DIGESTS FOR ART. 1458 1. CRUZ v. FERNANDO

December 9, 2005 SPS. LUIS V. CRUZ and G.R. NO. 145470 AIDA CRUZ, Petitioners, Present: PUNO, Chairman, AUSTRIA-MARTINEZ, - versus - CALLEJO, SR., TINGA, and CHICO-NAZARIO, JJ. SPS. ALEJANDRO FERNANDO, SR., and RITA FERNANDO, Promulgated: Respondents. AUSTRIA-MARTINEZ, J.: x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x FACTS:

Luis V. Cruz and Aida Cruz (petitioners) are occupants of the front portion of a 710-square meter

property located in Sto. Cristo, Baliuag, Bulacan. On October 21, 1994, spouses Alejandro Fernando, Sr.

and Rita Fernando (respondents) filed before the RTC a complaint for accion publiciana against

petitioners, demanding the latter to vacate the premises and to pay the amount of P500.00 a month as

reasonable rental for the use thereof.

CONTENTION OF THE RESPONDENTS

Spouses Fernando (Respondents) alleged in their complaint that: (1) they are owners of the

property, having bought the same from the spouses Clodualdo and Teresita Glorioso (Gloriosos) per Deed

of Sale dated March 9, 1987; (2) prior to their acquisition of the property, the Gloriosos offered to sell to

petitioners the rear portion of the property but the transaction did not materialize due to petitioners

failure to exercise their option; (3) the offer to sell is embodied in a Kasunduan dated August 6, 1983

executed before the Barangay Captain; (4) due to petitioners failure to buy the allotted portion,

respondents bought the whole property from the Gloriosos; and (5) despite repeated demands,

petitioners refused to vacate the property.

CONTENTION OF THE PETITIONERS:

Petitioners then filed their Answer setting forth the affirmative defenses that: (1)

the Kasunduan is a perfected contract of sale; (2) the agreement has already been partially consummated

as they already relocated their house from the rear portion of the lot to the front portion that was sold to

them; (3) Mrs. Glorioso prevented the complete consummation of the sale when she refused to have the

exact boundaries of the lot bought by petitioners surveyed, and the existing survey was made without

their knowledge and participation; and (4) respondents are buyers in bad faith having bought that portion

of the lot occupied by them (petitioners) with full knowledge of the prior sale to them by the Gloriosos.

RTC RULING and CA:

RTC ruled in favor of the Spouses Fernando. It thereafter ordered Spouses Cruz to vacate

placefully the premises in question and to remove their house therefore. It also ordered the Spouses Cruz

to pay Spouses Fernando the sum of P500.00 as reasonable rental per month beginning October 21, 1994

until they vacate the subject premises and to pay the costs of suit. Petitioners appealed the RTC decision

but it was affirmed by the CA.

The RTC dwelt on the issue of which portion was being sold by the Gloriosos to petitioners, finding

that it was the rear portion and not the front portion that was being sold; while the CA construed

the Kasunduan as a mere contract to sell and due to petitioners failure to pay the purchase price, the

Gloriosos were not obliged to deliver to them (petitioners) the portion being sold.

Petitioners, however, insist that the agreement was a perfected contract of sale, and their failure

to pay the purchase price is immaterial. They also contend that respondents have no cause of action

against them, as the obligation set in the Kasunduan did not set a period, consequently, there is no breach

of any obligation by petitioners. They appealed to the Supreme Court.

ISSUES:

1. Whether the Honorable Court of Appeals committed an error of law in holding

that the Agreement (Kasunduan) between the parties was a mere offer to sell, and not a perfected Contract of Purchase and Sale?

2. Whether the Honorable Court of Appeals committed an error of law in not

holding that where the parties clearly gave the petitioners a period of time within which

to pay the price, but did not fix said period, the remedy of the vendors is to ask the Court to fix the period for the payment of the price, and not an accion publiciana?

3. Whether the Honorable Court of Appeals committed an error of law in

affirming the decision of the trial court ordering the petitioners, who are possessors in good faith, to pay rentals for the portion of the lot possessed by them?

CONTRACT OF SALE v. CONTRACT TO SELL

a. Contract of Sale = the title to the property passes to the vendee upon the delivery of the thing sold.

The vendor loses ownership over the property and cannot recover it until and unless the contract is

resolved or rescinded.

b. 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.Title is retained by the vendor until full payment of the price. In

the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach

but an event that prevents the obligation of the vendor to convey title from becoming effective.

KASUNDUAN:

The Kasunduan provides for the following terms and conditions:

(a) that the Gloriosos agreed to sell to petitioners a portion of the property with an area of 213

meters at the price of P40.00 per square meter;

(b) that in the title that will be caused to be issued, the aggregate area is 223 square meters with

10 meters thereof serving as right of way;

(c) that the right of way shall have a width of 1.75 meters from Lopez Jaena road going towards

the back of the lot where petitioners will build their house on the portion of the lot that they will buy;

(d) that the expenses for the survey and for the issuance of the title will be divided between the

parties with each party giving an amount of no less thanP400.00; and

(e) that petitioners will definitely relocate their house to the portion they bought or will buy by

January 31, 1984.

HELD:

SC ruled in favor of the Spouses Fernando (respondents)

Under Article 1458 of the Civil Code, a contract of sale is a contract by which one of the contracting

parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to

pay therefor a price certain in money or its equivalent. Article 1475 of the Code further provides that the

contract of sale is perfected at the moment there is meeting of the minds upon the thing which is the

object of the contract and upon the price. From that moment the parties may reciprocally demand

performance subject to the provisions of the law governing the form of contracts.

1.Based on the Kasunduan, the foregoing terms and conditions show that it is a CONTRACT TO SELL and

not a contract of sale. Normally, in a contract to sell, the payment of the purchase price is the positive

suspensive condition upon which the transfer of ownership depends. The Kasunduan does not establish

any definite agreement between the parties concerning the terms of payment. What it merely provides

is the purchase price for the 213-square meter property at P40.00 per square meter.

The absence of a definite manner of payment of the purchase price in the agreement confirms

the conclusion that it is a contract to sell. This is because 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. vs. Court of Appeals, a definite agreement on the manner of payment of the price is

an essential element in the formation of a binding and enforceable contract of sale.

The Kasunduan only simply means that the Gloriosos only agreed to sell a portion of the property

and that the portion to be sold measures 213 square meters. It also indicates that a contract of sale is yet

to be consummated and ownership of the property remained in the Gloriosos. Otherwise, why would the

alternative term mabibili be used if indeed the property had already been sold to petitioners.In addition,

the absence of any formal deed of conveyance is a strong indication that the parties did not intend

immediate transfer of ownership.

In the present case, aside from the payment of the purchase price, there existed another

suspensive condition, i.e.: that petitioners will relocate their house to the portion they bought or will buy

by January 31, 1984. Petitioners failed to abide by the express condition that they should relocate to the

rear portion of the property being bought by January 31, 1984. Indeed, the Kasunduan discloses that it is

the rear portion that was being sold by the Gloriosos, and not the front portion as petitioners stubbornly

claim. This is evident from the provisions establishing a right of way from Lopez Jaena road going towards

the back of the lot, and requiring them to relocate their house to the portion being sold by January 31,

1984.

This condition is a suspensive condition noncompliance of which prevented the Gloriosos from

proceeding with the sale and ultimately transferring title to petitioners; and the Kasunduan from having

obligatory force. It is established by evidence that the petitioners did not transfer their house located in

the front portion of the subject property to the rear portion which, under the Kasunduan, they intended

to buy. Thus, no obligation arose on the part of the Gloriosos to consider the subject property as having

been sold to petitioners because the latters non-fulfillment of the suspensive condition rendered the

contract to sell ineffective and unperfected.

2.Petitioners further claim that respondents have no cause of action against them because their

obligation to pay the purchase price did not yet arise, as the agreement did not provide for a period within

which to pay the purchase price. They argue that respondents should have filed an action for specific

performance or judicial rescission before they can avail of accion publiciana. Moreover, it would be inutile

for respondents to first petition the court to fix a period for the performance of the contract. In the first

place, respondents are not parties to the Kasunduan between petitioners and the Gloriosos, and they

have no standing whatsoever to seek such recourse.

Hence, petitioners have no superior right of ownership or possession to speak of. Their occupation

of the property was merely through the tolerance of the owners.

3.There is also no merit to petitioners contention that respondents are buyers in bad faith. As explained

in Coronel vs. Court of Appeals:

In a contract to sell, there being no previous sale of the property, a third person

buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer.[21] (Emphasis supplied)

A person who occupies the land of another at the latter's forbearance or permission without any

contract between them is necessarily bound by an implied promise that he will vacate upon demand.

2. DANTIS v. MAGHINANG

G.R. No. 191696 April 10, 2013

ROGELIO DANTIS, Petitioner, vs. JULIO MAGHINANG, JR., Respondent.

FACTS:

Rogelio Dantis alleged that he was the registered owner of a parcel of land covered by Transfer Certificate of Title located in San Miguel, Bulacan. According to him, he acquired ownership of the property through a deed of extrajudicial partition of the estate of his deceased father, Emilio Dantis (Emilio), dated December 22, 1993. He had been paying the realty taxes on the said property but Julio, Jr. occupied and built a house on a portion of his property without any right at al. Rogelio alleged that demands were made upon Julio, Jr. to vacate the premises but the same fell on deaf ears and. Rogelio, thus, prayed that judgment be rendered declaring him to be the true and real owner of the said parcel of land covered.

In his Answer Julio, Jr. denied the material allegations of the complaint. By way of an affirmative defense, he claimed that he was the actual owner said parcel of land. According to him, he had been in open and continuous possession of the property for almost thirty (30) years; The land was sold by Rogelio’s father, Emilio, to his father, Julio Sr. In the affidavit, affiant Ignacio Dantis, alleged that Emilio Dantis agreed to sell 352 square meters of the lot to Julio Maghinang on installment. Defendant was then 11 years old in 1952. Julio Jr. admitted that the affidavit was not signed by the alleged vendor, Emilio Dantis, the father of Rogelio Dantis. The receipt he presented was admittedly a mere photocopy.

Julio Jr. presented an undated handwritten receipt of initial downpayment in the amount of ₱100.00 supposedly issued by Emilio to Julio, Sr. in connection with the sale of the subject lot. Rogelio, on the other hand, argues that even if Exhibit "4" would be considered as competent and admissible evidence, still, it would not be an adequate proof of the existence of the alleged oral contract of sale because it failed to provide a description of the subject lot, including its metes and bounds, as well as its full price or consideration.

RTC RULING:

The RTC ruled that even if these documents were adjudged as competent evidence, still, they would only serve as proofs that the purchase price for the subject lot had not yet been completely paid and, hence, Rogelio was not duty-bound to deliver the property to Julio, Jr. The RTC found Julio, Jr. to be a mere possessor by tolerance. It therefore declared that Rogelio Dantis, married to Victoria Payawal, is the true and lawful owner of the aforementioned real property; and ordered defendant Julio Maghinang, Jr. and all persons claiming under him to peacefully vacate the said real property and surrender the possession thereof to Rogelio or latter’s successors-in-interest.

Julio, Jr. appealed.

CA RULING:

CA ruled in favor of Julio Jr. It stated that the partial payment of the purchase price, coupled with the delivery of the res, gave efficacy to the oral sale and brought it outside the operation of the statute of frauds. Finally, the court declared that Julio, Jr. had an equitable claim over the subject lot which imposed on Rogelio.

Rogelio appealed.

ISSUES:

1.Whether there is a perfected contract of sale between Emilio and Julio, Sr. 2. Who is the rightful ownership of the subject lot.

HELD:

The petition is meritorious. The Supreme Court ruled in favor of Rogelio.

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. A contract of sale is a consensual contract and, thus, is perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Until the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties.

The essential elements of a contract of sale are: The absence of any of the essential elements shall negate the existence of a perfected contract of sale. 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.

Seemingly, Julio, Jr. wanted to prove the sale by a receipt when it should be the receipt that should further corroborate the existence of the sale. At best, his testimony only alleges but does not prove the existence of the verbal agreement. Julio, Jr. miserably failed to establish by preponderance of evidence that there was a meeting of the minds of the parties as to the subject matter and the purchase price.

Receipt:

Alamin ng sino mang Makababasa. Akong si Emilio Dantis may sapat na Gulang may asawa naninirahan sa Sta Rita San Miguel Bul. ay kusang nagsasasay ng sumosunod. Na ako Tumanggap Kay Julio Maghinang ng P100.00 peso cuartang Pilipino, bilang paunang bayad sa Lupa niyang nilote sa akin 400 apat na raan mahigit na metro cudrado.

Testigo Tumangap,

Emilio a Dantis

The above document would readily show that it does not specify a determinate subject matter. Nowhere does it provide a description of the property subject of the sale, including its metes and bounds, as well as its total area..

In Swedish Match, AB v. Court of Appeals,37 the Court ruled that the manner of payment of the purchase price was an essential element before a valid and binding contract of sale could exist. The Civil Code does not explicitly provide that the minds of the contracting parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise, there is no sale. An agreement anent the manner of payment goes into the price so much so that a disagreement on the manner of payment is tantamount to a failure to agree on the price

The fact, therefore, that the petitioners delivered to the respondent the sum ofP10,000.00 as part of the down-payment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties herein under Art. 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter - the terms of payment - still had to be mutually covenanted.

Also, there is, therefore, no basis for the application of the Statute of Frauds. The application of the Statute of Frauds presupposes the existence of a perfected contract. WHEREFORE, the petition is GRANTED.

3. ALFREDO v. BORRAS

G.R. No. 144225 June 17, 2003

SPOUSES GODOFREDO ALFREDO and CARMEN LIMON ALFREDO, SPOUSES ARNULFO SAVELLANO and EDITHA B. SAVELLANO, DANTON D. MATAWARAN, SPOUSES DELFIN F. ESPIRITU, JR. and ESTELA S. ESPIRITU and ELIZABETH TUAZON, Petitioners, vs. SPOUSES ARMANDO BORRAS and ADELIA LOBATON BORRAS, Respondents.

CARPIO, J.:

FACTS:

Spouses Alfredo are the registered owner of a parcel of land in Bataan. The subject land is covered by original certificate issued under Homestead Patent. Later on, Spouses Alfredo allegedly mortgaged the Subject Land for P7,000.00 with the DBP. To pay the debt to DBP, Spouses Alfredo then sold the Subject Land to Spouses Boras for P15, 000.00. The buyers paid the DBP loan, its accumulated interest, and paid the balance in cash to the sellers.

Spouses Boras gave the money to pay the DBP; after doing so, the subject land was released from mortgage and the owner’s duplicate copy was returned to Spouses Alfredo. Spouses Boras subsequently paid the balance of the purchase price of the Subject Land for which Carmen Alfredo issued a receipt dated 11 March 1970. Spouses Alfredo and Carmen then delivered to Adelia Boras the owner’s duplicate copy of OCT No. 284, with the document of cancellation of mortgage, official receipts of realty tax payments, and tax declaration in the name of Godofredo Alfredo. Spouses Alfredo introduced Spouses Boras, as the new owners of the Subject Land, to the Natanawans, the old tenants of the Subject Land. Spouses Boras then took possession of the Subject Land.

In January 1994, Spouses Boras learned that hired persons had entered the Subject Land and were cutting trees under instructions of allegedly new owners of the Subject Land. SUBSEQUENTLY, SPOUSES BORAS DISCOVERED THAT SPOUSES ALFREDO HAD RE-SOLD PORTIONS OF THE SUBJECT LAND TO NEW BUYERS. Spouses Boras learned that Spouses Alfredo secured an owner’s duplicate copy of land title and complained about it but Spouses Alfredo did not reply. Spouses Boras filed a complaint for specific performance against Spouses Alfredo and the subsequent buyers.

CONTENTION OF THE PETITIONERS:

Spouses Alfredo and the Subsequent Buyers argued that the action is unenforceable under the Statute of Frauds. Petitioners pointed out that there is no written instrument evidencing the alleged contract of sale over the Subject Land in favor of Spouses Boras.

RULING OF RTC:

RTC ruled in favor of the Spouses Boras. RTC ruled that there perfected contract of sale between the spouses Alfredo and spouses Boras. The trial court found that all the elements of a perfected contract of sale were present in this case: (1) Spouses Alfredo delivered to Armando and Adelia the Subject Land; (2) Spouses Boras treated as their own tenants the tenants of Spouses Alfredo; (3) Spouses Alfredo turned over to Spouses Boras documents such as the owner’s duplicate copy of the title of the Subject Land, tax declaration, and the receipts of realty tax payments in the name of Godofredo; and (4) the DBP cancelled the mortgage on the Subject Property upon payment of the loan of Godofredo and Carmen. Moreover, the receipt of payment issued by Carmen Alfredo

served as an acknowledgment, if not a ratification, of the verbal sale between the sellers and the buyers. The trial court ruled that the Statute of Frauds is not applicable because in this case the sale was perfected.

RULING OF CA:

Court of Appeals also concluded that there was a perfected contract of sale and the Subsequent Buyers were not innocent purchasers. The Court of Appeals ruled that the handwritten receipt dated 11 March 1970 is sufficient proof that Spouses Alfredo sold the Subject Land to Spouses Boras even if the agreement of sale was not don in writing

Also, the Subsequent Buyers of the Subject Land cannot claim that they are buyers in good faith because they had constructive notice of the adverse claim of Spouses Boras. Calonso, the broker of the subsequent sale knew that when she registered the subsequent deeds of sale, the adverse claim of Spouses Boras was already annotated on the title of the Subject Land.

Spouses Alfredo and the subsequent buyers petitioned.

Issues:

Whether the alleged sale of the Subject Land in favor of Armando and Adelia is valid and enforceable even if (1) it was orally entered into and not in writing; (2) Carmen Alfredo did not obtain the consent and authority of her husband, Godofredo, who was the sole owner of the Subject Land in whose name the title thereto (OCT No. 284) was issued.

(3) Whether the subsequent buyers are purchasers in good faith.

Held:

The petition is without merit. Supreme Court ruled in favor of the Spouses Boras.

1. Validity and Enforceability of the Sale

The contract of sale between the spouses Alfredo and the spouses Boras was a perfected contract. A contract is perfected once there is consent of the contracting parties on the object certain and on the cause of the obligation. In the instant case, the object of the sale is the Subject Land, and the price certain is P15,000.00. There was a meeting of the minds on the sale of the Subject Land and on the purchase price of P15,000.00.

The contract of sale of the Subject Land has also been consummated because the sellers and buyers have performed their respective obligations under the contract. In a contract of sale, the seller obligates himself to transfer the ownership of the determinate thing sold, and to deliver the same, to the buyer who obligates himself to pay a price certain to the seller (Art. 1458). In the instant case, Spouses Alfredo delivered the Subject Land to Spouses Boras, placing the latter in actual physical possession of the Subject Land. This physical delivery of the Subject Land also constituted a transfer of ownership of the Subject Land to Spouses Boras. Ownership of the thing sold is transferred to the vendee upon its actual or constructive delivery. Spouses Alfredo also turned over to Armando and Adelia the documents of ownership to the Subject Land, namely the owner’s duplicate copy of OCT No. 284, the tax declaration and the receipts of realty tax payments.

STATUTE OF FRAUDS:

Spouses Alfredo have performed their obligations under the verbal contract. Clearly, both the sellers and the buyers have consummated the verbal contract of sale of the Subject Land. The Statute of Frauds was enacted

to prevent fraud. This law cannot be used to advance the very evil the law seeks to prevent. Therefore, it is inapplicable in this case.

The trial and appellate courts correctly refused to apply the Statute of Frauds to this case. The Statute of Frauds provides that a contract for the sale of real property shall be unenforceable unless the contract or some note or memorandum of the sale is in writing and subscribed by the party charged or his agent. The existence of the receipt dated 11 March 1970, which is a memorandum of the sale, removes the transaction from the provisions of the Statute of Frauds. Spouses Alfredo cannot invoke the Statute of Frauds to deny the existence of the verbal contract of sale because they have performed their obligations, and have accepted benefits, under the verbal contract.

The Statute of Frauds applies only to executory contracts and not to contracts either partially or totally performed. Thus, where one party has performed one’s obligation, oral evidence will be admitted to prove the agreement. In the instant case, the parties have consummated the sale of the Subject Land, with both sellers and buyers performing their respective obligations under the contract of sale. In addition, a contract that violates the Statute of Frauds is ratified by the acceptance of benefits under the contract. Spouses Alfredo benefited from the contract because they paid their DBP loan and secured the cancellation of their mortgage using the money given by Spouses Boras. Spouses Alfredo also accepted payment of the balance of the purchase price.

2. Issuance of Receipt Only by the Wife

Even Carmen Alfredo Godofredo was the only one who issued the receipt, the sale is voidable and not void.

The Family Code, which took effect on 3 August 1988, provides that any alienation or encumbrance made by the husband of the conjugal partnership property without the consent of the wife is void. However, when the sale is made before the effectivity of the Family Code, the applicable law is the Civil Code.

Article 173 of the Civil Code provides that the disposition of conjugal property without the wife’s consent is not void but merely voidable. Article 173 reads:

The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.

In Felipe v. Aldon, we applied Article 173 in a case where the wife sold some parcels of land belonging to the conjugal partnership without the consent of the husband. We ruled that the contract of sale was voidable subject to annulment by the husband. Following petitioners’ argument that Carmen sold the land to Spouses Boras without the consent of Carmen’s husband, the sale would only be voidable and not void.

However, Godofredo Alfredo can no longer question the sale. Voidable contracts are susceptible of ratification. Godofredo Alfredo ratified the sale when he introduced Armando and Adelia to his tenants as the new owners of the Subject Land.

3. Validity of Subsequent Sale of Portions of the Subject Land

The subsequent buyers are not buyers in good faith.

Spouses Alfredo cannot possess the land title therefore cannot longer sell the subject land. The settled rule is when ownership or title passes to the buyer, the seller ceases to have any title to transfer to any third person. If the seller sells the same land to another, the second buyer who has actual or constructive knowledge of the prior sale cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer’s title.

The registration of the adverse claim of Spouses Alfredi on 8 February 1994 constituted, by operation of law, notice to the whole world.61 From that date onwards, the Subsequent Buyers were deemed to have constructive notice of the adverse claim of Armando and Adelia. When the Subsequent Buyers purchased portions of the Subject Land on 22 February 1994, they already had constructive notice of the adverse claim registered earlier. Thus, the Subsequent Buyers were not buyers in good faith when they purchased their lots on 22 February 1994. They were also not registrants in good faith when they registered their deeds of sale with the Registry of Deeds on 24 February 1994.