G.R. No. 13435. July 27, 1960
EUSEBIO MANUEL, PLAINTIFF AND APPELLANT, VS. EULOGIO RODRIGUEZ, SR., ET AL., DEFENDANTS AND APPELLEES.
REYES, J.B.L., J.:
of Rizal, promulgated on October 31, 1957, dismissing his complaint.
Questions of law and of fact are involved, but the property being worth
over P2,000,000.00, the appeal was directly taken to this Court.
The complaint seeks to have plaintiff Eusebio Manuel declared absolute
owner of Lot 51, Plan Psu-32606, situated in San Mateo, Rizal; to
compel defendants to execute a deed of absolute sale of said lot in
favor of said plaintiff and to receive the unpaid balance of the
purchase price thereof; and to declare the subsequent sales of said lot
null and void and to cancel the transfer certificates of title issued
to the transferees. The cross-claim by defendant Eulogio Rodriguez
against his co-defendant Dolores Vda. de Landahl (as Administratrix of
the intestate estate of John Landahl having been dismissed, and there
being no appeal therefrom, the facts pertaining thereto will be omitted.
It appears that Januaria Rodriguez was the original registered owner of
a big tract of land (part of which is the land, in question), embraced
by Transfer Certificate of Title No. 8821 of the Register of Deeds of
Rizal. In 1924, Januaria Rodriguez ceded and transferred said land to
the Payatas Subdivision Inc., to be administered by said firm,
subdivided, sold, leased or otherwise disposed of (Exhibit “A”-1).
Defendant-appellee Eulogio Rodriguez was then the Secretary-Treasurer
of said Payatas Subdivision Inc.
Sometime in April, 1926,
plaintiff-appellant offered to buy the lot in question (about 248,310
sq. meters in area). The Company agreed to sell said lot (Lot 51) for
P2,240 in cash, or by installments with 10% interest (Exhibit “C”).
Plaintiff-appellant made a counter-offer for P2,000, which the Payatas
Subdivision accepted, provided it was paid in cash (Exhibit “E”).
Plaintiff-appellant wanted to pay in installments, and on August 2,
1926, the Company wrote him that it was agreeable to a down-payment of
P1,500, the balance to be paid within 9 to 10 months without interest,
or if the down-payment be less than P1,500, with interest at 10% on the
balance (Exhibit “F”). Plaintiff-appellant then requested that the
down-payment be reduced to P1,300, and through the intercession of
defendant-appellee Eulogio Rodriguez, Sr., who was
plaintiff-appellant’s friend, this was granted. After making the
initial payment of P1,300, a provisional receipt was issued, which, on
August 25, 1926, was substituted by the official receipt sent by
Casiano M. de Vera, the Company’s bookkeeper (Exhibits “G” &
“G”-1). Soon after, plaintiff-appellant was placed in the possession of
the lot.
It also appears that plaintiff-appellant did not
make any payments within the 9 to 10-month period mentioned in Exhibit
“F”, so that on April 30, 1928, the Payatas Subdivision Inc. sent him a
letter urging immediate payment of his unpaid account with the Company,
which, including interest, amounted to P819.23, and asking him to
answer within 10 days (Exhibit “H”). Thereafter, plaintiff-appellant
made another payment of P300 for which a receipt dated June 20, 1928
was issued to him (Exhibit “I”). So far as the record discloses, this
appears to be the last payment made by plaintiff-appellant on Lot 51,
the property in question. On April 24, 1929, the Payatas Subdivision
Inc. sent plaintiff-appellant a detailed statement of his unpaid
account which, including interest and taxes, amounted to P596.21,
urging immediate payment thereof, so that title could be transferred to
him as per agreement, and requesting answer within 10 days (Exhibit
“J”). Still, plaintiff-appellant did not pay his account, despite the
fact that thereafter, on several occasions, the Company sent to his
residence its acting secretary, Conrado Vicente, to collect the balance.
Defendants-appellees advance the theory that in view of
plaintiff-appellant’s repeated default in paying his outstanding
account, the Payatas Subdivision Inc. then considered his contract
cancelled and extinguished, and the amounts already paid (P1,600),
forfeited to the Company, the transaction being merely a contract to
sell or promise to sell; that sometime in 1939, the Payatas Subdivision
Inc., having sold all its properties (except some properties it was
administering for Januaria Rodriguez), was extrajudicially dissolved,
but its papers of dissolution were lost or destroyed during the war;
that after said dissolution, all unsold properties belonging to
Januaria Rodriguez were returned to her.
Sometime in 1941,
Januaria Rodriguez, who was the aunt of defendant-appellee Eulogio
Rodriguez, sold several properties to the latter, including Lot 51 in
question, in consideration of the monthly advances, support, services,
care, maintenance, medical expenses, etc. which she received from the
said Eulogio Rodriguez (Exhibit “U”). Pursuant to such sale, Transfer
Certificate of Title No. 44709 was issued to Eulogio Rodriguez, Sr.
(Exhibit 21-a).
Likewise, it appears that on February 4,
1941, Eulogio Rodriguez, Sr., then Mayor of Manila, instructed his
secretary to write plaintiff-appellant to urge him to pay his unsettled
account with the Payatas Subdivision, Inc. As per instructions, his
secretary wrote plaintiff-appellant (Exhibit “O”). Still, there was no
payment.
On August 5, 1944, Eulogio Rodriguez, Sr. sold Lot
51 (among others) to John Landahl (represented in the transaction by
Carlos Landahl as attorney-in-fact), for and in consideration of
P157,192.80, in Japanese war notes (Exhibit 1-Landahl). The sale was
duly registered and Transfer Certificate of Title No. 46521 was issued
in Landahl’s name (Exhibit 3-Landahl).
On April 6, 1949, or
just a little less than 23 years after the alleged sale to him of Lot
51 in 1926, plaintiff-appellant brought the instant case, as aforesaid,
to compel the execution of a formal deed of conveyance in his favor
covering the purported sale in 1926; to compel receipt of the unpaid
balance of the price which plaintiff-appellant consigned in court; and
to annul the subsequent sales to Eulogio Rodriguez and to John Landahl,
and the corresponding transfer certificates of title issued to them.
The decision of the trial court dismissing the complaint is predicated on two main findings—
Firstly.—That
the transaction in 1926 was a mere contract to sell or promise to sell
of Lot 51 to plaintiff-appellant, the understanding being that upon
failure to pay the installments as demanded, the vendor corporation had
the right to consider the contract cancelled and the amounts already
paid, forfeited.
Secondly.—That even under
plaintiff-appellant’s theory that his contract with the defunct Payatas
Subdivision Inc. was an absolute sale, involving immediate transfer of
ownership, his right of action to compel the execution of a formal deed
of conveyance has prescribed, whether the contract is considered
written or verbal (Sec. 43, pars. 1 & 2, Code of Civil Procedure,
Act 190); moreover, the action is barred by laches.
The findings that the contract entered into in 1926 was a mere contract
to sell or promise to sell was predicated on the following premises:
-
The alleged contract of absolute sale was not reduced to a formal deed
of conveyance, much less registered, which is unlikely if the contract
had been, an absolute sale, because plaintiff-appellant would have
insisted that it be reduced to a public document, the land being
covered by a Torrens title. - It
is highly improbable that the Payatas Subdivision Inc. would agree to
an immediate transfer of ownership to plaintiff without any guaranty or
security that the balance of the price would be completely paid. -
The statement in Exhibit “J”, introduced by plaintiff as his evidence,
requesting payment of the balance “at ng kayo naman ay mabigyan na ng
katibayan, alinsunod sa pinagkayarian”, confirms that the agreement
between plaintiff and the company was that title would be transferred
to plaintiff only upon full payment of the price. -
Plaintiff would not have waited for more than 20 years to file this
action to enforce the contract if this were an absolute sale,
considering that the land being covered by a Torrens title, it was easy
for the vendor to resell or encumber the same property to some other
person on the basis of a clean title. - The nature of the transaction as a mere contract to sell is established by the testimony of witnesses for defendants-appellees.
-
The dissolution of the Payatas Subdivision Inc. sometime in 1939 must
have been the reason which prompted the cancellation of plaintiff’s
contract, as it had to wind up all its affairs and conclude all pending
business before dissolution. - It
may be taken judicial notice of that it is a general practice among
subdivision companies engaging in installment sales to place the buyer
immediately in possession after the down-payment, the company remaining
owner of the property until full payment, at which time the deed of
conveyance is then executed in favor of the buyer; and if the buyer
defaults in paying the installments due, the corporation cancels the
contract and forfeits the amount already paid.
In
his brief containing 20 assignments of error, plaintiff-appellant
insists that the contract in 1926 was not merely a contract to sell but
an absolute sale (Errors I-IV). He Contends that contrary to the
finding of the lower court, the 1926 contract was not verbal but
written, citing the series of communications between
plaintiff-appellant and the Payatas Subdivision Inc., Exhibits “C” to
“G-1. A careful examination of these exhibits, however, reveals that
Exhibits “C” to “F” are mere bargaining negotiations that took place
before the parties arrived at a full understands while Exhibits “G” and
“G”-1 are mere receipts of payment; they fail to show that the parties
had committed all the terms of their agreement to writing. Exhibit “C”
merely offers to sell Lot 51 for P2,240, with interest at 10% if it be
by installments; Exhibit “D” offered to reduce the total price for Lots
44 and 51 (early negotiation were for 2 lots) to P2,955, and also
referred to other matters concerning the sale which should be discussed
personally by the parties; Exhibit “E” accepts a previous counter-offer
made by plaintiff-appellant to buy Lot 51 for P2,000, provided the
payment was in cash, and again referred to other matters regarding the
sale which should be threshed out between the parties; Exhibit “F”,
after making reference to the terms of payment desired by
plaintiff-appellant, laid down the condition that if the first payment
is at least P1,500, the balance payable in 9 to 10 months would not
bear interest; and if the initial payment was less than P1,500, the
balance would bear interest at 10%; Exhibit “G” is a note by Payatas
Inc. referring to the attached receipt, Exhibit “G-1”) covering the
down-payment of P1,300 made by plaintiff-appellant for Lot 51.
These letters show that if at all, only the price and the terms of
payment were in writing. The most important, the alleged transfer of
title, and the other matters alluded to in some of the communications,
were, not reduced to any written document. It is generally recognized
that to be a written contract, all its terms must be in writing; so
that a contract partly in writing and partly oral is, in legal effect,
an oral contract (Fey vs. Loose Wiles Biscuit Co., 75 P2d 810; Peifer vs.
NewComer, et al., 157 NE 240; 12 Am. Jur. 550). Apart from whether the
letters negotiating the transaction could constitute a written contract
of sale, the absence of a formal deed of conveyance strongly indicates
that the parties did not intend immediate transfer of title, but only a
transfer after full payment of the price. As observed by the trial
court, if the contract were an absolute sale, it is unlikely that
plaintiff-appellant would not have insisted that the same be reduced to
a public document, considering that Lot 51 is covered by a Torrens
title. On the other hand, it is unlikely for the Payatas Subdivision
Inc. to have agreed to an immediate transfer of ownership without
guaranty of the balance being ever paid.
One other evidence
of the true character of the transaction is the statement contained in
Exhibit “J” of the following tenor: “at ng kayo naman ay mabigyan na ng
katibayan, alinsunod sa pinagkayarian”, strengthening the conclusion
that what transpired in 1926 was a mere contract to sell, transfer of
title being conditioned on full payment of the price.
Plaintiff-appellant tries to refute this by citing El Banco Nacional
Filipino vs. Ah Sing, 69 Phil. 611, wherein the contract
captioned “Promesa De Venta” was held to be an absolute sale. Suffice
it to say that the comparison will not hold, because in the cited case,
the contract was reduced to a formal deed of conveyance and the court
found that the parties had agreed to and actually effectuated a
delivery. In the instant case, there was no formal deed of conveyance,
and, as the land is covered by a Torrens title, there could be no
delivery except by the act of registration of the deed or instrument.
Adding to the pile of circumstances, the fact that plaintiff-appellant
did not file this action to enforce the contract until after more than
20 years from the alleged absolute sale in 1926 induces no other
conclusion than that the transaction was a mere contract to sell, for
if it were an absolute sale, it was unlikely for plaintiff-appellant to
wait as long as he did before commencing the present action,
considering that as the land was covered by a Torrens title, it could
have been very easy for the Payatas Subdivision to dispose or encumber
the same to another party. Considering the steady increase in land
values since 192& (Martin vs. Martin,[*]
57 Off. Gaz. [9] 1589), plaintiff’s laches and his neglect to comply
with his own obligations are powerful indicia against the merits of his
case rendering his case highly inequitable.
The dissolution
of the Payatas Subdivision Inc. sometime in 1939 is sufficiently
established by the evidence. The only argument advanced by
plaintiff-appellant to show that it was not dissolved in 1939 (Errors
I-IV; IX-X) is Exhibit “O”, the letter written in 1941 by the secretary
of defendant-appellee Eulogio Rodriguez, asking for payment of the
balance of the price, wherein the statement appears “Sa utos ng
pangasiwan ng Payatas Estate Subdivision **”, from which it is supposed
to be inferred that said corporation had not yet been dissolved.
However, in Exhibit “O” itself, the payment was being asked to be made
at the office of defendant-appellee Eulogio Rodriguez at the City Hall,
showing that Payatas Subdivision no longer even had an office. Also
significant is the computation of interest mentioned in Exhibit “O”
which, according to said letter, accrued only up to January, 1939. All
these, plus the other circumstances on record, give credence to
defendant-appellees’ contention that the corporation was really
dissolved in 1939.
Although this dissolution cannot be
determinative of the character of the sale in 1926 (as to whether
conditional or absolute), it must really have been the occasion which
prompted the termination of the contract, as the corporation had to
wind up its affairs and close all pending business.
Plaintiff-appellant, however, argues (Errors I-IV; VI; VIII) that the
Payatas Subdivision had no right to cancel the contract, as there was
no demand by suit or notarial act, as provided by Article 1504 of the
Old Code (Art. 1592, N. C. C). This is without merit, because Article
1504 requiring demand by suit or notarial act in case the vendor of
realty wants to rescind, does not apply to a contract to sell or
promise to sell, where title remains with the vendor until fulfillment
to a positive suspensive condition, such as full payment of the price
(Caridad Estates vs. Santero, 71 Phil., 114, 121; Albea vs. Inquimboy, 86 Phil., 476; 47 Off. Gaz. Supp. 12, p. 181; Jocson vs. Capitol Subdivision Inc. et al., L-6573, February 28, 1955; Miranda vs. Caridad Estates, L-2077 and Aspuria vs. Caridad Estates, L-2121, October 3, 1950).
The contention of plaintiff-appellant that Payatas Subdivision Inc. had
no right to cancel the contract as there was only a “casual breach” is
likewise untenable. In contracts to sell, where ownership is retained
by the seller and is not to pass until the full payment of the price,
such payment, as we said, is a positive suspensive condition, the
failure of which is not a-breach, casual or serious, but simply an
event that prevented the obligation of the vendor to convey title from
acquiring binding force, in accordance with Article 1117 of the Old
Civil Code. To argue that there was only a casual breach is to proceed
from the assumption that the contract is one of absolute sale, where
non-payment is a resolutory condition, which is not the case.
Whether the trial court could take judicial notice of the alleged
practice in subdivision companies to retain ownership over lands they
contracted to sell, until full payment of the price, we find not
necessary to discuss. The circumstances shown by the trend of evidence,
including the oral testimony of the witnesses for defendants-appellees,
more than convince this Court that the transaction in 1926 was merely a
contract to sell, subject to a suspensive condition that was terminated
for the Payatas Subdivision Inc. before its dissolution, by reason of
the non-payment of the balance of the price.
It is contended
(Error V) that the balance of the price was not due and payable within
the 9 to 10-month period mentioned in Exhibit “F”. This Court has
examined said letter, and finds nothing to justify such a strained
conclusion. Reasonably interpreted, the pertinent portion merely stated
that if the first payment is at least P1,500, then, the balance will
bear interest at 10%. In other words, the initial payment determines
whether or not interest will be paid, not the period within which the
balance will fall due. The period here bears no relation to the amount
to be initially paid. At any rate, plaintiff-appellant was legally
bound to pay the obligation due upon judicial or extra-judicial demand
(Art. 1100, Old Civil Code; Article 1169, N.C.C.); and it appears that
demands were made which plaintiff-appellant failed to heed.
Plaintiff-appellant next contends (Errors IX-XI) that when Exhibit “O”
was sent by Clemente Felix, upon instructions of defendant-appellee
Eulogio Rodriguez, the latter was not yet the owner of Lot 51 and the
Payatas Subdivision Inc. had not yet been dissolved. As earlier
discussed, there is enough evidence that the company was dissolved in
1939. As to whether or not Eulogio Rodriguez had already acquired Lot
51 when Exhibit “O” was sent to plaintiff-appellant, it would really
seem that said Eulogio Rodriguez, as of that time, was not yet the
owner of Lot 51, since Exhibit “0” is dated February 4, 1941 while
Exhibit “U” (the deed of sale from Januaria Rodriguez to Eulogio
Rodriguez) is dated December 26, 1941. But this is not material, since
it would merely show that, for whomever Eulogio Rodriguez was acting,
he still wanted to give plaintiff-appellant a chance to own the land as
a gesture of liberality. Anyway, appellant failed to take advantage of
the proposal, and the same remains without binding effect.
Having lost all rights to the land, plaintiff-appellant has no
personality to question the sales subsequently made to Eulogio
Rodriguez, and later, to John Landhal. Hence, it becomes academic to
discuss the assignments of error pertaining thereto (Errors VII, XII,
XIII, XIV, XV, XVI), specially since there is no evidence that Landhal
was prevented from relying on the clean certificate of title in the
name of Rodriguez.
From a different perspective, there is
yet another reason why the purported sale to plaintiff-appellant could
not have transferred title to him, and could not have prevented the
subsequent sale of the property to another party. The land in question,
being covered by a Torrens title, only the act of registration of the
deed or instrument could effect transfer of ownership (Worcester vs. Ocampo, 34 Phil. 646; Tuason vs. Raymundo, 28 Phil. 635; Buzon vs. Lichauco, 13 Phil. 354). In the instant case, there is not even a deed or instrument that could possibly be registered.
Having reached the conclusion that title to the disputed property never
passed to plaintiff-appellant; that his failure to complete payment of
the price and his laches in enforcing his rights render it inequitable
to compel performance of the contract at the present time, we find it
unnecessary to discuss the remaining errors assigned in appellant’s
brief.
Equity would, of course, demand that, in the absence
of stipulation, the amounts paid by plaintiff be returned, since the
purpose for which he paid them was not attained; and it appears of
record that such reimbursement was made as early as 1945 (Exhibits 1 to
1-C).
In view of the foregoing, the judgment of the trial court is affirmed. Costs against plaintiff-appellant.
Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David, JJ., concur.
Endencia, J., did not take part.
[1] 106 Phil., 750.