HENRY MACION AND ANGELES MACION, PETITIONERS, VS. HON. JAPAL M. GUIANI, IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT BRANCH 14, COTABATO CITY AND DELA VIDA INS…

The subject of this litigation revolves around two (2) parcels of
adjoining lots owned by petitioners which are the proposed extension sites of
De La Vida Institute, an educational institution located in Cotabato City.

On April 26, 1991, the petitioners and private respondent entered
into a contract to sell under which terms, private respondent, as president of
De la Vida Institute, assured petitioners that they would buy the said
properties on or before July 31, 1991 in the amount of P1,750,000.00. In the meantime, petitioners surrendered the physical
possession of the two lots to private respondent who promptly built an edifice
worth P800,000.00.^[1]

But on July 31, 1991, the sale did not materialize. Consequently, petitioners filed a complaint
for unlawful detainer against private respondent (MTCC Civil Case No.
2739). In retaliation, private
respondent filed a complaint for reformation of the contract to sell executed
on April 26, 1991 (Civil Case 592).^[2]
Afterwards, the parties met to settle their differences.

On February 6, 1992, the parties entered into a compromise
agreement which stipulated among others that petitioners would give private
respondent five (5) months to raise the amount of P2,060,000.00;^[3]
that in the event of failure to raise the said amount within the designated
period, private respondent would vacate the premises immediately. The compromise agreement, inter alia,
provided:

“6.  that upon the execution of this agreement, the
defendant will furnish the plaintiff with xerox copy of the land title for each
lot which the latter may use for the purpose of providing information in securing a loan from any financing
or banking institution of their choice.

7.   that if within the
period of five (5) months from and after February 6, 1992, the plaintiff
succeeds in obtaining funds for the purpose of settling their obligations with
defendants in the total sum of P2,060,000.00 the latter shall oblige themselves
to execute, sign and deliver to the former the corresponding Deed of Sale for
the two (2) lots which is the subject of this case and turn-over to said
plaintiff the owner’s
duplicate copy of TCT Nos. T-22004 and T-22005 of the Registry of Deeds for the
City of Cotabato.”

In affirmation of the compromise agreement, the Board of Trustees
of De La Vida College passed thereafter a resolution expressing full support to the said agreement entered
into between the parties.^[4]

On March 10, 1992,
private respondent wrote petitioners that “the compromise agreement we
have had in  the presence of Judge Guiani
is not the same as per attached xerox copy you gave us.” In that
letter, which essentially
was a counterproposal, private respondent said that the price of P2,060,000.00
was higher than what they were willing to pay in the amount of P2,000,000.00 only.^[5] Other
matters taken up in the letter were: De
La Vida Institute would admit students and hold classes until July 6, 1992 but
in case they (private respondent) fail to deliver the said amount, they would
voluntarily vacate the premises and that “in the event that the bank and
other lending institutions give its nod and approval to our loan and require
the submission of other documents, you will give to us the Deed of Sale and
Owner’s copies of the Titles of the two (2) lots to expedite release of
the amount concerned.”^[6]

On March 25, 1992, the trial court approved the compromise
agreement dated February 6, 1992.

Two (2) months after, private
respondents, alleging that they had negotiated a loan from the Bank of
the Philippine Islands, wrote letters dated May 19, 20 and 26 requesting
petitioners to execute with them a contract to sell in their favor. On May 28, 1992, private respondent filed
with the trial court an urgent motion for an order directing petitioners to
execute a contract to sell in private respondent’s favor in accordance with
paragraph 7 of the compromise agreement.^[7]

On July 8, 1992, petitioners filed a motion for execution of
judgment alleging that after a lapse of five (5) months from February
6, 1992, private respondents have failed to settle their obligations
with petitioners.^[8]

In its order dated August 6, 1992, respondent judge denied the
motion for execution and directed petitioners to execute the required contract
to sell in favor of private respondent. Respondent judge opined that the proximate cause of private respondent’s
failure to comply with the compromise agreement was the refusal of petitioners
to execute
a contract to sell as required under the agreement. Respondent judge added that petitioners should have executed
the contract to sell because anyway they would not be prejudiced since there was no
transfer of ownership involved in a contract to sell.^[9]

Hence this instant petition for certiorari, with prayer
for a temporary restraining order enjoining respondent judge from enforcing its
August 6, 1992 order.

On October 7, 1992, petitioners filed an
Omnibus Urgent Motion praying that private respondent be ordered to consign
with the court below P135,000.00 representing rentals from May 1991 to January
1992. In our resolution dated November
18, 1992, we granted said prayer. On
March 9, 1993, private respondent consigned with the Office of the Clerk
of Court the sum of P135,000.00. On
March 29, 1993, petitioners filed with the lower court a motion to withdraw the
consigned amount and on April 5, 1993, the trial court released the consigned
amount to petitioners.^[10]

The issue in the case at bar is whether or not respondent judge
committed grave abuse of discretion in ordering petitioner to execute a
contract to sell in favor of private respondent.

We dismiss the petition.

The resolution of this case hinges on whether the compromise
agreement gives private respondent-buyer the right to demand from
petitioner-sellers the execution of a contract to sell in favor of the former.

Apparently, paragraph 7 of the compromise agreement does not give
such right to private respondent-buyer. To wit:

“7.  that if within the period of five (5) months
from and after February 6, 1992, the plaintiff succeeds in obtaining funds for
the purpose of settling their obligations with defendants in the total sum of
P2,060,000.00 the latter shall oblige themselves to execute, sign and deliver
to the former the corresponding Deed of Sale for the two
(2) lots which is the subject of this case and turn-over to said plaintiff the
owner’s duplicate copy of TCT Nos. T-22004 and T-22005 of the Registry of Deeds
for the City of Cotabato.” (Underscoring provided).

From
the aforecited paragraph, it is clear that the seller is obliged to
execute a Deed of Sale and not a Contract to Sell upon payment of the full
price of P2.06 million. Thereafter, the
sellers would turn over to the buyers, respondents herein, the owner’s
duplicate copy of Transfer Certificate of Title Nos. T-22004 and T-22005.

However, in the
interpretation of the compromise agreement, we must delve into the
contemporaneous and subsequent acts of the parties to fathom the real intention
of the parties.^[11] A review of
the facts reveals that even prior to the signing of the compromise agreement
and the filing of Civil Case No. 592 before the trial court, the parties had
already entered into a contract to sell. Thereafter, when the transaction failed to materialize, the parties
filed suits against each other; petitioners, their unlawful detainer
case, and private respondent a complaint for reformation of contract, alleging
that petitioners in fact had caused the preparation of the contract to sell
dated April 26, 1991 with the understanding that the land would be used as a
collateral in obtaining a loan with DBP.

Said contract to sell was
superseded by the compromise agreement entered into on February 6, 1992
containing the abovequoted paragraph. It must be recalled that private respondent was given five (5) months from
February 6, 1992, i.e., on or before July 6, 1992 to secure the purchase
price of the two (2) lots. We note that
within the time frame agreed upon by the parties, private respondents wrote
three (3) letters dated May 19, 20 and 26 requesting petitioners to execute a
contract to sell
in its favor.

Under these factual circumstances, we opine that the compromise agreement
must be interpreted as bestowing upon private respondent-buyer the power to
demand a contract to sell from petitioner-sellers. Where the seller promised to execute a deed of absolute sale upon
completing payment of the price, it is a contract to sell.^[12] In the
case at bar, the sale is still in the executory stage since the passing of
title is subject to a suspensive condition, namely, that if private respondent
is able to secure the needed funds to be used in the purchase of the two (2)
lots owned by petitioners. A mere
executory sale, one where the sellers merely promise to transfer the property
at some future date, or where some conditions have to be fulfilled before the
contract is converted from an executory to an executed one, does not pass ownership
over the real estate being sold.^[13]

In our jurisdiction, it has been held that an accepted bilateral
promise to buy and sell is in a sense similar to, but not exactly the same, as
a perfected contract of sale because there is already a meeting of minds upon
the thing which is the object of the contract and upon the price.^[14] But a contract
of sale is consummated only upon delivery and payment. It cannot be denied that the compromise
agreement, having been signed by both parties, is tantamount to a bilateral
promise to buy and sell a certain thing for a price certain. Hence, this gives the contracting parties
rights in personam, such that each has the right to demand from
the other the fulfillment of their respective undertakings.^[15]
Demandability may be exercised at any time after the execution of the
Deed.^[16]

The order of respondent judge directing petitioners to issue a
contract to sell does not place petitioners in any danger of losing their
property without consideration, for, to repeat, in a contract to sell there is
no immediate transfer of ownership. In
contracts to sell, payment is a positive suspensive condition, failure of which does
not constitute a breach but an event that prevents the obligation of the vendor
to convey title from materializing, in accordance with Article 1184 of
the Civil Code.^[17]
Petitioners as promisors were never obliged to convey title before the
happening of the suspensive condition. In fact, nothing stood in the way of their selling the property to
another after an unsuccessful demand for said price upon the expiration
of the time agreed upon.

Since the period given by petitioners under the compromise
agreement has already lapsed, we order the trial court to fix anew a period
within which private respondents could secure the needed funds for the purchase
of the land.^[18]
Moreover, considering that private respondents have only consigned rentals from
May 1991 to January 1992 and have since accepted students for the present
school year, it is only proper that they be ordered to deposit the monthly rentals
collected thereafter with the trial court.

WHEREFORE, the instant petition is DISMISSED. Petitioners are hereby ordered to EXECUTE a
contract to sell in favor of
private respondents. On the other hand,
private respondent is ordered to DEPOSIT with the trial court current rentals pending consummation of the
transaction between the parties. The
trial court is ordered to FIX anew the period within which private respondents
may be given the opportunity to raise funds for the purchase of the two (2)
adjoining lots owned by petitioners.

SO ORDERED.

Feliciano, (Chairman), Bidin, Melo, and Vitug, JJ., concur.

^[1]
Exhibit D, Rollo, p. 27.

^[2]
Exhibit E, Rollo, p. 30.

^[3]
Calculated as follows: P1,750,000
as price of defendants’ 2 parcels of lots situated along Notre Dame Avenue, Cotobato City + P175,000
as interest of 2% a month on P1,750,000 for five months from February 6, 1992
to July 6, 1992. Provided the only
interest due upon full payment of P1,750,000 and back rentals of, P135,000 shall
be accounted and paid by complainant. (EX. If the above obligations are
fully paid on May 31,1992 then the interest from June 1, 1992 to July 6, 1992
shall no longer be due and payable) + P135,000 as rentals for the period
from May 1991 to January 1992.

^[4]
Exhibit B-3, Rollo, p. 22.

^[5]
P1,750,000.00 – as price of the two (2) parcels of lots situated along Notre
Dame Avenue Cotabato City.

P175,000.00 – as interest of two (2)% percent a month of
P1,750,000.00 for five months from February 6, 1992 to July 6, 1992.

P75,000.00 – as rentals for the period from May 1991 to Jan. 1992.

^[6]
Exhibit K, Rollo, p. 53.

^[7]
Exhibit O, Rollo,
pp. 58-60.

^[8]
Exhibit Q, Rollo, p. 63.

^[9]
Exhibit A, Rollo, p. 18.

^[10]
Rollo, pp. 144-146.

^[11]
Article 1371, Civil Code.

^[12]
Dichosos v. Roxas, G.R. No. 17441,
July 31, 1962, 5 SCRA 781.

^[13]
Mccullough and Co., v. Berger, 43 Phil.
823 (1922).

^[14]
Article 1479, Civil Code, El Banco Nacional Filipino v. Ah Sing, 69
Phil. 611 (1940); Manuel v. Rodriguez, 109 Phil. 1 (1960).

^[15]
Villamor v. CA, G.R. No. 97332, October 10, 1991, 202 SCRA 607; Borromeo
v. Franco, et al., 5 Phil. 49 (1905).

^[16]
Sanchez v. Rigos, G.R. No. L-25494, June 14, 1972, 45 SCRA 368, 376.

^[17]
Alfonso v. CA, G.R. No. 63745, June 8, 1990, 186 SCRA 400; Manuel v.
Rodriguez, 109 Phil. 1 (1960); Luzon Brokerage Co. Inc. v. Maritime Building Co. Inc.,
G.R. No. 25885, January 31, 1972, 43 SCRA 93.

^[18]
Article 1197, Civil Code.