Corinthian Realty v. Martin
REITERATIONFacts
The Antecedents: Private respondents, along with other co-owners, are co-owners of a parcel of land. On June 13, 1983, private respondents and petitioner entered into a Deed of Conditional Sale for the property. The deed stipulated a selling price of P10.00 per square meter, with an initial payment upon signing and the remaining balance of P335,159.00 to be paid within ninety (90) days from execution. The deed also stated that if the vendee fails to comply with its obligation, the earnest money shall be forfeited, but if the vendee complies, the vendors shall execute an absolute deed of sale. Petitioner paid specific amounts totaling P82,956.42 to some of the co-owners who signed the deed. However, petitioner did not pay the balance of the purchase price within the stipulated ninety (90) days. Notably, two co-owners, Delfin Guinto and the heirs of spouses Tomas de Leon and Francisca Medina, who were named as vendors, did not affix their signatures to the deed. Procedural History: On January 14, 1985, petitioner filed an action for specific performance against private respondents, praying for the execution of an absolute deed of sale or, alternatively, for a refund of the payments made (prayer for refund was later deleted). Private respondents countered that petitioner failed to comply with the terms of the deed by not paying the balance within 90 days, and that the initial payments were forfeited. Private respondent Delfin Guinto argued he had no cause of action against him as he was not a signatory. The Regional Trial Court (RTC) dismissed the complaint for lack of cause of action. Petitioner appealed, and the Court of Appeals (CA) reversed the dismissal and remanded the case. After trial, the RTC dismissed the complaint, holding that petitioner violated the deed by suspending payment and that the failure of Delfin Guinto to sign did not affect the contract with other respondents. The CA affirmed the RTC decision, stating that the respondents did not intend to sell collectively and that Delfin Guinto's refusal to sign was significant. Petitioner's motion for reconsideration was denied. The Petition: Petitioner filed a petition for review on certiorari, assailing the CA's decision for holding that the shares of non-signatory co-owners were not affected, that petitioner's payment of the balance was not a condition precedent to the execution of the deed of sale, that petitioner was not justified in suspending payment, and that the action for specific performance was improperly filed.
Issue(s)
Whether the Court of Appeals erred in holding that the respective shares of the co-owners who did not sign the Deed of Conditional Sale were not affected, despite petitioner dealing with all vendor co-owners collectively. Whether the Court of Appeals erred in holding that the obligation of petitioner to pay the remaining balance of the purchase price was a condition precedent to the execution by the vendor co-owners of the Deed of Sale. Whether the Court of Appeals erred in holding that petitioner was not justified in suspending payment of the remaining balance of the purchase price. Whether the Court of Appeals erred in not holding that the action for specific performance was properly filed by the petitioner.
Ruling
The petition is denied. The Court of Appeals did not err in affirming the trial court's decision dismissing the complaint for specific performance.
Ratio Decidendi
On the issue of whether the shares of non-signatory co-owners were affected: The Court held that only the pro-indiviso shares of the co-owners who were signatories to the deed were affected. This is in accordance with Article 493 of the Civil Code, which states that each co-owner has full ownership of their part and can alienate it, but the effect of the alienation with respect to other co-owners is limited to the portion allotted to them in the division upon termination of the co-ownership. The fact that petitioner paid specific amounts to signatories and had the deed notarized despite the absence of other co-owners' signatures negates the claim that it dealt with them collectively. The Court reiterated that even if a co-owner sells the whole property as his own, the sale affects only his share, not those of co-owners who did not consent. On the issue of whether payment of the balance was a condition precedent: The Court found no merit in petitioner's contention that payment of the balance was not a condition precedent. The Deed of Conditional Sale clearly stipulated that the remaining balance would be paid within ninety (90) days from execution and that "as soon as the VENDEE complied (sic) with his obligation under this Contract, then the VENDORS shall immediately execute the absolute deed." This clearly establishes petitioner's compliance with its obligation as a condition precedent to the vendors' obligation to execute the absolute sale, pursuant to Article 1181 of the Civil Code. Since petitioner failed to comply with this obligation, the vendors' obligation to execute the deed of absolute sale had not yet arisen. On the issue of whether petitioner was justified in suspending payment: The Court ruled that petitioner's invocation of Article 1590 of the Civil Code to justify its suspension of payment was unavailing. Article 1590 allows suspension of payment if the vendee is disturbed in possession or ownership, or has reasonable grounds to fear such disturbance. However, the Court found no such disturbance or reasonable fear. The failure of one co-owner (Delfin Guinto) to sign the deed did not constitute a disturbance of petitioner's possession or ownership that would justify suspending payment of the balance. Furthermore, Article 1191 of the Civil Code, concerning rescission of reciprocal obligations, was also inapplicable as petitioner was the one who failed to perform its obligation. On the issue of whether the action for specific performance was properly filed: Given that petitioner failed to comply with the condition precedent of paying the balance of the purchase price within the stipulated period, it was not entitled to demand performance from the vendors. The principle that "where one of the parties to a contract do[es] not perform the undertaking which he [is] bound by its terms, he is not entitled to insist upon the performance of the other party" applies. Therefore, the action for specific performance was not properly filed as petitioner was the party in breach of the contract.
Main Doctrine
Compliance by the vendee with the obligation to pay the balance of the purchase price within the stipulated period is a condition precedent to the vendors' obligation to execute an absolute deed of sale. Failure to comply with this condition precedent does not justify the suspension of payment by the vendee, nor does it give rise to a cause of action for specific performance.