David v. David
REITERATIONFacts
The Antecedents: Eduardo C. David (Eduardo) and his brother Edwin C. David (Edwin), acting for their co-heirs, sold inherited properties, including a Baguio City lot and two truck tractors with trailers, to Roberto R. David (Roberto), their first cousin and former business partner. The sale was embodied in a deed of sale with assumption of mortgage, with a consideration of ₱6,000,000.00. The vendors reserved the right to repurchase the properties within three years from execution, based on the purchase price plus 12% annual interest. Subsequently, Roberto and Edwin executed a memorandum of agreement (MOA) with the Spouses Marquez and Soledad Go to sell the Baguio City lot for ₱10,000,000.00, stipulating that Edwin would execute a deed of absolute sale in favor of the Spouses Go in lieu of Roberto to save on taxes. The Spouses Go deposited ₱10,000,000.00 into Roberto's account. Roberto then gave Eduardo ₱2,800,000.00 and returned one truck tractor and trailer. Eduardo demanded the return of the other truck tractor and trailer, but Roberto refused. Procedural History: Eduardo initiated a replevin suit against Roberto to recover possession of the other truck tractor and trailer, alleging he was exercising his right to repurchase. Roberto denied Eduardo's right to repurchase and claimed the MOA extinguished their deed of sale by novation. The Regional Trial Court (RTC) ruled in favor of Eduardo, holding that the deed of sale was conditional, Eduardo fulfilled the repurchase conditions, ownership reverted to him, Roberto's defense of novation was meritless, and awarded litigation expenses and attorney's fees. The Court of Appeals (CA) affirmed the RTC's decision, finding that the circumstances indicated an exercise of the right to repurchase and that no novation had intervened. The Petition: Roberto filed a petition for review on certiorari, seeking reversal of the CA decision, primarily arguing that the CA erred in holding that Eduardo exercised his right to repurchase and that there was no novation of the deed of sale.
Issue(s)
Whether the respondent Eduardo C. David exercised his right to repurchase the properties subject of the deed of sale. Whether the execution of the Memorandum of Agreement (MOA) extinguished the Deed of Sale with Assumption of Mortgage by novation.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, upholding Eduardo C. David's exercise of the right of repurchase and dismissing Roberto R. David's claim of novation.
Ratio Decidendi
On whether Eduardo C. David exercised his right to repurchase: The Court affirmed the findings of the RTC and CA that Eduardo had complied with the conditions for repurchase stipulated in the deed of sale and prescribed by Article 1616 of the Civil Code. The deed of sale explicitly granted the vendors the right to repurchase within three years, requiring payment of the purchase price plus 12% annual interest, and reimbursement for expenses and payments made to the Development Bank of the Philippines (DBP). The CA noted that Roberto's own testimony acknowledged that Eduardo and his co-heirs exercised their right to repurchase by satisfying these conditions. The return of ₱2,800,000.00 to Eduardo from the ₱10,000,000.00 proceeds of the sale to the Spouses Go, after Roberto deducted the repurchase price, interests, and expenses, was considered an unequivocal acknowledgment. Furthermore, the return of one truck tractor and trailer to Eduardo was seen as a tacit acknowledgment of the repurchase. The Court reiterated that factual findings of the RTC, when affirmed by the CA, are binding on the Supreme Court, and Roberto's petition was limited to questions of law. The Court emphasized that a sincere tender of payment, which was effectively made by Eduardo through the deposit of sale proceeds into Roberto's account, is sufficient to show the exercise of the right to repurchase, citing Metropolitan Bank and Trust Company v. Tan and Legaspi v. Court of Appeals. On whether the execution of the MOA extinguished the Deed of Sale by novation: The Court dismissed Roberto's claim of novation, stating that the issue of novation involves questions of fact, requiring the determination of its requisites: a previous valid obligation, agreement to a new contract, extinguishment of the old contract, and a valid new contract. Both the RTC and CA concluded that the MOA was consistent with the deed of sale and did not extinguish it. The Court reiterated that the factual findings of the lower courts are binding. In sales with a right to repurchase, ownership vests immediately in the vendee, subject to the resolutory condition of repurchase. Thus, Eduardo's compliance with the repurchase conditions led to the reversion of ownership to him, entitling him to possession of the remaining property.
Main Doctrine
In a sale with right to repurchase, title and ownership of the property sold are immediately vested in the vendee, subject to the resolutory condition of repurchase by the vendor within the stipulated period. Compliance with the conditions for repurchase, including the return of the price and expenses, is essential for the exercise of this right.