues that his Deed of Sale has all the requisites of a valid contract. Montecillo points out that he
agreed to purchase, and Reynes agreed to sell, the Mabolo Lot at the price of P47,000.00. Thus, the three
requisites for a valid contract concur: consent, object certain and consideration. Montecillo asserts there is no
lack of consideration that would prevent the existence of a valid contract. Rather, there is only non-payment of
the consideration within the period agreed upon for payment.

Montecillo argues there is only a breach of his obligation to pay the full purchase price on time. Such breach
merely gives Reynes a right to ask for specific performance, or for annulment of the obligation to sell the
Mabolo Lot. Montecillo maintains that in reciprocal obligations, the injured party can choose between fulfillment
and rescission,20 or more properly cancellation, of the obligation under Article 119121 of the Civil Code. This
Article also provides that the "court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of the period." Montecillo claims that because Reynes failed to make a demand for payment, and
instead unilaterally revoked Montecillo's Deed of Sale, the court has a just cause to fix the period for payment
of the balance of the purchase price.

These arguments are not persuasive.

Montecillo's Deed of Sale states that Montecillo paid, and Reynes received, the P47,000.00 purchase price on
March 1, 1984, the date of signing of the Deed of Sale. This is clear from the following provision of the Deed of
Sale:

"That I, IGNACIA T. REYNES, x x x for and in consideration of FORTY SEVEN THOUSAND (P47,000.00)
PESOS, Philippine Currency, to me in hand paid by RIDO MONTECILLO xxx, receipt of which is hereby
acknowledged, have sold, transferred, and conveyed, unto RIDO MONTECILLO, x x x a parcel of land x x x."

On its face, Montecillo's Deed of Absolute Sale22 appears supported by a valuable consideration. However,
based on the evidence presented by both Reynes and Montecillo, the trial court found that Montecillo never
paid to Reynes, and Reynes never received from Montecillo, the P47,000.00 purchase price. There was
indisputably a total absence of consideration contrary to what is stated in Montecillo's Deed of Sale. As pointed
out by the trial court -

"From the allegations in the pleadings of both parties and the oral and documentary evidence adduced during
the trial, the court is convinced that the Deed of Sale (Exhibits "1" and "1-A") executed by plaintiff Ignacia
Reynes acknowledged before Notary Public Ponciano Alvinio is devoid of any consideration. Plaintiff Ignacia
Reynes through the representation of Baudillo Baladjay had executed a Deed of Sale in favor of defendant on
the promise that the consideration should be paid within one (1) month from the execution of the Deed of Sale.
However, after the lapse of said period, defendant failed to pay even a single centavo of the consideration. The
answer of the defendant did not allege clearly why no consideration was paid by him except for the allegation
that he had a balance of only P10,000.00. It turned out during the pre-trial that what the defendant considered
as the consideration was the amount which he paid for the obligation of Bienvenido Jayag with the Cebu Ice
and Cold Storage Corporation over which plaintiff Ignacia Reynes did not have a part except that the subject of
the mortgage was constructed on the parcel of land in question. Plaintiff Ignacia Reynes was not a party to nor
privy of the obligation in favor of the Cebu Ice and Cold Storage Corporation, the obligation being exclusively of
Bienvenido Jayag and wife who mortgaged their residential house constructed on the land subject matter of
the complaint. The payment by the defendant to release the residential house from the mortgage is a matter
between him and Jayag and cannot by implication or deception be made to appear as an encumbrance upon
the land. "23

Factual findings of the trial court are binding on us, especially if the Court of Appeals affirms such
findings.24 We do not disturb such findings unless the evidence on record clearly does not support such
findings or such findings are based on a patent misunderstanding of facts,25 which is not the case here. Thus,
we find no reason to deviate from the findings of both the trial and appellate courts that no valid consideration
supported Montecillo's Deed of Sale.

This is not merely a case of failure to pay the purchase price, as Montecillo claims, which can only amount to a
breach of obligation with rescission as the proper remedy. What we have here is a purported contract that
lacks a cause - one of the three essential requisites of a valid contract. Failure to pay the consideration is
different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the
obligation under an existing valid contract26 while the latter prevents the existence of a valid contract
Where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed
of sale is null and void ab initio for lack of consideration. This has been the well-settled rule as early as Ocejo
Perez & Co. v. Flores,27 a 1920 case. As subsequently explained in Mapalo v. Mapalo28 -

"In our view, therefore, the ruling of this Court in Ocejo Perez & Co. vs. Flores, 40 Phil. 921, is squarely
applicable herein. In that case we ruled that a contract of purchase and sale is null and void and produces no
effect whatsoever where the same is without cause or consideration in that the purchase price which appears
thereon as paid has in fact never been paid by the purchaser to the vendor."

The Court reiterated this rule in Vda. De Catindig v. Heirs of Catalina Roque,29 to wit -

"The Appellate Court's finding that the price was not paid or that the statement in the supposed contracts of
sale (Exh. 6 to 26) as to the payment of the price was simulated fortifies the view that the alleged sales were
void. "If the price is simulated, the sale is void . . ." (Art. 1471, Civil Code)

A contract of sale is void and produces no effect whatsoever where the price, which appears thereon as paid,
has in fact never been paid by the purchaser to the vendor (Ocejo, Perez & Co. vs. Flores and Bas, 40 Phil.
921; Mapalo vs. Mapalo, L-21489, May 19, 1966, 64 O.G. 331, 17 SCRA 114, 122). Such a sale is non-
existent (Borromeo vs. Borromeo, 98 Phil. 432) or cannot be considered consummated (Cruzado vs. Bustos
and Escaler, 34 Phil. 17; Garanciang vs. Garanciang, L-22351, May 21, 1969, 28 SCRA 229)."

Applying this well-entrenched doctrine to the instant case, we rule that Montecillo's Deed of Sale is null and
void ab initio for lack of consideration.

Montecillo asserts that the only issue in controversy is "the mode and/or manner of payment and/or whether or
not payment has been made."30 Montecillo implies that the mode or manner of payment is separate from the
consideration and does not affect the validity of the contract. In the recent case of San Miguel Properties
Philippines, Inc. v. Huang,31 we ruled that -

"In Navarro v. Sugar Producers Cooperative Marketing Association, Inc. (1 SCRA 1181 [1961]), we laid down
the rule that the manner of payment of the purchase price is an essential element before a valid and
binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the
parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is
no sale. As held in Toyota Shaw, Inc. v. Court of Appeals (244 SCRA 320 [1995]), agreement on the manner of
payment goes into the price such that a disagreement on the manner of payment is tantamount to a
failure to agree on the price." (Emphasis supplied)

One of the three essential requisites of a valid contract is consent of the parties on the object and cause of the
contract. In a contract of sale, the parties must agree not only on the price, but also on the manner of payment
of the price. An agreement on the price but a disagreement on the manner of its payment will not result in
consent, thus preventing the existence of a valid contract for lack of consent. This lack of consent is separate
and distinct from lack of consideration where the contract states that the price has been paid when in fact it
has never been paid.

Reynes expected Montecillo to pay him directly the P47,000.00 purchase price within one month after the
signing of the Deed of Sale. On the other hand, Montecillo thought that his agreement with Reynes required
him to pay the P47,000.00 purchase price to Cebu Ice Storage to settle Jayag's mortgage debt. Montecillo also
acknowledged a balance of P10,000.00 in favor of Reynes although this amount is not stated in Montecillo's
Deed of Sale. Thus, there was no consent, or meeting of the minds, between Reynes and Montecillo on the
manner of payment. This prevented the existence of a valid contract because of lack of consent.

In summary, Montecillo's Deed of Sale is null and void ab initio not only for lack of consideration, but also for
lack of consent. The cancellation of TCT No. 90805 in the name of Montecillo is in order as there was no valid
contract transferring ownership of the Mabolo Lot from Reynes to Montecillo.

WHEREFORE, the petition is DENIED and the assailed Decision dated July 16, 1998 of the Court of Appeals
in CA-G.R. CV No. 41349 is AFFIRMED. Costs against petitioner.

SO ORDERED.

Puno, Panganiban, and Sandoval-Gutierrez, JJ., concur.

PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated May 12, 2010 and the
Resolution[3] dated September 15, 2010 of the Court of Appeals (CA) in CA G.R. CV No. 92113 which affirmed
the Decision[4] dated July 8, 2008 of the Regional Trial Court of Binangonan, Rizal, Branch 69 (RTC) that
dismissed Civil Case Nos. 03-022 and 05-003 for reconveyance, annulment of sale, deed of real estate
mortgage, foreclosure and certificate of sale, and damages.

The Facts

The property subject of this case is a parcel of land with an area of 20,862 square meters (sq. m.), located in
Sitio Tagpos, Barangay Tayuman, Binangonan, Rizal, known as Lot 18089.[5]

On July 21, 1977, petitioners-spouses Jose C. Roque and Beatriz dela Cruz Roque (Sps. Roque) and the
original owners of the then unregistered Lot 18089 namely, Velia R. Rivero (Rivero), Magdalena Aguilar,
Angela Gonzales,  Herminia R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R. Topacio, and Augusto
Rivero (Rivero, et al.) executed a Deed of Conditional Sale of Real Property[6] (1977 Deed of Conditional
Sale) over a 1,231-sq. m. portion of Lot 18089 (subject portion) for a consideration of P30,775.00. The parties
agreed that Sps. Roque shall make an initial payment of P15,387.50 upon signing, while the remaining balance
of the purchase price shall be payable upon the registration of Lot 18089, as well as the segregation and the
concomitant issuance of a separate title over the subject portion in their names. After the deed's execution,
Sps. Roque took possession and introduced improvements on the subject portion which they utilized as
a balut factory.[7]

On August 12, 1991, Fructuoso Sabug, Jr. (Sabug, Jr.), former Treasurer of the National Council of Churches
in the Philippines (NCCP), applied for a free patent over the entire Lot 18089 and was eventually issued
Original Certificate of Title (OCT) No. M-5955[8] in his name on October 21, 1991. On June 24, 1993, Sabug,
Jr. and Rivero, in her personal capacity and in representation of Rivero, et al., executed a Joint
Affidavit[9] (1993 Joint Affidavit), acknowledging that the subject portion belongs to Sps. Roque and
expressed their willingness to segregate the same from the entire area of Lot 18089.

On December 8, 1999, however, Sabug, Jr., through a Deed of Absolute Sale[10] (1999 Deed of Absolute

Sale), sold Lot 18089 to one Ma. Pamela P. Aguado (Aguado) for P2,500,000.00, who, in turn, caused the
cancellation of OCT No. M-5955 and the issuance of Transfer Certificate of Title (TCT) No. M-96692 dated
December 17, 1999[11] in her name.

Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank of the Philippines (Land Bank)
secured by a mortgage over Lot 18089.[12] When she failed to pay her loan obligation, Land Bank commenced
extra-judicial foreclosure proceedings and eventually tendered the highest bid in the auction sale.
Upon Aguado's failure to redeem the subject property, Land Bank consolidated its ownership, and TCT No. M-
115895[13] was issued in its name on July 21, 2003.[14]

On June 16, 2003, Sps. Roque filed a complaint[15] for reconveyance, annulment of sale, deed of real estate
mortgage, foreclosure, and certificate of sale, and damages before the RTC, docketed as Civil Case No. 03-
022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of Morong, Rizal, and Sheriff
Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been erroneously
included in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land Bank, both
covering Lot 18089 in its entirety.

In defense, NCCP and Sabug, Jr. denied any knowledge of the 1977 Deed of Conditional Sale through which
the subject portion had been purportedly conveyed to Sps. Roque.[16]

For her part, Aguado raised the defense of an innocent purchaser for value as she allegedly derived her title
(through the 1999 Deed of Absolute Sale) from Sabug, Jr., the registered owner in OCT No. M-5955, covering
Lot 18089, which certificate of title at the time of sale was free from any lien and/or encumbrances. She also
claimed that Sps. Roque's cause of action had already prescribed because their adverse claim was made only
on April 21, 2003, or four (4) years from the date OCT No. M-5955 was issued in Sabug, Jr.'s name on
December 17, 1999. [17]

On the other hand, Land Bank averred that it had no knowledge of Sps. Roque's claim relative to the subject
portion, considering that at the time the loan was taken out, Lot 18089 in its entirety was registered in Aguado's
name and no lien and/or encumbrance was annotated on her certificate of title.[18]

Meanwhile, on January 18, 2005, NCCP filed a separate complaint[19] also for declaration of nullity of
documents and certificates of title and damages, docketed as Civil Case No. 05-003. It claimed to be the real
owner of Lot 18089 which it supposedly acquired from Sabug, Jr. through an oral contract of sale[20] in the
early part of 1998, followed by the execution of a Deed of Absolute Sale on December 2, 1998 (1998 Deed of
Absolute Sale).[21]  NCCP also alleged that in October of the same year, it entered into a Joint Venture
Agreement (JVA) with Pilipinas Norin Construction Development Corporation (PNCDC), a company owned by
Aguado's parents, for the development of its real properties, including Lot 18089, into a subdivision project,
and as such, turned over its copy of OCT No. M-5955 to PNCDC. [22] Upon knowledge of the purported sale of
Lot 18089 to Aguado, Sabug, Jr. denied the transaction and alleged forgery. Claiming that the Aguados[23] and
PNCDC conspired to defraud NCCP, it prayed that PNCDC's corporate veil be pierced and that the Aguados
be ordered to pay the amount of P38,092,002.00 representing the unrealized profit from the JVA.[24] Moreover,
NCCP averred that Land Bank failed to exercise the diligence required to ascertain the true owners of Lot
18089. Hence, it further prayed that: (a) all acts of ownership and dominion over Lot 18089 that the bank might
have done or caused to be done be declared null and void; (b) it be declared the true and real owners of Lot
18089; and (c) the Register of Deeds of Morong, Rizal be ordered to cancel any and all certificates of title
covering the lot, and a new one be issued in its name.[25]

In its answer, Land Bank reiterated its stance that Lot 18089 was used as collateral for the P8,000,000.00 loan
obtained by the Countryside Rural Bank, Aguado, and one Bella Palasaga. There being no lien and/ or
encumbrance annotated on its certificate of title, i.e., TCT No. M-115895,  it cannot be held liable for NCCP's
claims. Thus, it prayed for the dismissal of NCCP's complaint.[26]

On September 7, 2005, Civil Case Nos. 02-022 and 05-003 were ordered consolidated.[27]
 The RTC Ruling

After due proceedings, the RTC rendered a Decision[28] dated July 8, 2008, dismissing the complaints of Sps.

Roque and NCCP.

With respect to Sps. Roque's complaint, the RTC found that the latter failed to establish their ownership over
the subject portion, considering the following: (a) the supposed owners-vendors, i.e., Rivero, et al., who
executed the 1977 Deed of Conditional Sale, had no proof of their title over Lot 18089; (b) the 1977 Deed of
Conditional Sale was not registered with the Office of the Register of Deeds;[29] (c) the 1977 Deed of
Conditional Sale is neither a deed of conveyance nor a transfer document, as it only gives the holder the right
to compel the supposed vendors to execute a deed of absolute sale upon full payment of the consideration; (d)
neither Sps. Roque nor the  alleged owners-vendors, i.e., Rivero, et al., have paid real property taxes in
relation to Lot 18089; and (e) Sps. Roque's occupation of the subject portion did not ripen into ownership that
can be considered superior to the ownership of Land Bank.[30] Moreover, the RTC ruled that Sps. Roque's
action for reconveyance had already prescribed, having been filed ten (10) years after the issuance of
OCT No. M-5955. [31]

On the other hand, regarding NCCP's complaint, the RTC observed that while it anchored its claim of
ownership over Lot 18089 on the 1998 Deed of Absolute Sale, the said deed was not annotated on OCT No.
M-5955. Neither was any certificate of title issued in its name nor did it take possession of Lot 18089 or paid
the real property taxes therefor. Hence, NCCP's claim cannot prevail against Land Bank's title, which was
adjudged by the RTC as an innocent purchaser for value. Also, the RTC disregarded NCCP's allegation that
the signature of Sabug, Jr. on the 1999 Deed of Absolute Sale in favor of Aguado was forged because his
signatures on both instruments bear semblances of similarity and appear genuine. Besides, the examiner from
the National Bureau of Investigation, who purportedly found that Sabug, Jr.'s signature thereon was spurious
leading to the dismissal of a criminal case against him, was not presented as a witness in the civil action.[32]

Finally, the RTC denied the parties' respective claims for damages.[33]

The CA Ruling

On appeal, the Court of Appeals (CA) affirmed the foregoing RTC findings in a Decision[34] dated May 12, 2010.
While Land Bank was not regarded as a mortgagee/purchaser in good faith with respect to the subject portion
considering Sps. Roque's possession thereof,[35] the CA did not order its reconveyance or segregation in the
latter's favor because of Sps. Roque's failure to pay the remaining balance of the purchase price. Hence, it
only directed Land Bank to respect Sps. Roque's possession with the option to appropriate the improvements
introduced thereon upon payment of compensation.[36]

As regards NCCP, the CA found that it failed to establish its right over Lot 18089 for the following reasons: (a)
the sale to it of the lot by Sabug, Jr. was never registered; and (b) there is no showing that it was in possession
of Lot 18089 or any portion thereof from 1998. Thus, as far as NCCP is concerned, Land Bank is a
mortgagee/purchaser in good faith.[37]

Aggrieved, both Sps. Roque[38] and NCCP[39] moved for reconsideration but were denied by the CA in a

Resolution[40] dated September 15, 2010, prompting them to seek further recourse before the Court.

The Issue Before the Court

The central issue in this case is whether or not the CA erred in not ordering the reconveyance of the subject
portion in Sps. Roque's favor.

Sps. Roque maintain that the CA erred in not declaring them as the lawful owners of the subject portion
despite having possessed the same since the execution of the 1977 Deed of Conditional Sale, sufficient for
acquisitive prescription to set in in their favor.[41] To bolster their claim, they also point to the 1993 Joint Affidavit
whereby Sabug, Jr. and Rivero acknowledged their ownership thereof.[42] Being the first purchasers and in
actual possession of the disputed portion, they assert that they have a better right over the 1,231- sq. m.
portion of Lot 18089 and, hence, cannot be ousted therefrom by Land Bank, which was adjudged as a
mortgagee/purchaser in bad faith, pursuant to Article 1544 of the Civil Code.[43]

In opposition, Land Bank espouses that the instant petition should be dismissed for raising questions of fact, in
violation of the proscription under Rule 45 of the Rules of Court which allows only pure questions of law to be
raised.[44] Moreover, it denied that ownership over the subject portion had been acquired by Sps. Roque who
admittedly failed to pay the remaining balance of the purchase price.[45] Besides, Land Bank points out that
Sps. Roque's action for reconveyance had already prescribed.[46]

Instead of traversing the arguments of Sps. Roque, NCCP, in its Comment[47] dated December 19, 2011,
advanced its own case, arguing that the CA erred in holding that it failed to establish its claimed ownership
over Lot 18089 in its entirety. Incidentally, NCCP's appeal from the CA Decision dated May 12, 2010 was
already denied by the Court,[48] and hence, will no longer be dealt with in this case.

The Court's Ruling

The petition lacks merit.

The essence of an action for reconveyance is to seek the transfer of the property which was wrongfully or
erroneously registered in another person's name to its rightful owner or to one with a better right.[49] Thus, it is
incumbent upon the aggrieved party to show that he has a legal claim on the property superior to that of
the registered owner and that the property has not yet passed to the hands of an innocent purchaser
for value.[50]

Sps. Roque claim that the subject portion covered by the 1977 Deed of Conditional Sale between them and
Rivero, et al. was wrongfully included in the certificates of title covering Lot 18089, and, hence, must be
segregated therefrom and their ownership thereof be confirmed. The salient portions of the said deed state:

DEED OF CONDITIONAL SALE OF REAL PROPERTY

KNOW ALL MEN BY THESE PRESENTS:

xxxx

That for and in consideration of the sum of THIRTY THOUSAND SEVEN HUNDRED SEVENTY FIVE PESOS
(P30,775.00), Philippine Currency, payable in the manner hereinbelow specified, the VENDORS do hereby
sell, transfer and convey unto the VENDEE, or their heirs, executors, administrators, or assignors, that
unsegregated portion of the above lot, x x x.

That the aforesaid amount shall be paid in two installments, the first installment which is in the amount of
__________ (P15,387.50) and the balance in the amount of __________ (P15,387.50), shall be paid as soon
as the described portion of the property shall have been registered under the Land Registration Act and a
Certificate of Title issued accordingly;

That as soon as the total amount of the property has been paid and the Certificate of Title has been
issued, an absolute deed of sale shall be executed accordingly;

x x x x[51]

Examining its provisions, the Court finds that the stipulation above-highlighted shows that the 1977 Deed of
Conditional Sale is actually in the nature of a contract to sell and not one of sale contrary to Sps. Roque's
belief.[52] In this relation, it has been consistently ruled that where the seller promises to execute a deed of
absolute sale upon the completion by the buyer of the payment of the purchase price, the contract is
only a contract to sell even if their agreement is denominated as a Deed of Conditional Sale,[53] as in this case.
This treatment stems from the legal characterization of a contract to sell, that is, 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 subject property exclusively to the prospective
buyer upon fulfillment of the condition agreed upon, such as, the full payment of the purchase price.
[54]
 Elsewise stated, in a contract to sell, ownership is retained by the vendor and is not to pass to the vendee
until full payment of the purchase price.[55] Explaining the subject matter further, the Court, in Ursal v. CA,
[56]
 held that:

[I]n contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the
suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the existence
of the contract of sale that the seller becomes obligated to transfer the ownership of the thing sold to the buyer.
Prior to the existence of the contract of sale, the seller is not obligated to transfer the ownership to the buyer,
even if there is a contract to sell between them.

Here, it is undisputed that Sps. Roque have not paid the final installment of the purchase price.[57] As such, the
condition which would have triggered the parties' obligation to enter into and thereby perfect a contract of sale
in order to effectively transfer the ownership of the subject portion from the sellers (i.e., Rivero et al.) to the
buyers  (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter cannot validly claim
ownership over the subject portion even if they had made an initial payment and even took possession of the
same.[58]

The Court further notes that Sps. Roque did not even take any active steps to protect their claim over the
disputed portion. This remains evident from the following circumstances appearing on record: (a) the 1977
Deed of Conditional Sale was never registered; (b) they did not seek the actual/physical segregation of the
disputed portion despite their knowledge of the fact that, as early as 1993, the entire Lot 18089 was registered
in Sabug, Jr.'s name under OCT No. M-5955; and (c) while they signified their willingness to pay the balance of
the purchase price,[59] Sps. Roque neither compelled Rivero et al., and/or Sabug, Jr. to accept the same nor did
they consign any amount to the court, the proper application of which would have effectively fulfilled their
obligation to pay the purchase price.[60] Instead, Sps. Roque waited 26 years, reckoned from the execution of
the 1977 Deed of Conditional Sale, to institute an action for reconveyance (in 2003), and only after Lot 18089
was sold to Land Bank in the foreclosure sale and title thereto was consolidated in its name. Thus, in view of
the foregoing, Sabug, Jr. as the registered owner of Lot 18089 borne by the grant of his free patent application
could validly convey said property in its entirety to Aguado who, in turn, mortgaged the same to Land Bank.
Besides, as aptly observed by the RTC, Sps. Roque failed to establish that the parties who sold the property to
them, i.e., Rivero, et al., were indeed its true and lawful owners.[61] In fine, Sps. Roque failed to establish any
superior right over the subject portion as against the registered owner of Lot 18089, i.e., Land Bank, thereby
warranting the dismissal of their reconveyance action, without prejudice to their right to seek damages against
the vendors, i.e., Rivero et al.[62] As applied in the case of Coronel v. CA: [63]

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 fulfilment 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-seller's title per se, but the latter, of
course, may be sued for damages by the intending buyer. (Emphasis supplied)

On the matter of double sales, suffice it to state that Sps. Roque's reliance [64] on Article 1544[65] of the Civil
Code has been misplaced since the contract they base their claim of ownership on is, as earlier stated, a
contract to sell, and not one of sale. In Cheng v. Genato, [66] the Court stated the circumstances which must
concur in order to determine the applicability of Article 1544, none of which are obtaining in this case, viz.:

(a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter, and must
be valid sales transactions;

(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent
conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought
from the same seller.

Finally, regarding Sps. Roque's claims of acquisitive prescription and reimbursement for the value of the
improvements they have introduced on the subject property,[67] it is keenly observed that none of the
arguments therefor were raised before the trial court or the CA.[68] Accordingly, the Court applies the well-
settled rule that litigants cannot raise an issue for the first time on appeal as this would contravene the basic
rules of fair play and justice. In any event, such claims appear to involve questions of fact which are generally
prohibited under a Rule 45 petition.[69]

With the conclusions herein reached, the Court need not belabor on the other points raised by the parties, and
ultimately finds it proper to proceed with the denial of the petition.

WHEREFORE, the petition is DENIED. The Decision dated May 12, 2010 and the Resolution dated September
15, 2010 of the Court of Appeals in CA G.R. CV No. 92113 are hereby AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Brion, Del Castillo, and Perez, JJ., concur.