Coronel v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioners (Coronels) executed a "Receipt of Down Payment" on January 19, 1985, agreeing to sell a parcel of land for P1,240,000.00 to Ramona Patricia Alcaraz. The agreement stipulated a P50,000.00 down payment, with the Coronels to transfer the title in their names from their deceased father's name immediately upon receipt of the down payment. Upon presentation of the new title, they would execute a deed of absolute sale, and Ramona would pay the balance of P1,190,000.00. Concepcion D. Alcaraz, Ramona's mother, paid the down payment on January 15, 1985. The title was transferred to the Coronels' names on February 6, 1985 (TCT No. 327043). On February 18, 1985, the Coronels sold the property to Catalina B. Mabanag for P1,580,000.00, after receiving P300,000.00. The Coronels deposited Ramona's down payment in trust for her and rescinded the contract. On February 22, 1985, Concepcion et al. filed a complaint for specific performance and annotated a notice of lis pendens. Catalina filed an adverse claim on April 2, 1985. The Coronels executed a Deed of Absolute Sale in favor of Catalina on April 25, 1985, and a new title was issued to her on June 5, 1985 (TCT No. 351582). Procedural History: The Regional Trial Court (RTC), Branch 83, Quezon City, rendered a judgment for specific performance, ordering the Coronels to execute a deed of absolute sale in favor of the plaintiffs, canceling Catalina's title, and ordering the defendants and intervenor to vacate the property. A motion for reconsideration was denied. The Court of Appeals affirmed the RTC decision. The Petition: Petitioners (Coronels and Mabanag) filed the instant petition before the Supreme Court.
Issue(s)
Whether the "Receipt of Down Payment" constituted a perfected contract of sale or a contract to sell. Whether the Coronels could unilaterally rescind the contract of sale. Whether Catalina B. Mabanag was a buyer in good faith and registered the sale in good faith, thereby acquiring ownership in a case of double sale.
Ruling
The petition is denied. The appealed judgment is affirmed. The contract between the parties was a conditional contract of sale, which became perfected upon the fulfillment of the suspensive condition. The sale to Catalina B. Mabanag constituted a double sale, and she was not a buyer in good faith for registration purposes.
Ratio Decidendi
On Whether the "Receipt of Down Payment" constituted a perfected contract of sale or a contract to sell: The Court held that the "Receipt of Down Payment" embodied a conditional contract of sale, not a contract to sell. This was based on the absence of an express reservation of ownership by the sellers and the fact that the impediment to the immediate execution of an absolute sale was the sellers' inability to present a title in their names, not the buyer's failure to pay the full price. The Court distinguished this from a contract to sell, where ownership is explicitly reserved until full payment, which serves as a suspensive condition. In this case, the essential elements of consent, determinate subject matter, and certain price were present, with the transfer of title being a suspensive condition. Article 1475 of the Civil Code, regarding the perfection of a contract of sale upon meeting of minds on the object and price, and Article 1181, on conditional obligations, were applied. The Court emphasized that the sellers' own admission in their petition acknowledged the sale was subject to the suspensive condition of transferring the title to their names. Furthermore, Article 1186 of the Civil Code was invoked, stating that a condition is deemed fulfilled when the obligor voluntarily prevents its fulfillment, though in this case, the condition was actually fulfilled when the title was transferred to the Coronels' names on February 6, 1985. The Court also noted that the sellers were already considered owners by succession from the moment of their father's death, and they were estopped from claiming otherwise due to their representation as owners when entering into the agreement. On Whether the Coronels could unilaterally rescind the contract of sale: The Court ruled that the Coronels could not unilaterally rescind the contract of sale. The alleged grounds for rescission, such as Ramona's departure for the United States, were mere allegations in their pleadings unsupported by evidence. The Court stressed that allegations must be proven by sufficient evidence, and mere allegations do not constitute proof. Even assuming Ramona was abroad, the sellers failed to show any express stipulation authorizing them to judicially rescind the contract. Moreover, the Coronels were estopped from raising Ramona's absence as a ground for rescission because they had been dealing with her mother, Concepcion, who acted on Ramona's behalf, and they accepted Concepcion's down payment without objection. The Court also pointed out that Ramona could not be in default because the Coronels had not proven they presented the new title and signified their readiness to execute the deed of absolute sale, thus her obligation to pay the balance never became due and demandable. On Whether Catalina B. Mabanag was a buyer in good faith and registered the sale in good faith, thereby acquiring ownership in a case of double sale: The Court held that the sale to Catalina B. Mabanag constituted a double sale, and Article 1544 of the Civil Code applied. However, Catalina was not a buyer in good faith for registration purposes. While the second sale occurred on February 18, 1985, and the notice of lis pendens was annotated on February 22, 1985, Catalina registered her sale in April 1985. By the time of her registration, she was aware or should have been aware of the prior sale to Ramona, evidenced by the lis pendens. Registration made with knowledge of a prior sale or adverse claim constitutes registration in bad faith. Therefore, Catalina's registration did not transfer ownership to her to the prejudice of the first buyer, Ramona. The Court cited jurisprudence stating that if a vendee registers the sale after acquiring knowledge of a previous sale, the registration is in bad faith and confers no right.
Main Doctrine
A contract to sell is distinguished from a conditional contract of sale by the reservation of title. In a contract to sell, ownership is retained until full payment, which is a suspensive condition. In a conditional contract of sale, consent to transfer ownership is present, but conditioned upon an event. When the condition is fulfilled, the sale becomes absolute. In cases of double sale, the second buyer's good faith in registering the sale is crucial.