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Flancia vs. Court of Appeals G.R. No.

146997, April On appeal, CA set aside the decision of the regular


26, 2005 presiding judge and reinstated the judgment of the
assisting judge August 16, 1996.
Facts:Spouses Flancia allege that they purchased from
Oakland Development Resources Corp. a parcel of land Issues: (1) whether or not the registered mortgage
and the spouses were authorized to transport all their constituted over the property was valid;
personal belongings to their house at the lot. On (2) whether or not the registered mortgage was
December 24, 1992, Flancias received a copy of the superior to the contract to sell; and
execution foreclosing the mortgage issued by the RTC, (3) whether or not the mortgagee was in good
Branch 98 ordering defendant Sheriff Sula to sell at
faith.
public auction several lots of Oakland including the land
Held: SC Affirmed the decision of the CA.
they purchased. They seek to nullify the foreclosed
mortgage and also seeks for payment of damages
All the essential requisites of a contract of
mortgage under the Article 2085 of the Civil Code
Defendant William Ong claimed that on May 19, are present.
1989, Oakland mortgaged to him two (2) parcels of
land (which includes the lot of the Spouses Flancia) FIRST ISSUE: WAS THE REGISTERED MORTGAGE
as security and guaranty for the payment of a loan VALID? (Mao ni ang topic sa Syllabus:
in the sum of P2,000,000.00 which was not paid by
Oakland resulting to an action for foreclosure of The contract between Spouses Flancia and
the said real estate mortgage which was already Oakland, aside from the fact that it was
affirmed by the CA. Genato alleges that the denominated as a contract to sell, the intention of
Contract to Sell between the spouses and Oakland Oakland not to transfer ownership to petitioners
does not appear to have been registered with the until full payment of the purchase price was very
Register of Deeds of Quezon City to affect him and clear. Acts of ownership over the property were
Oakland so they are not bound by it making the expressly withheld by Oakland from petitioner. All
registered mortgage superior to that was granted to them by the occupancy permit
to the Contract to Sell since ownership of the lot was the right to possess it.
was not yet passed to the spouses, not until full
payment. Clearly, when the property was mortgaged to
Genato in May 1989, what was in effect between
After trial, the assisting judge of the trial court Oakland and Spouses Flancia was a contract to
rendered a decision dated August 16, 1996, sell, not a contract of sale. Oakland retained
ordering Oakland to pay Spouses Flancia the absolute ownership over the property.
payments they made for the option to purchase,
downpayment, amortizations plus legal interest Ownership is the independent and general power
including moral and exemplary damages, and of a person over a thing for purposes recognized by
attorney’s fees plus cost. Decision included law and within the limits established thereby.
dismissing Oakland counterclaim and Genatos (dili According to Art. 428 of the Civil Code, this means
ko sure kung si Genato jud or ang Spouses Flancia that:
pero Genato man ang naa sa decision, hehehe)
counterclaim. The owner has the right to enjoy and dispose of a
thing, without other limitations than those
On motion for reconsideration, the regular established by law. Aside from the jus utendi and
presiding judge set aside the judgment of the the jus abutendi inherent in the right to enjoy the
assisting judge and rendered a new one on thing, the right to dispose, or the jus disponendi, is
November 27, 1996, favoring of the Spouses the power of the owner to alienate, encumber,
Flancia, declaring the mortgage and the foreclosure transform and even destroy the thing owned.
null and void and ordered Oakland to pay the
Spouses Flancia litigation-related expenses, Sheriff Because Oakland retained all the foregoing rights
Sula to desist from conducting further proceedings as owner of the property, it was entitled
in the foreclosure, and dismissing the absolutely to mortgage it to Genato. Hence, the
counterclaims of defendants Oakland and Genato mortgage was valid.
(Oh, kani murag sakto Genato na jud) and with
costs against them. SECOND ISSUE: WAS THE REGISTERED MORTGAGE
SUPERIOR TO THE CONTRACT TO SELL?
An unregistered sale is preferred over a registered petitioners not only failed to pay the P1.8 million
mortgage over the same property yet this balance, but they also imposed upon private
inapplicable to the case at bar. A contract of sale respondents new obligations as preconditions to
and a contract to sell are worlds apart. In the case the performance of their own obligation. In effect,
before us, Oakland retained absolute ownership the qualified offer to pay was a repudiation of an
over the property under the contract to sell and existing obligation, which was legally due and
therefore had every right to mortgage it. Genatos demandable under the contract of sale. Hence,
registered mortgage was superior to petitioners private respondents were left with the legal option
contract to sell, subject to any liabilities Oakland of seeking rescission to protect their own interest.
may have incurred in favor of Spouses Flancia by
irresponsibly mortgaging the property to Genato Coronel vs ca 263 scra 15
despite its commitments under their contract to
sell. FACTS: This case is about a sale of land in
Roosevelt Avenue, Quezon City by the vendor
THIRD ISSUE: WAS THE MORTGAGE IN GOOD Romulo Coronel to the vendees Conception Alcaraz
FAITH? and her daughter Ramona Patricia Alcaraz with the
following conditions:
The third issue involves a factual matter which
should not be raised in this petition. Only questions The Coronel’s will immediately transfer the
of law may be raised in a Rule 45 petition. This certificate of title in their name upon receipt of the
Court is not a trier of facts. Just as an innocent downpayment which is ₱50,000.
purchaser for value may rightfully rely on what
appears in the certificate of title, a mortgagee has Upon the transfer in their names of the subject
the right to rely on what appears in the title property, the Coronel’s will execute the deed of
presented to him. In the absence of anything to absolute sale in favor of Ramona and then Ramona
arouse suspicion, he is under no obligation to look shall immediately pay the Coronel’s the whole
beyond the certificate and investigate the title of balance of ₱1,190,000.
the mortgagor appearing on the face of the said
certificate. On January 15, 1985, Conception paid the
downpayment of ₱50,000 and then on February 6,
Velarde vs. Court of Appeals (361 SCRA 57) 1985, the property was now registered under the
name of Coronel’s. By Feb. 18, 1985, the Coronel’s
FACTS: The private respondent executed a Deed of sold the property to Catalina B. Mabanag for
Sale with Assumption of Mortgage, with a balance ₱1,580,000 after she made a ₱300,000
of P1.8 million, in favor of the petitioners. Pursuant downpayment. This is the reason why the Coronel’s
to said agreements, plaintiffs paid the bank (BPI) cancelled and rescind the contract with the Alcaraz
for three (3) months until they were advised that by depositing back the ₱50,000 to Ramona’s bank
the Application for Assumption of Mortgage was account.
denied. This prompted the plaintiffs not to make
any further payment. Private respondent wrote the On Feb. 22, Conception filed a complaint for
petitioners informing the non-fulfillment of the specific performance against the Coronel’s. On
obligations. Petitioners, thru counsel responded April, the Coronel’s executed a deed of absolute
that they are willing to pay in cash the balance sale over the subject property to Catalina after
subject to several conditions. Private respondents which on June Catalina was issued a new title over
sent a notarial notice of cancellation/rescission of the subject property.
the Deed of Sale. Petitioners filed a complaint
which was consequently dismissed by an outgoing ISSUE: Whether or not the “Receipt of Down
judge but was reversed by the assuming judge in payment” embodied a perfected contract of sale or
their Motion for Reconsideration. The Court of just a mere contract to sell?
Appeals reinstated the decision to dismiss.
HELD: CONTRACT OF SALE- contracting parties
ISSUE: Whether or not there is a substantial obligates himself to transfer the ownership and to
breach of contract that would entitle its rescission. deliver a determinate thing and the other to pay a
price certain in money or its equivalent.
RULING: YES. Article 1191 of the New Civil Code
applies. The breach committed did not merely CONTRACT TO SELL- the prospective seller explicitly
consist of a slight delay in payment or an reserves the transfer of the title to the prospective
irregularity; such breach would not normally defeat buyer, meaning the seller does not yet agree or
the intention of the parties to the contract. Here, consent to transfer the ownership of the property
until the happening of a contingent event like full settle or clear the encumbrances or other problems
payment of price. affecting them. Petitioner prepared a joint motion
to dismiss the expropriation case but respondent
SUPREME COURT RULING: Antonio Florendo refused to sign because there
were still three lots which had not yet been paid.
When the “Receipt of Down Payment” document Respondents could not clear these properties of
was prepared and signed by Romulo Coronel, the their encumbrances and liens as there were
parties had agreed to a conditional contract of sale pending cases filed by third party claimants over
the consummation of the contract is subject only to them. Instead, they proposed that a partial
the successful transfer of the certificate of Title. compromise agreement be executed to cover the
four lots that had already been sold and
According to Supreme Court, the receipt of down transferred to PEZA. Petitioner, however, found the
payment document manifests a clear intent of the proposal unacceptable and contrary to their
Coronel’s to transfer the title to the buyer, but compromise agreement.
since the title is still in the name effect the transfer
even though the buyers are able and willing to Issue: Whether or not there was a perfected
immediately pay the purchase price. The compromise agreement between the parties.
agreement as well could not have been a contract
to sell because the seller or the Coronel’s made no Ruling: The compromise agreement the parties
express reservation of ownership or the title of the executed was in the form of a contract of sale. The
land. elements of a valid contract of sale are: (a) consent
or meeting of the minds; (b) determinate subject
On Feb. 6, 1985, the Contract of Sale between the matter and (c) price certain in money or its
Coronel’s and the Alcaraz’ became obligatory. equivalent. All the elements are present here. The
parties agreed on the sale of a determinate object
Republic vs Florendo 549 scra 527 and the price certain. The contention of the
respondent that there was no meeting of mind
Facts: Petitioner Republic of the Philippines is because the condition relating to the delivery of
represented in this case by the Philippine Economic clean titles was not fulfilled is wrong. The delivery
Zone Authority (PEZA), a government corporation of clean titles was not a condition imposed on the
created under RA 7916, as amended. perfection of the contract of sale but a condition
imposed on petitioner's obligation to pay the
On April 14, 1991, the Export Processing Zone purchase price of these lots. As ruled in the case of
Authority, (PEZA), predecessor of PEZA, filed a Jardine Davies Inc. vs CA, the court distinguished
complaint for the expropriation of seven parcels of between a condition imposed on the perfection of
land located at Barrio Ibo, Lapu-Lapu City, Cebu, a contract and a condition imposed merely on the
owned by respondents. The purpose of the performance of an obligation. While failure to
expropriation was to establish and develop an comply with the first condition results in the failure
export processing zone or a part thereof on those of a contract, non-compliance with the second
real properties. After trial on the merits, the RTC merely gives the other party options and/or
rendered a decision ordering the expropriation of remedies to protect its interest.
the seven parcels of land and payment of just
compensation of P1,500 per sq. m. with 12% SAN MIGUEL PROPERTIES PHILS., INC. v SPOUSES
interest per annum from the time petitioner took ALFREDO and GRACE HUANG, G. R. No. 137290, 31
possession. During the pendency of petitioner’s July 2000
appeal for the correctness of valuation, both
parties reached an amicable settlement and agreed Nature of the Case: A petition for review for a
for the payment as fixed by RTC; as well as decision of the Court of Appeals which reversed
presentation by respondents of clean titles of all the decision of the RTC dismissing the complaint
the subject properties before payment by brought by the Huangs against San Miguel
petitioner. Properties for enforcement of a contract of sale.

Accordingly, the parties executed a deed of Facts: San Miguel Properties offered two parcels
absolute sale dated June 25, 2001 which set out of land for sale and the offer was made to an agent
the terms and conditions of their settlement, the of the respondents. An “earnest-deposit” of P1
transfer of ownership from respondents to million was offered by the respondents and was
petitioner and the execution by the parties of the accepted by the petitioner’s authorized officer
corresponding deed of absolute sale for the subject to certain terms.
remaining six lots as soon as respondents could
Petitioner, through its executive officer, wrote the promise on the part of respondents to buy the
respondent’s lawyer that because ethe parties subject properties within 30 days from the date of
failed to agree on the terms and conditions of the acceptance of the offer. Such option giving
sale despite the extension granted by the respondents the exclusive right to buy the
petitioner, the latter was returning the “earnest- properties within the period agreed upon is
deposit”. separate and distinct from the contract of sale
which the parties may enter. All that respondents
The respondents demanded execution of a deed of had was just the option to buy the properties
sale covering the properties and attempted to which privilege was not, however, exercised by
return the “earnest-deposit” but petitioner refused them because there was a failure to agree on the
on the ground that the option to purchase had terms of payment. No contract of sale may thus be
already expired. enforced by respondents.

A complaint for specific performance was filed Even the option secured by respondents from
against the petitioner and the latter filed a motion petitioner was fatally defective. Under the second
to dismiss the complaint because the alleged paragraph of Art. 1479, an accepted unilateral
“exclusive option” of the respondents lacked a promise to buy or sell a determinate thing for a
consideration separate and distinct from the price certain is binding upon the promisor only if
purchase price and was thus unenforceable; the the promise is supported by a distinct
complaint did not allege a cause of action because consideration. Consideration in an option contract
there was no “meeting of the mind” between the may be anything of value, unlike in sale where it
parties and therefore the contact of sale was not must be the price certain in money or its
perfected. equivalent. There is no showing here of any
consideration for the option. Lacking any proof of
The trial court granted the petitioner’s motion and such consideration, the option is unenforceable.
dismissed the action. The respondents filed a
motion for reconsideration but were denied by the Equally compelling as proof of the absence of a
trial court. The respondents elevated the matter to perfected sale is the second condition that, during
the Court of Appeals and the latter reversed the the option period, the parties would negotiate the
decision of the trial court and held that a valid terms and conditions of the purchase. The stages
contract of sale had been complied with. of a contract of sale are as follows: (1) negotiation,
covering the period from the time the prospective
Petitioner filed a motion for reconsideration but contracting parties indicate interest in the contract
was denied. to the time the contract is perfected; (2)
perfection, which takes place upon the
Issue: WON there was a perfected contract of sale concurrence of the essential elements of the sale
between the parties which are the meeting of the minds of the parties
as to the object of the contract and upon the price;
Ruling: The decision of the appellate court was and (3) consummation, which begins when the
reversed and the respondents’ complaint was parties perform their respective undertakings
dismissed. under the contract of sale, culminating in the
extinguishment thereof.
Ratio Decidendi: It is not the giving of earnest
money , but the proof of the concurrence of all the In the present case, the parties never got past the
essential elements of the contract of sale which negotiation stage. The alleged “indubitable
establishes the existence of a perfected sale. evidence” of a perfected sale cited by the appellate
court was nothing more than offers and counter-
The P1 million “earnest-deposit” could not have offers which did not amount to any final
been given as earnest money because at the time arrangement containing the essential elements of a
when petitioner accepted the terms of contract of sale. While the parties already agreed
respondents’ offer, their contract had not yet been on the real properties which were the objects of
perfected. This is evident from the following the sale and on the purchase price, the fact
conditions attached by respondents to their letter. remains that they failed to arrive at mutually
acceptable terms of payment, despite the 45-day
The first condition for an option period of 30 days extension given by petitioner.
sufficiently shows that a sale was never perfected.
As petitioner correctly points out, acceptance of
this condition did not give rise to a perfected sale
but merely to an option or an accepted unilateral