Cebu v. Heirs of Morales
REITERATIONFacts
The Antecedents: The Province of Cebu (petitioner) leased a lot to Rufina Morales in 1961. In 1964, petitioner donated several parcels of land, including the lot in question (Lot No. 646-A-3), to the City of Cebu. The City of Cebu sold Lot No. 646-A-3 at public auction in 1965. Morales, as the highest bidder, was allowed to match the bid and paid a deposit and partial payment. Morales died in 1969, unable to pay the balance of the purchase price. In 1974, petitioner and the City of Cebu entered into a compromise agreement, approved by the court, wherein donated lots were returned to petitioner, except those already utilized by the City. Lot No. 646-A-3 was returned to petitioner and registered in its name. Procedural History: In 1983 and 1986, heirs of Morales requested the formal conveyance of the lot. When these requests were unheeded, the heirs filed an action for specific performance and reconveyance against petitioner, consigning the balance of the purchase price. Petitioner failed to present evidence despite opportunities, and the Regional Trial Court (RTC) ruled in favor of the heirs, ordering petitioner to convey the lot. The Court of Appeals (CA) affirmed the RTC decision. Petitioner filed a petition for review on certiorari. The Petition: Petitioner assails the CA's findings that Morales and her heirs have the right to match the highest bid, that the sale was perfected and consummated with the deposit and partial payment, that laches and prescription were not applicable, and that the pendency of Civil Case No. 238-BC prevented payment of installments.
Issue(s)
Whether the award of the lot to Rufina Morales at public auction constituted a perfected contract of sale. Whether the Province of Cebu, as successor-in-interest of the City of Cebu, is bound by the sale of the lot to Morales. Whether the failure to pay the full purchase price rendered the sale inexistent or invalid. Whether the consignation of the balance of the purchase price by the heirs operated as full payment. Whether the Province of Cebu can raise the issues of prescription and laches for the first time on appeal.
Ruling
The petition is denied, and the decision and resolution of the Court of Appeals are affirmed. The Province of Cebu is ordered to convey Lot 646-A-3 to the heirs of Rufina Morales.
Ratio Decidendi
On whether the award constituted a perfected contract of sale: The Court held that a contract of sale is perfected upon the meeting of the minds as to the object and price. In this case, there was a meeting of minds between the City of Cebu and Morales regarding Lot No. 646-A-3 and its price. The award at public auction, even if Morales merely matched the highest bid, signifies the perfection of the contract. The elements of consent, determinate subject matter, and certain price were present, fulfilling the requirements of Article 1458 of the Civil Code. The absence of a formal document does not negate the perfection of the contract, as a sale is a consensual contract. On whether the Province of Cebu is bound by the sale: The Court affirmed that petitioner, as the successor-in-interest of the City of Cebu, is bound to respect the contract of sale. The City of Cebu was the owner when it awarded the lot to Morales. Although the lot was later returned to petitioner under a compromise agreement, this was done erroneously as the City had already sold the property. Petitioner could only acquire the rights its predecessor had, which included the obligation to respect the sale. The compromise agreement did not nullify prior sales made by the City. On the effect of failure to pay the full purchase price: The Court clarified that failure to pay the balance of the purchase price does not render a contract of sale inexistent or invalid. Instead, it gives the vendor the right to demand specific performance or rescission. The fact that there was an agreed price confirms the perfection of the contract. Article 1592 of the Civil Code further provides that in the sale of immovable property, the vendee may still pay even after the expiration of the period, as long as no demand for rescission has been made judicially or by notarial act. On the effect of consignation of the balance: The consignation of the balance of the purchase price by the respondents before the trial court operated as full payment. Since no demand for rescission had been made by the petitioner or its predecessor, the respondents were still entitled to pay the full price. This payment extinguished their obligation under the contract of sale, entitling them to the conveyance of the property. On the issues of prescription and laches: The Court ruled that petitioner could not raise the issues of prescription and laches for the first time on appeal. It is a basic procedural rule that defenses and issues not raised before the trial court or the Court of Appeals cannot be considered on appeal. Petitioner failed to raise these matters in the lower courts, thus it is barred from pleading them before the Supreme Court.
Main Doctrine
A contract of sale is perfected upon the meeting of the minds as to the object and price. Partial payment and actual occupation of the property, coupled with the vendor's obligation to transfer ownership, can transfer ownership to the vendee, even if the full purchase price has not yet been paid, provided no demand for rescission has been made by the vendor.