CASE DIGEST: Spouses Roque vs. Aguado

G.R. No. 193787 : April 7, 2014




The property subject of this case is a parcel of land with an area of 20,862 square meters (sq. m.), located in Sitio Tagpos, Barangay Tayuman, Binangonan, Rizal, known as Lot 18089.

On July 21, 1977, petitioners-spouses Jose C. Roque and Beatriz dela Cruz Roque (Sps. Roque) and the original owners of the then unregistered Lot 18089 namely, Velia R. Rivero (Rivero), Magdalena Aguilar, Angela Gonzales, Herminia R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R. Topacio, and Augusto Rivero (Rivero, et al.) executed a Deed of Conditional Sale of Real Property (1977 Deed of Conditional Sale) over a 1,231-sq. m. portion of Lot 18089 (subject portion) for a consideration of 30,775.00. The parties agreed that Sps. Roque shall make an initial payment of 15,387.50 upon signing, while the remaining balance of the purchase price shall be payable upon the registration of Lot 18089, as well as the segregation and the concomitant issuance of a separate title over the subject portion in their names. After the deeds execution, Sps. Roque took possession and introduced improvements on the subject portion which they utilized as a balut factory.

On August 12, 1991, Fructuoso Sabug, Jr. (Sabug, Jr.), former Treasurer of the National Council of Churches in the Philippines (NCCP), applied for a free patent over the entire Lot 18089 and was eventually issued Original Certificate of Title (OCT) No. M-59558 in his name on October 21, 1991. On June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in representation of Rivero, et al., executed a Joint Affidavit (1993 Joint Affidavit), acknowledging that the subject portion belongs to Sps. Roque and expressed their willingness to segregate the same from the entire area of Lot 18089.

On December 8, 1999, however, Sabug, Jr., through a Deed of Absolute Sale (1999 Deed of Absolute Sale), sold Lot 18089 to one Ma. Pamela P. Aguado (Aguado) for 2,500,000.00, who, in turn, caused the cancellation of OCT No. M-5955 and the issuance of Transfer Certificate of Title (TCT) No. M-96692 dated December 17, 199911 in her name.

Thereafter, Aguado obtained an 8,000,000.00 loan from the Land Bank of the Philippines (Land Bank) secured by a mortgage over Lot 18089. When she failed to pay her loan obligation, Land Bank commenced extra-judicial foreclosure proceedings and eventually tendered the highest bid in the auction sale. Upon Aguados failure to redeem the subject property, Land Bank consolidated its ownership, and TCT No. M-11589513 was issued in its name on July 21, 2003.

On June 16, 2003, Sps. Roque filed a complaint for reconveyance, annulment of sale, deed of real estate mortgage, foreclosure, and certificate of sale, and damages before the RTC, docketed as Civil Case No. 03-022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of Morong, Rizal, and Sheriff Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been erroneously included in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land Bank, both covering Lot 18089 in its entirety.

In defense, NCCP and Sabug, Jr. denied any knowledge of the 1977 Deed of Conditional Sale through which the subject portion had been purportedly conveyed to Sps. Roque.

For her part, Aguado raised the defense of an innocent purchaser for value as she allegedly derived her title (through the 1999 Deed of Absolute Sale) from Sabug, Jr., the registered owner in OCT No. M-5955, covering Lot 18089, which certificate of title at the time of sale was free from any lien and/or encumbrances. She also claimed that Sps. Roques cause of action had already prescribed because their adverse claim was made only on April 21, 2003, or four (4) years from the date OCT No. M-5955 was issued in Sabug, Jr.s name on December 17, 1999.

On the other hand, Land Bank averred that it had no knowledge of Sps. Roques claim relative to the subject portion, considering that at the time the loan was taken out, Lot 18089 in its entirety was registered in Aguados name and no lien and/or encumbrance was annotated on her certificate of title.

Meanwhile, on January 18, 2005, NCCP filed a separate complaint also for declaration of nullity of documents and certificates of title and damages, docketed as Civil Case No. 05-003. It claimed to be the real owner of Lot 18089 which it supposedly acquired from Sabug, Jr. through an oral contract of sale in the early part of 1998, followed by the execution of a Deed of Absolute Sale on December 2, 1998 (1998 Deed of Absolute Sale). NCCP also alleged that in October of the same year, it entered into a Joint Venture Agreement (JVA) with Pilipinas Norin Construction Development Corporation (PNCDC), a company owned by Aguados parents, for the development of its real properties, including Lot 18089, into a subdivision project, and as such, turned over its copy of OCT No. M-5955 to PNCDC. Upon knowledge of the purported sale of Lot 18089 to Aguado, Sabug, Jr. denied the transaction and alleged forgery. Claiming that the Aguados and PNCDC conspired to defraud NCCP, it prayed that PNCDCs corporate veil be pierced and that the Aguados be ordered to pay the amount of .38,092,002.00 representing the unrealized profit from the JVA. Moreover, NCCP averred that Land Bank failed to exercise the diligence required to ascertain the true owners of Lot 18089.

In its answer, Land Bank reiterated its stance that Lot 18089 was used as collateral for the 8,000,000.00 loan obtained by the Countryside Rural Bank, Aguado, and one Bella Palasaga. There being no lien and/ or encumbrance annotated on its certificate of title, i.e., TCT No. M-115895, it cannot be held liable for NCCPs claims. Thus, it prayed for the dismissal of NCCPs complaint.

On September 7, 2005, Civil Case Nos. 02-022 and 05-003 were ordered consolidated.

After due proceedings, the RTC rendered a Decision dated July 8, 2008, dismissing the complaints of Sps. Roque and NCCP. With respect to Sps. Roques complaint, the RTC found that the latter failed to establish their ownership over the subject portion.

On the other hand, regarding NCCPs complaint, the RTC observed that while it anchored its claim of ownership over Lot 18089 on the 1998 Deed of Absolute Sale, the said deed was not annotated on OCT No. M5955. The RTC denied the parties respective claims for damages.

On appeal, the Court of Appeals (CA) affirmed the foregoing RTC findings in a Decision34 dated May 12, 2010. While Land Bank was not regarded as a mortgagee/purchaser in good faith with respect to the subject portion considering Sps. Roques possession thereof. As regards NCCP, the CA found that it failed to establish its right over Lot 18089.

ISSUE: Whether or not the CA erred in not ordering the reconveyance of the subject portion in Sps. Roques favor.

HELD: The petition lacks merit.

CIVIL LAW: contract to sell

Examining its provisions, the Court finds that the stipulation above-highlighted shows that the 1977 Deed of Conditional Sale is actually in the nature of a contract to sell and not one of sale contrary to Sps. Roques belief. In this relation, it has been consistently ruled that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the purchase price, the contract is only a contract to sell even if their agreement is denominated as a Deed of Conditional Sale, as in this case. This treatment stems from the legal characterization of a contract to sell, that is, a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the subject property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, such as, the full payment of the purchase price.

Elsewise stated, in a contract to sell, ownership is retained by the vendor and is not to pass to the vendee until full payment of the purchase price. Explaining the subject matter further, the Court, in Ursal v. CA, held that:

In contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the existence of the contract of sale that the seller becomes obligated to transfer the ownership of the thing sold to the buyer. Prior to the existence of the contract of sale, the seller is not obligated to transfer the ownership to the buyer, even if there is a contract to sell between them.

Here, it is undisputed that Sps. Roque have not paid the final installment of the purchase price. As such, the condition which would have triggered the parties obligation to enter into and thereby perfect a contract of sale in order to effectively transfer the ownership of the subject portion from the sellers (i.e., Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter cannot validly claim ownership over the subject portion even if they had made an initial payment and even took possession of the same.

The Court further notes that Sps. Roque did not even take any active steps to protect their claim over the disputed portion. This remains evident from the following circumstances appearing on record: (a) the 1977 Deed of Conditional Sale was never registered; (b) they did not seek the actual/physical segregation of the disputed portion despite their knowledge of the fact that, as early as 1993, the entire Lot 18089 was registered in Sabug, Jr.s name under OCT No. M-5955; and (c) while they signified their willingness to pay the balance of the purchase price, Sps. Roque neither compelled Rivero et al., and/or Sabug, Jr. to accept the same nor did they consign any amount to the court, the proper application of which would have effectively fulfilled their obligation to pay the purchase price. Instead, Sps. Roque waited 26 years, reckoned from the execution of the 1977 Deed of Conditional Sale, to institute an action for reconveyance (in 2003), and only after Lot 18089 was sold to Land Bank in the foreclosure sale and title thereto was consolidated in its name. Thus, in view of the foregoing, Sabug, Jr. as the registered owner of Lot 18089 borne by the grant of his free patent application could validly convey said property in its entirety to Aguado who, in turn, mortgaged the same to Land Bank. Besides, as aptly observed by the RTC, Sps. Roque failed to establish that the parties who sold the property to them, i.e., Rivero, et al., were indeed its true and lawful owners. In fine, Sps. Roque failed to establish any superior right over the subject portion as against the registered owner of Lot 18089, i.e., Land Bank, thereby warranting the dismissal of their reconveyance action, without prejudice to their right to seek damages against the vendors, i.e., Rivero et al.

As applied in the case of Coronel v. CA:

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfilment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer.

CIVIL LAW: double sales

On the matter of double sales, suffice it to state that Sps. Roques reliance on Article 154465 of the Civil Code has been misplaced since the contract they base their claim of ownership on is, as earlier stated, a contract to sell, and not one of sale. In Cheng v. Genato, the Court stated the circumstances which must concur in order to determine the applicability of Article 1544, none of which are obtaining in this case:

(a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter, and must be valid sales transactions;

(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the same seller.

CIVIL LAW: acquisitive prescription

Finally, regarding Sps. Roques claims of acquisitive prescription and reimbursement for the value of the improvements they have introduced on the subject property, it is keenly observed that none of the arguments therefor were raised before the trial court or the CA. Accordingly, the Court applies the well-settled rule that litigants cannot raise an issue for the first time on appeal as this would contravene the basic rules of fair play and justice. In any event, such claims appear to involve questions of fact which are generally prohibited under a Rule 45 petition.

With the conclusions herein reached, the Court need not belabor on the other points raised by the parties, and ultimately finds it proper to proceed with the denial of the petition.

WHEREFORE, the petition is DENIED.