Cabrera v. Ysaac
REITERATIONFacts
The Antecedents: Respondent Henry Ysaac, as a co-owner, offered to sell a specific 95-square-meter portion of a larger parcel of land he co-owned with his siblings. Petitioner Juan P. Cabrera, a lessee of this portion, agreed to purchase it, but expressed concern about its size. Ysaac then expanded the offer to include two adjoining parcels leased by the Borbe and Espiritu families, totaling 439 square meters, contingent on the consent of those families. Cabrera agreed to the expanded offer, and a price of P250.00 per square meter was set, with full payment due after Cabrera's retirement on June 15, 1992. Cabrera made an initial payment of P1,500.00 and later reimbursed Mamerta Espiritu's initial deposit for her leased portion, totaling P6,100.00, for which Ysaac issued a receipt. When Cabrera attempted to pay the balance in June 1992, Ysaac's wife refused to accept it. In September 1993, Ysaac allegedly proposed reducing the area due to a planned barangay walkway and an occupant difficult to eject, which Cabrera accepted. A resurvey indicated the area was reduced to 321 square meters. Cabrera's subsequent attempts to pay were again refused by Ysaac's wife. Procedural History: On September 21, 1994, Ysaac's counsel sent a letter rescinding the contract due to Cabrera's failure to pay the balance, applying Cabrera's payments to overdue rent. Cabrera then filed a civil case for specific performance on September 20, 1995, seeking a deed of sale and title transfer, and tendering the remaining balance. A notice of lis pendens was annotated on the title. The heirs of Luis and Matilde Ysaac subsequently sold the entire property to the local government of Naga City. The Regional Trial Court ruled that the contract was rescinded due to Cabrera's failure to pay the balance and dismissed the complaint, finding no evidence that the occupants of the adjoining lots agreed to sell their portions. The Court of Appeals agreed there was a perfected sale but found the rescission invalid. However, due to the supervening sale to the City of Naga, it ruled specific performance unavailable and ordered Ysaac to return Cabrera's payments plus damages and attorney's fees. Ysaac moved for reconsideration, and Cabrera filed a petition for review on certiorari with the Supreme Court. The Supreme Court initially denied the petition as premature, then later reinstated it after treating a letter as a second motion for reconsideration, finding merit in Cabrera's claim of a clerical error in filing dates. The Petition: Petitioner Juan P. Cabrera filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals' decision and resolution. Cabrera argued that the Court of Appeals erred in holding that specific performance was unavailable due to the supervening sale to the City of Naga and consequently erred in not ordering the execution of a deed of sale in his favor. He contended that the sale to the City of Naga was not in good faith, as a notice of lis pendens had been annotated on the title prior to the finalization of that sale. Respondent Henry Ysaac, in his comment, argued that there was no valid contract of sale to begin with, as there was no meeting of the minds on the object and price, and that the contract was terminated by his letter dated September 21, 1994. The Supreme Court considered issues raised by both parties, ultimately finding that no valid contract of sale existed because Ysaac, as a co-owner, could not sell a definite portion of the unpartitioned land without the consent of all co-owners. The Court declared the contract invalid, denied specific performance, ordered Ysaac to return P10,600.00 with legal interest, and deleted the award of attorney's fees and litigation expenses.
Issue(s)
Whether the Supreme Court can take cognizance of issues raised by the respondent but not by the petitioner. Whether there was a valid contract of sale between petitioner and respondent. Whether the contract of sale still subsisted, specifically whether the contract was terminated through rescission. Whether the contract of sale still subsisted, specifically whether the contract was no longer enforceable due to the supervening sale of the property to the local government of Naga City. Whether petitioner is entitled to the execution of a deed of sale in his favor. Whether petitioner is entitled to actual damages. Whether petitioner is entitled to attorney's fees, and costs of litigation.
Ruling
The petition is denied. The Court of Appeals' decision is set aside. The contract between petitioner and respondent is declared invalid and thus cannot be subject to specific performance. Respondent is ordered to return ₱10,600.00 to petitioner with legal interest. The award of attorney's fees and litigation expenses is deleted.
Ratio Decidendi
On the issue of whether the Supreme Court can take cognizance of issues raised by the respondent but not by the petitioner: The Supreme Court can resolve issues raised by both parties, even if not assigned as errors in the appeal, if their consideration is necessary for a just decision. The respondent's assignment of error, attacking the validity of the contract, was responsive to the petitioner's main argument that a valid contract existed, making it relevant to the final disposition of the case. On the issue of whether there was a valid contract of sale between petitioner and respondent: There was no valid contract of sale because the object of the contract, a definite portion of a co-owned property, could not be validly sold by a co-owner without the consent of all other co-owners. Article 491 of the Civil Code requires unanimous consent for the disposition of a common property, and a co-owner can only sell their undivided interest (Article 493). The sale of a definite portion prior to partition constitutes an alteration of the property and requires consent. The ruling in Pamplona v. Moreto is distinguished as it involved acquiescence and tolerance from co-heirs over many years, which was absent in this case. The agreement was, at best, a contract to sell, subject to the suspensive condition of partition and consent, which was not met. On the issue of whether the contract of sale still subsisted and whether it was terminated through rescission: Rescission under Article 1592 of the Civil Code does not apply because the agreement was a contract to sell, not a contract of sale. For a contract to sell, non-payment or a letter demanding rescission is sufficient to terminate the contract, as opposed to the judicial or notarial act required for a contract of sale of immovable property. The letter dated September 21, 1994, from respondent's counsel served as a valid rescission of the contract to sell. On the issue of whether the contract of sale still subsisted and whether it was no longer enforceable due to the supervening sale: The subsequent sale of the entire property to the City of Naga, an innocent purchaser for value, rendered specific performance impossible. The notice of lis pendens annotated by Cabrera did not automatically negate the City of Naga's status as an innocent purchaser for value, especially since the primary contract with Cabrera was found to be invalid. On the issue of whether petitioner is entitled to the execution of a deed of sale in his favor: Specific performance is not available because there was no valid contract of sale to begin with. The agreement was a contract to sell, which was terminated due to the non-fulfillment of suspensive conditions and the supervening sale of the property to a third party. The Court cannot enforce a right to buy property when the underlying contract is invalid and has been terminated. On the issue of whether petitioner is entitled to actual damages: Petitioner is entitled to the return of the ₱10,600.00 paid, representing initial payments and resurvey costs, as ownership could not be transferred to him, preventing unjust enrichment of the respondent. On the issue of whether petitioner is entitled to attorney's fees, and costs of litigation: Attorney's fees and litigation costs were deleted because the petitioner did not have a clear right over the property, and his pursuit of the case was to determine if he had rights, rather than to protect existing ones. Respondent's claim for rent in arrears is a separate cause of action and was not proven to be due, liquidated, and demandable during the trial, thus preventing compensation.
Main Doctrine
A co-owner cannot sell a definite portion of an unpartitioned co-owned property without the consent of all other co-owners; such a sale is null and void ab initio. A contract to sell a definite portion is subject to the suspensive condition of partition and consent of co-owners.