Facts:
Calixta Pasagui and Fausta Mosar filed a complaint against the defendants spouses Bocar alleging that the parcel of agricultural land they bought for the consideration of P2.8k was being illegally occupied by the defendants spouses Villablanca depriving the petitioner possession thereof. Pasagui was suing the spouse Bocar by virtue of the warranty clause contained in the deed of sale they executed.
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The appellees, Villablanca moved to dismiss the case
alleging that the CFI does not have jurisdiction since it is an action of forcible entry. The Pasaguis on the other hand, opposed the
dismissal claiming that it was not an action for forcible entry since it was not alleged that the deprivation was through force, stealth, intimidation etc.
The CFI however dismissed, holding that the action was one of forcible entry and hence jurisdiction belonged to the Justice of the Peace and not with the trial court.
Issues:
W/N the Pasagui’s action was one of forcible entry Ratio/Held:
NO, it is well settled that what determines jurisdiction of the municipal court in forcible entry cases are the allegations found in the complaint and the character of relief sought. In the
case at bar, the complaint did not allege that Pasagui were in physical possession of the land and have been deprived of such possession through force, intimidation, threat etc.
The complaint simply alleges that Pasagui bought the parcel of land from Bocar for P2.8k through a deed of sale which was notarized and registered and that the Villablanca took possession of the said lot, depriving Pasagui of possession.
The execution of the deed of absolute sale in a public instrument is equivalent to delivery of the land subject of the sale. Such constructive delivery would only have effect if no
IMPEDIMENT exists that would prevent the passing of property from the seller to the buyer. In the case at bar, however, Pasagui could not take possession of the land since it is being occupied by Villablanca hence; the action is not one of Forcible Entry since there was no prior possession of the land by Pasagui and the depravation of possession was not through FITSS granting jurisdiction to the CFI.
Power Commercial and Industrial Corp. v. CA
Facts:
Petitioner Power Commercial and Industrial Corp (PCIC) needed a bigger office space and warehouse for its products. For this purpose it entered into a contract of sale with the respondent- spouses Quiambao for a parcel of land located in San Antonio Village, Makati City. The parties agreed that PCIC would pay the Quiambaos P108k as downpayment and the balance of P295k would be paid once the deed of transfer of the title has been executed. It was also agreed upon that, PCIC would assume the mortgage of the Quiambaos with PNB amounting to around P80k. The Quiambaos however, mortgaged the said land again to guarantee a loan of P145k, P80k of which was already paid to the spouses. PCIC also agreed to assume the second mortgage.
On June 26, 1979 the PCIC and the Quiambaos executed a Deed of Absolute Sale with Assumption of Mortgage which stipulated the following:
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Said land is not covered by the Land Reform Code
Warrants that the Quiambaos are the lawful owners of the land described, free from any lien/encumberance
Warrants peaceful possession of the land to PCIC States that the property is mortgaged to PNB for P145k
which PCIC would assume to pay
Constantino, the General Manager of PCIC, submitted to the PNB the deed of sale along with the formal application for assumption of mortgage.
PNB however, informed the Quiambaos that PCIC failed to submit the papers necessary for the assumption of mortgage. PNB also told the Quiambaos that the application was deemed withdrawn and that the mortgage of P145k was deemed fully due and demandable and be paid within 15 days from notice. It turns out however, that PCIC paid PNB P41k and P20k on various dates which were to be applied to the outstanding loan. It was also found that, PCIC sent letters to PNB requesting that, “PCIC’s application for assumption of mortgage be approved and that the title be transferred to PCIC’s name because it was found that tenants occupied the land.” PNB however replied saying that PCIC needs to pay the remaining balance plus interest. This led PCIC to file a case against the Quiambaos for recission plus damages before the RTC of Pasig. PCIC then replied to PNB demanding the return of the payments they made since the application for mortgage was never approved. During the pendency of the trial, the property was foreclosed upon and was bought by PNB at the public auction.
The RTC ruled in favor of PCIC on the ground that the Quiambaos failed to deliver actual possession of the land to PCIC, entitling the latter to for rescission and ordering PNB to return to PCIC the payments made by the latter. This was however reversed by the CA, on the ground that the deed of sale did not obligate the Quiambaos to eject the lessees from the land as a pre-condition of the sale nor was the lessees occupation a breach of warranty. Hence, there was no substantial breach that would justify recission. Issues:
W/N there was substantial breach to justify rescission, because of nonejectment of the tenants and failure to deliver the lot sold W/N solution indebitii applies, obligating PNB to return to PCIC the payments they made
Ratio/Held:
NO, the “alleged” failure of the Quiambaos to eject the lessees and to deliver actual physical possession of the land did not constitute substantial breach to justify rescission, because:
(1) such “failure to eject” was NOT STIPULATED as a condition
(2) its effects and consequences were also not specified
The stipulations found in the deed of sale that “…warrants the land is free from any lien/encumberance, warrants peaceful possession in favor of PCIC etc etc” pertains to the usual warranty against eviction and NOT TO A CONDITION that was not met.
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Powers, the General Manager of PCIC, admitted to the fact that he did not ask PCIC’s lawyers to stipulate in the contract the guarantee to eject tenants, this proved to be fatal since it caused obscurity and therefore must be taken against PCIC.
If the parties intended to impose upon the Quiambaos the obligations to ejects the tenants from the lot sold, they should have included a provision saying so. Absent a stipulation therefor, the nonfullfilment of ejectment cannot be a ground for rescission. Furthermore, it was found that PCIC was aware that tenants did occupy the said lot, and even tasked its lawyers to eject such tenants.
On the issue of delivery, the SC held that there was indeed
delivery through the execution of the deed of sale. The lot in question was placed in the control of PCIC which enabled them to file the ejectment suit. Considering that deed of sale did not stipulate ejectment as a pre-condition, the SC held that execution of the deed of sale was sufficient delivery. Prior physical delivery is
not legally required and the execution of the deed of sale is deemed equivalent to delivery. (Note: is this contradictory to what the SC has been saying in the prior cases? Isn’t the presence of tenants here a impediment to PCIC from taking possession of the land? Ewan haha)
The court held that there was no breach of warranty against eviction can be appreciated because the facts of the case do not show that the requirements for breach was satisfied. The presence of lessees did not constitute as an encumberance nor does it deprive PCIC from control over the lot. PCIC’s deprivation of the lot
was due to its own fault, by its failure to pay the amortizations causing the lot to be foreclosed.
On the issue of solution indebitii, the SC held that PCIC was
under the obligation to pay the amortizations under the contract of sale and the deed of real estate of mortgage. Therefore it cannot be said that PCIC did not have any duty to pay PNB amortization, hence, there can be no mistake in payment.
Chua v CA
Facts
Valdes-Choy advertised for sale her paraphernal house and lot located in San Lorenzo Village, Makati City. Petitioner Chua responded to the ad and they two agreed on a purchase price of P10.8M payable in cash. Chua then paid Valdes-Choy P100k in earnest money stipulating that failure to pay the remaining balance of P10.7M would result to forfeiture of the earnest money.
Chua then secured from PBCom a managers check worth P480k. However, Chua immediately issued a stop-payment order on the managers check claiming that it was lost/misplaced. On the same day, PBCom Asst. VP Pe, notified the PBCom Operation group of Chua’s stop-payment order. On the same day, Chua and Valdes- Choy met with their respective counsels to execute the necessary documents and to arrange the payments. The first Deed of Sale covered the house and lot at the purchase price of P8M. The second
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Deed of Sale covered the movable properties in the house at the price of P2.8M. The capital gains tax was pegged at P485k.
The next day, Chua handed to Valdes-Choy the alleged “lost” PBCom check for P480k so Valdes-Choy could pay the capital gains tax since the latter did not have enough funds to pay such taxes. On the same day, Chua accompanied Valdes-Choy to Traders Royal Bank where she deposited the manager’s check and
subsequently purchased a Trader’s Royal Bank check payable to the Commissioner of Internal Revenue for the capital gains tax. Valdes- Choy gave the TRB check to her counsel who undertook to pay the CGT.
It was at this moment that Chua showed to Valdes-Choy a PBCom check for P10.215M representing the remaining balance of the purchase price. However, Chua refused to give it Valdes-Choy since the former required that the property be registered first in his name before he would turn the check over. This caused Valdes-Choy to rage on Chua tearing up the deeds of sale in the process claiming that it wasn’t part of their agreement.
The transaction was at an impasse and neither side were budging until Valdes-Choy suggested to her counsel that Chua should place the check in escrow and then she would cause the issuance of the TCT in Chua’s name. However, this fell on deaf ears.
Chua then filed with the RTC a complaint for specific performance against Valdes-Choy but which was subsequently dismissed. Chua however, refilled the case for specific performance plus damages and the trial court gave due course to the complaint.
The RTC ruled in favor of Chua, however the CA reversed and set aside the RTC decision dismissing the complaint.
The RTC ruling
Parties entered into a contract to sell evidenced by the receipt of P100k as earnest money
Chua complied with the terms of the contract to sell since he was prepared pay the balance on the condition that all papers must be in “proper order” before full payment is made
Valdes-Choy did not perform her obligations under the contract since the capital gains tax was still not paid. The CA ruling
In reversing the RTC, they said that Chua’s refusal to pay until the Certificate was issued in his name was not part of their agreement.
The CA found that all papers were in proper order hence Chua had no valid reason not to pay on the agreed date. Valdes-Choy was in a position to deliver the disputed
property to Chua
Chua’s capacity to pay could not be equated with actual payment since he actually refused to do so
Non-payment of the CGT has no bearing on the validity of the Deed of Sale since it is only after the deeds are signed and notarized can the final computation and payment of the CGT be made.
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W/N there was a perfected contract of sale or a mere contract to sell
W/N Chua can compel Valdes-Choy to cause the issuance of a new TCT in Chua’s name before payment of the full price
Ratio/Held:
The court held that the agreement by Chua and Valdes- Choy, as evidenced by the Receipt, IS A CONTRACT TO SELL and not a contract of sale.
In a contract of sale, title passes to the vendee upon delivery of the thing sold
In a contract to sell, ownership remains with vendor and is not to pass to the vendee until full payment of the purchase price
In the case at bar, the stipulation allowing Valdes-Choy to forfeit the earnest money in case of Chua’s failure to pay the balance is in the nature of a stipulation reserving ownership in the seller until full payment of the purchase price. The agreement between Chua and Valdes-Choy was embodied in a receipt rather than in a deed of sale, since ownership not having passed between them. It was also shown that Valdes-Choy retained possession of the certificate of title and all other documents relative to the sale. These are proof that the agreement did not transfer to Chua either by actual or constructive delivery, ownership of the property.
Since the agreement between Valdes-Choy and Chua is one of contract to sell, the full payment of the purchase price is a suspensive condition, non-fulfillment of which prevents the
obligation to sell from arising and ownership is retained by the seller without further remedies by the buyer.
It is only once the buyer pays the full purchase price would the seller be obligated to transfer ownership to the buyer. In the sale of real property, the seller is not obligated to transfer in the name of the a new certificate of title but rather to transfer
ownership of the real property. There is a difference because a
buyer may become the owner of the real property even though the title is still registered in the name of the seller. As between the seller and buyer, ownership is transferred not by issuance of a new certificate of title, but by the execution of the instrument of sale in
a public document. When the deed of absolute sale is signed by the
parties and notarized then the delivery is deemed made by the seller to the buyer.
In the case at bar it was found that Valdes-Choy was in a position to comply with her obligations as a seller
She signed the deeds of sale in the presence of Chua She was prepared to turn over the owner’s duplicate of the
TCT, along with the tax declarations and latest realty tax receipt to Chua
Chua’s refusal to pay the balance price put himself in default and has only himself to blame for the rescission by Valdes-Choy.
2016 B L O C K B 2 0 1 6 Facts:
The spouses Flores were the owners of two parcels of land located in Cubao, Quezon City. The spouses Flores and TATIC executed an agreement to sell which bound the spouses to sell such properties to TATIC. TATIC then applied for a loan with Capital Rural Bank of Makati to finance the purchase of the lots. The bank agreed to grant the application of TATIC on the condition that the
properties be registered in TATIC’s name as it would be used as collateral for the loan.
The spouses Flores, TATIC, Tobias, and the Bank entered into a memorandum of agreement where it was stipulated that:
Warrants that the properties are free from any liens/encumberances
Tobias, the broker, will undertake the payment of all taxes and assessment imposed over the lots, including the payment of the capital gains tax
Tobias would also undertake the ejectment of tenants on the lots with the assistance of the spouses Flores
The expenses incurred by TATIC and Tobias would be deducted from the purchase price of the property Pursuant to their MOA, the spouses Flores executed a deed of absolute sale in favor of TATIC for the price of P5.7m and turned over the custody of the titles to the Bank.
TATIC subsequently caused the sale of the said lots to petitioner Vive Eagle Land Inc (VELI) for the price of P6.3m and warranted that:
There were valid titles to the property and that TATIC would deliver to VELI possession thereof to the latter
Warrants that the land is free from any
liens/encumberances except the mortgage subsisting in favor of the Bank
TATIC would undertake to remove the occupants/tenants, otherwise VELI may may withhold payment of the balance of the purchase price
TATIC would cause the registration of the titles covering the lots in its name
VELI would assume the mortgage
Subsequently, VELI sold to its president, petitioner Cervantes and Genuino Ice Co. Inc (GICI) for the price of P4m. They executed a deed of assignment of rights to this effect.
The respondent GICI wrote a letter to letter to VELI
demanding VELI to pay the capital gains taxes but this was rejected by VELI. Respondent GICI then filed a complaint against VELI and its president Cervantes for specific performance plus damages, claiming that VELI failed to deliver the properties to GICI, to cause the ejectment of the occupants of properties and to pay the capital gains taxes. VELI answered, stating that it is exempt from payment of the CGT and that is the spouses Flores and Tobias who are liable for the payment of such taxes and that is also the spouses Flores and Tobias who are responsible for the ejectment of occupants.
The RTC ruled in favor GICI that it should be VELI who is liable to pay the GCT since the latter was not privy to the agreement between the spouses Flores, TATIC and VELI and as such is not
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bound by those deeds. VELI then appealed to the CA which affirmed the CA decision.
Issues:
W/N VELI is obliged to pay the expenses for the transfer of property in favor of GICI
W/N VELI is liable for the capital gains tax
W/N VELI is obliged to evict the remaining occupants on the property
Ratio/Held:
YES, VELI is liable for the said expenses because under Art 1487 of the Civil Code, the expenses for the registration of sale should be shouldered by the vendor unless there is a stipulation to the contrary.
While Art. 1498 of the Civil Code provides that the
execution of a notarized deed of sale shall be equivalent to delivery