Sps. Torcuator v. Sps. Bernabe

G.R. No. 134219, 8 June 2005

FACTS:

The subject of this action is Lot 17, Block 5 of the Ayala Alabang Village, Muntinlupa, Metro-Manila,with an area of 569 square meters and covered by TCT No. S-79773. The above parcel of land waspurchased by the Salvador spouses from the developers of Ayala Alabang subject, among others, to thefollowing conditions:–“It is part of the condition of buying a lot in Ayala Alabang Village (a) that the lot buyer shall deposit withAyala Corporation a cash bond (about P17,000.00 for the Salvadors) which shall be refunded to him if he builds a residence thereon within two (2) years of purchase, otherwise the deposit shall be forfeited, (b)architectural plans for any improvement shall be approved by Ayala Corporation, and (c) no lot may be resold by the buyer unless a residential house has been constructed thereon (Ayala Corporation keeps theTorrens Title in their [sic] possession). Salvadors sold the parcel of land to Bernabe spouses. Salvadors executed a special power of attorneyauthorizing the Bernabes to construct a residential house on the lot and to transfer the title in their names.Bernabes, on the other hand, without making any improvement, contracted to sell the parcel of land to Torcuator spouses. Confronted by the Ayala Alabang restrictions, the parties agreed to cause the sale between the Salvadors and the Bernabes cancelled, in favor of (a) a new deed of sale from the Salvadors directly to the Torcuators; (b) a new Irrevocable Special Power of Attorney executed by the Salvadors tothe Torcuators in order for the latter to build a house on the land in question; and (c) an IrrevocableSpecial Power of Attorney from the Salvadors to the Bernabes authorizing the latter to sell, transfer andconvey, with power of substitution, the subject lot.The deed of sale was never consummated nor was payment on the said sale ever effected. Subsequently,Bernabes sold to Angeles, a brother-in-law, however the document was not notarized. Torcuators filed anaction against the Bernabes and Salvadors for Specific Performance or Rescission with Damages. TCdismissed petition. CA also dismissed the appeal, ruling that the sale between the Bernabes and theTorcuators was tainted with serious irregularities and bad faith.

ISSUE:

WON the agreement is a contract to sell or a contract of sale. 

RULING:

The agreement is a contract to sell.Contract of sale- title passes to the buyer upon delivery of the thing sold; Non-payment of the price is anegative resolutory condition.Contract to sell- ownership is reserved in the seller and is not to pass until the full payment of the purchase price is made; Full payment is a positive suspensive condition.

The agreement imposed upon petitioners the obligation to fully pay the agreed purchase price for the property; that ownership shall not pass to petitioners until they have fully paid the price is implicit in the agreement. Salvadors did not execute a deed of sale in favor of Torcuator, but a special power of attorney authorizing the Bernabes to sell the property on their behalf, in order to afford the latter a measure of protection that would guarantee full payment of the purchase price before any deed of sale in favor of Torcuator was executed.Ayala Corporation retained title to the property and the Salvador spouses were precluded from selling itunless a residence had been constructed thereon. Had the agreement been a contract of sale, the special power of attorney would have been entirely unnecessary as petitioners would have had the right to compel the Salvadors to transfer ownership to them.The special power of attorney does not contain the essential elements of the purported contract and, more tellingly, does not even refer to any agreement for the sale of the property. In any case, it was rendered virtually inoperable as a consequence of the Salvadors’ adamant refusal to part with their title to the property.Petition denied.

* Case digest by  Leizel O.  Lagare, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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