THIRD DIVISION

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
Florida 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.

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 the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the
following:

MELO, J.:p
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 Down payment

P1,190,000.00 Balance

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 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
thereof, 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. On March 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 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 to P1,190,000.00 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 attorney's 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 petitioner 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 such 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 court's
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 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 absolute sale.
Plainly, such variance in the contending parties' contentions 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 explicity 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 is 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 non-fulfillment 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 seller's 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 if 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 ownerseller's title per se, but the latter, of course, may be used 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 seller's title thereto. In fact, if there had been previous delivery
of the subject property, the seller's 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 seller's 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 buyer's
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 petitioner's 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 properly 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 changed 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 full ownership of the
subject house and lot to the buyer if the documents were then in order. It
just 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 one 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 Romeo 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 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 the 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 abovestated". 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.)

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.

(Ibid.)
not aware that they 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 only to the
suspensive condition that the sellers shall effect the issuance of new
certificate title from that of their father's 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 obligation 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

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 be 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 decedent's 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
breached 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 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 petitionersellers' act of unilaterally and extradicially rescinding the contract of sale,
there being no express stipulation authorizing the sellers to extarjudicially
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, Ramona's 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

Concepcion's 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. Ramona's 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 xxx 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 if be immovable property, the ownership shall
belong to the person acquiring it who in good faith first
recorded it in 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 first 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 buyer's 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 has 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).
Petitioner point out that the notice of lis pendens in the case at bar was
annoted 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 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 was a 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 that 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 pervious 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.

SECOND DIVISION
G.R. No. 157374

August 27, 2009

HEIRS OF CAYETANO PANGAN and CONSUELO

PANGAN,* Petitioners,
vs.
SPOUSES ROGELIO PERRERAS and PRISCILLA
PERRERAS, Respondents.
DECISION
BRION, J.:
1

The heirs of spouses Cayetano and Consuelo Pangan (petitioners-heirs)

seek the reversal of the Court of Appeals (CA) decision2 of June 26,
2002, as well its resolution of February 20, 2003, in CA-G.R. CV Case
No. 56590 through the present petition for review on certiorari.3 The CA
decision affirmed the Regional Trial Courts (RTC) ruling4 which granted
the complaint for specific performance filed by spouses Rogelio and
Priscilla Perreras (respondents) against the petitioners-heirs, and
dismissed the complaint for consignation instituted by Consuelo Pangan
(Consuelo) against the respondents.
THE FACTUAL ANTECEDENTS
The spouses Pangan were the owners of the lot and two-door apartment
(subject properties) located at 1142 Casaas St., Sampaloc, Manila.5 On
June 2, 1989, Consuelo agreed to sell to the respondents the subject
properties for the price of P540,000.00. On the same day, Consuelo
received P20,000.00 from the respondents as earnest money, evidenced
by a receipt (June 2, 1989 receipt)6 that also included the terms of the
parties agreement.
Three days later, or on June 5, 1989, the parties agreed to increase the
purchase price from P540,000.00 toP580,000.00.
In compliance with the agreement, the respondents issued two Far East
Bank and Trust Company checks payable to Consuelo in the amounts
of P200,000.00 and P250,000.00 on June 15, 1989. Consuelo, however,
refused to accept the checks. She justified her refusal by saying that her
children (the petitioners-heirs) co-owners of the subject properties did
not want to sell the subject properties. For the same reason, Consuelo

offered to return the P20,000.00 earnest money she received from the
respondents, but the latter rejected it. Thus, Consuelo filed a complaint
for consignation against the respondents on September 5, 1989,
docketed as Civil Case No. 89-50258, before the RTC of Manila, Branch
28.
The respondents, who insisted on enforcing the agreement, in turn
instituted an action for specific performance against Consuelo before the
same court on September 26, 1989. This case was docketed as Civil
Case No. 89-50259. They sought to compel Consuelo and the
petitioners-heirs (who were subsequently impleaded as co-defendants) to
execute a Deed of Absolute Sale over the subject properties.
In her Answer, Consuelo claimed that she was justified in backing out
from the agreement on the ground that the sale was subject to the
consent of the petitioners-heirs who became co-owners of the property
upon the death of her husband, Cayetano. Since the petitioners-heirs
disapproved of the sale, Consuelo claimed that the contract became
ineffective for lack of the requisite consent. She nevertheless expressed
her willingness to return theP20,000.00 earnest money she received from
the respondents.
The RTC ruled in the respondents favor; it upheld the existence of a
perfected contract of sale, at least insofar as the sale involved
Consuelos conjugal and hereditary shares in the subject properties. The
trial court found that Consuelos receipt of the P20,000.00 earnest money
was an "eloquent manifestation of the perfection of the contract."
Moreover, nothing in the June 2, 1989 receipt showed that the agreement
was conditioned on the consent of the petitioners-heirs. Even so, the
RTC declared that the sale is valid and can be enforced against
Consuelo; as a co-owner, she had full-ownership of the part pertaining to
her share which she can alienate, assign, or mortgage. The petitionersheirs, however, could not be compelled to transfer and deliver their
shares in the subject properties, as they were not parties to the
agreement between Consuelo and the respondents. Thus, the trial court
ordered Consuelo to convey one-half (representing Consuelos conjugal
share) plus one-sixth (representing Consuelos hereditary share) of the
subject properties, and to pay P10,000.00 as attorneys fees to the
respondents. Corollarily, it dismissed Consuelos consignation complaint.
Consuelo and the petitioners-heirs appealed the RTC decision to the CA
claiming that the trial court erred in not finding that the agreement was
subject to a suspensive condition the consent of the petitioners-heirs to
the agreement. The CA, however, resolved to dismiss the appeal and,

therefore, affirmed the RTC decision. As the RTC did, the CA found that
the payment and receipt of earnest money was the operative act that
gave rise to a perfected contract, and that there was nothing in the
parties agreement that would indicate that it was subject to a suspensive
condition. It declared:
Nowhere in the agreement of the parties, as contained in the June 2,
1989 receipt issued by [Consuelo] xxx, indicates that [Consuelo] reserved
titled on [sic] the property, nor does it contain any provision subjecting the
sale to a positive suspensive condition.
Unconvinced by the correctness of both the RTC and the CA rulings, the
petitioners-heirs filed the present appeal by certiorari alleging reversible
errors committed by the appellate court.
THE PETITION
The petitioners-heirs primarily contest the finding that there was a
perfected contract executed by the parties. They allege that other than
the finding that Consuelo received P20,000.00 from the respondents as
earnest money, no other evidence supported the conclusion that there
was a perfected contract between the parties; they insist that Consuelo
specifically informed the respondents that the sale still required the
petitioners-heirs consent as co-owners. The refusal of the petitionersheirs to sell the subject properties purportedly amounted to the absence
of the requisite element of consent.
Even assuming that the agreement amounted to a perfected contract, the
petitioners-heirs posed the question of the agreements proper
characterization whether it is a contract of sale or a contract to sell. The
petitioners-heirs posit that the agreement involves a contract to sell, and
the respondents belated payment of part of the purchase price, i.e., one
day after the June 14, 1989 due date, amounted to the non-fulfillment of
a positive suspensive condition that prevented the contract from
acquiring obligatory force. In support of this contention, the petitionersheirs cite the Courts ruling in the case of Adelfa Rivera, et al. v. Fidela
del Rosario, et al.: 7
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. 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.
[Rivera], however, failed to complete payment of the second installment.
The non-fulfillment of the condition rendered the contract to sell
ineffective and without force and effect. [Emphasis in the original.]
From these contentions, we simplify the basic issues for resolution to
three questions:
1. Was there a perfected contract between the parties?
2. What is the nature of the contract between them? and
3. What is the effect of the respondents belated payment on their
contract?
THE COURTS RULING
There was a perfected contract between the parties since all the
essential requisites of a contract were present
Article 1318 of the Civil Code declares that no contract exists unless the
following requisites concur: (1) consent of the contracting parties; (2)
object certain which is the subject matter of the contract; and (3) cause of
the obligation established. Since the object of the parties agreement
involves properties co-owned by Consuelo and her children, the
petitioners-heirs insist that their approval of the sale initiated by their
mother, Consuelo, was essential to its perfection. Accordingly, their
refusal amounted to the absence of the required element of consent.
That a thing is sold without the consent of all the co-owners does not
invalidate the sale or render it void. Article 493 of the Civil
Code8 recognizes the absolute right of a co-owner to freely dispose of
his pro indiviso share as well as the fruits and other benefits arising from
that share, independently of the other co-owners. Thus, when Consuelo
agreed to sell to the respondents the subject properties, what she in fact
sold was her undivided interest that, as quantified by the RTC, consisted
of one-half interest, representing her conjugal share, and one-sixth
interest, representing her hereditary share.

The petitioners-heirs nevertheless argue that Consuelos consent was

predicated on their consent to the sale, and that their disapproval
resulted in the withdrawal of Consuelos consent. Yet, we find nothing in
the parties agreement or even conduct save Consuelos self-serving
testimony that would indicate or from which we can infer that
Consuelos consent depended on her childrens approval of the sale. The
explicit terms of the June 8, 1989 receipt9 provide no occasion for any
reading that the agreement is subject to the petitioners-heirs favorable
consent to the sale.
The presence of Consuelos consent and, corollarily, the existence of a
perfected contract between the parties are further evidenced by the
payment and receipt of P20,000.00, an earnest money by the contracting
parties common usage. The law on sales, specifically Article 1482 of the
Civil Code, provides that whenever earnest money is given in a
contract of sale, it shall be considered as part of the price and proof
of the perfection of the contract. Although the presumption is not
conclusive, as the parties may treat the earnest money differently, there
is nothing alleged in the present case that would give rise to a contrary
presumption. In cases where the Court reached a conclusion contrary to
the presumption declared in Article 1482, we found that the money
initially paid was given to guarantee that the buyer would not back out
from the sale, considering thatthe parties to the sale have yet to arrive at
a definite agreement as to its terms that is, a situation where the
contract has not yet been perfected.10 These situations do not obtain in
the present case, as neither of the parties claimed that the P20,000.00
was given merely as guarantee by the respondents, as vendees, that
they would not back out from the sale. As we have pointed out, the terms
of the parties agreement are clear and explicit; indeed, all the essential
elements of a perfected contract are present in this case. While the
respondents required that the occupants vacate the subject properties
prior to the payment of the second installment, the stipulation does not
affect the perfection of the contract, but only its execution.
In sum, the case contains no element, factual or legal, that negates the
existence of a perfected contract between the parties.
The characterization of the contract can be considered irrelevant in
this case in light of Article 1592 and the Maceda Law, and the
petitioners-heirs payment
The petitioners-heirs posit that the proper characterization of the contract
entered into by the parties is significant in order to determine the effect of
the respondents breach of the contract (which purportedly consisted of a

one-day delay in the payment of part of the purchase price) and the
remedies to which they, as the non-defaulting party, are entitled.
The question of characterization of the contract involved here would
necessarily call for a thorough analysis of the parties agreement as
embodied in the June 2, 1989 receipt, their contemporaneous acts, and
the circumstances surrounding the contracts perfection and execution.
Unfortunately, the lower courts factual findings provide insufficient detail
for the purpose. A stipulation reserving ownership in the vendor until full
payment of the price is, under case law, typical in a contract to sell.11 In
this case, the vendor made no reservation on the ownership of the
subject properties. From this perspective, the parties agreement may be
considered a contract of sale. On the other hand, jurisprudence has
similarly established that the need to execute a deed of absolute sale
upon completion of payment of the price generally indicates that it is a
contract to sell, as it implies the reservation of title in the vendor until the
vendee has completed the payment of the price. When the respondents
instituted the action for specific performance before the RTC, they prayed
that Consuelo be ordered to execute a Deed of Absolute Sale; this act
may be taken to conclude that the parties only entered into a contract to
sell.
Admittedly, the given facts, as found by the lower courts, and in the
absence of additional details, can be interpreted to support two conflicting
conclusions. The failure of the lower courts to pry into these matters may
understandably be explained by the issues raised before them, which did
not require the additional details. Thus, they found the question of the
contracts characterization immaterial in their discussion of the facts and
the law of the case. Besides, the petitioners-heirs raised the question of
the contracts characterization and the effect of the breach for the first
time through the present Rule 45 petition.
Points of law, theories, issues and arguments not brought to the attention
of the lower court need not be, and ordinarily will not be, considered by
the reviewing court, as they cannot be raised for the first time at the
appellate review stage. Basic considerations of fairness and due process
require this rule.12
At any rate, we do not find the question of characterization significant to
fully pass upon the question of default due to the respondents breach;
ultimately, the breach was cured and the contract revived by the
respondents payment a day after the due date.
1avvphi1

In cases of breach due to nonpayment, the vendor may avail of the

remedy of rescission in a contract of sale. Nevertheless, the defaulting
vendee may defeat the vendors right to rescind the contract of sale if he
pays the amount due before he receives a demand for rescission, either
judicially or by a notarial act, from the vendor. This right is provided under
Article 1592 of the Civil Code:
Article 1592. 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.
[Emphasis supplied.]
Nonpayment of the purchase price in contracts to sell, however, does not
constitute a breach; rather, nonpayment is a condition that prevents the
obligation from acquiring obligatory force and results in its cancellation.
We stated in Ong v. CA13 that:
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 obligatory force. The non-fulfillment of the
condition of full payment rendered the contract to sell ineffective and
without force and effect. [Emphasis supplied.]
As in the rescission of a contract of sale for nonpayment of the price, the
defaulting vendee in a contract to sell may defeat the vendors right to
cancel by invoking the rights granted to him under Republic Act No. 6552
or the Realty Installment Buyer Protection Act (also known as the
Maceda Law); this law provides for a 60-day grace period within which
the defaulting vendee (who has paid less than two years of installments)
may still pay the installments due. Only after the lapse of the grace period
with continued nonpayment of the amounts due can the actual
cancellation of the contract take place. The pertinent provisions of the
Maceda Law provide:
xxxx
Section 2. It is hereby declared a public policy to protect buyers of real
estate on installment payments against onerous and oppressive
conditions.

Sec. 3. In all transactions or contracts involving the sale or financing of

real estate on installment payments, including residential condominium
apartments but excluding industrial lots, commercial buildings and sales
to tenants under Republic Act Numbered Thirty-eight hundred forty-four
as amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of
succeeding installments:
xxxx
Section 4. In case where less than two years of installments were paid,
the seller shall give the buyer a grace period of not less than 60 days
from the date the installment became due. If the buyer fails to pay the
installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from the receipt by the buyer of the
notice of cancellation or the demand for rescission of the contract by
notarial act. [Emphasis supplied.]
Significantly, the Court has consistently held that the Maceda Law covers
not only sales on installments of real estate, but also financing of such
acquisition; its Section 3 is comprehensive enough to include both
contracts of sale and contracts to sell, provided that the terms on
payment of the price require at least two installments. The contract
entered into by the parties herein can very well fall under the Maceda
Law.
Based on the above discussion, we conclude that the respondents
payment on June 15, 1989 of the installment due on June 14, 1989
effectively defeated the petitioners-heirs right to have the contract
rescinded or cancelled. Whether the parties agreement is characterized
as one of sale or to sell is not relevant in light of the respondents
payment within the grace period provided under Article 1592 of the Civil
Code and Section 4 of the Maceda Law. The petitioners-heirs obligation
to accept the payment of the price and to convey Consuelos conjugal
and hereditary shares in the subject properties subsists.
WHEREFORE, we DENY the petitioners-heirs petition for review on
certiorari, and AFFIRM the decision of the Court of Appeals dated June
24, 2002 and its resolution dated February 20, 2003 in CA-G.R. CV Case
No. 56590. Costs against the petitioners-heirs.
SO ORDERED.