Macion v. Guiani
REITERATIONFacts
The Antecedents: Petitioners Henry and Angeles Macion entered into a contract to sell two adjoining lots to Dela Vida Institute, represented by Josephine Lanzaderas, for P1,750,000.00, with a deadline of July 31, 1991. Petitioners surrendered possession, and the Institute built an edifice worth P800,000.00. The sale did not materialize. Procedural History: Petitioners filed an unlawful detainer case. In retaliation, the Institute filed a complaint for reformation of the contract to sell. Subsequently, the parties entered into a compromise agreement on February 6, 1992. This agreement stipulated that the Institute would have five months to raise P2,060,000.00, and if they failed, they would vacate the premises. The agreement also stated that upon execution of the agreement, petitioners would furnish xerox copies of the land titles for loan purposes, and if the funds were secured within five months, petitioners would execute a Deed of Sale and turn over the owner's duplicate copies of the titles. The compromise agreement was approved by the trial court on March 25, 1992. On May 28, 1992, the Institute filed a motion for an order directing petitioners to execute a contract to sell. Petitioners filed a motion for execution of judgment on July 8, 1992, alleging failure to settle obligations. The respondent judge denied the motion for execution and ordered petitioners to execute a contract to sell, opining that the proximate cause of the Institute's failure was petitioners' refusal to execute the contract to sell. The Petition: Petitioners filed a petition for certiorari, praying for a temporary restraining order to enjoin the respondent judge from enforcing the August 6, 1992 order.
Issue(s)
Whether the respondent judge committed grave abuse of discretion in ordering petitioners to execute a contract to sell in favor of private respondent. Whether paragraph 7 of the compromise agreement gives the private respondent-buyer the right to demand the execution of a contract to sell.
Ruling
The petition is dismissed. Petitioners are ordered to execute a contract to sell in favor of private respondents. Private respondent is ordered to deposit with the trial court current rentals pending consummation of the transaction. The trial court is ordered to fix anew the period within which private respondents may be given the opportunity to raise funds for the purchase of the two adjoining lots.
Ratio Decidendi
On whether the respondent judge committed grave abuse of discretion in ordering petitioners to execute a contract to sell in favor of private respondent: The Court held that the respondent judge did not commit grave abuse of discretion. While paragraph 7 of the compromise agreement explicitly stated that the sellers were obliged to execute a Deed of Sale upon payment, the Court looked into the contemporaneous and subsequent acts of the parties to ascertain their real intention. The initial contract to sell, the subsequent filing of a complaint for reformation, and the private respondent's letters requesting a contract to sell, all indicated that the parties intended the agreement to be executory, with the passing of title subject to a suspensive condition. The Court reiterated that in a contract to sell, ownership is not immediately transferred, and payment is a positive suspensive condition. Therefore, the judge's order to execute a contract to sell, rather than a deed of sale, was consistent with the executory nature of the sale and the intention of the parties. On whether paragraph 7 of the compromise agreement gives the private respondent-buyer the right to demand the execution of a contract to sell: The Court found that while paragraph 7 stipulated the execution of a Deed of Sale, the overall context and the parties' actions implied an executory sale, where the passing of title was contingent upon the fulfillment of a suspensive condition – the securing of funds. The Court clarified that an accepted bilateral promise to buy and sell is similar to a perfected contract of sale, creating rights in personam. In this case, the compromise agreement, being a bilateral promise, gave each party the right to demand fulfillment of their respective undertakings. The Court reasoned that the private respondent's request for a contract to sell, and the nature of the transaction as an executory sale where ownership transfer is conditional, supported the interpretation that the private respondent had the right to demand a contract to sell, which precedes the execution of a Deed of Sale upon fulfillment of the suspensive condition.
Main Doctrine
While a compromise agreement stipulated the execution of a Deed of Sale upon payment, the contemporaneous and subsequent acts of the parties, including the initial contract to sell and the request for a contract to sell, indicated that the agreement was executory and that the passing of title was subject to the suspensive condition of securing funds. Therefore, the seller was obliged to execute a contract to sell, not a deed of sale, as ownership does not pass until the suspensive condition is fulfilled.