FLORANTE VIDAD, SR., ARLENE VIDAD-ABSALON AND FLORANTE VIDAD, JR., PETITIONERS, VS. ELPIDIO TAYAMEN AND LAUREANA TAYAMEN, RESPONDENTS.

Vidad versus Tayamen

The Case

This is a petition for review brought by Florante Vidad, Senior, Arelene Vidad-Absalon, and Florante Vidad, Junior against the spouses Elpidio and Laureana Tayamen, arising from a complaint for recovery of possession and damages over a three-door apartment and the lot on which it stands in Manila. The Vidads were occupying one door of the apartment and refused to leave after the Tayamens acquired the property. The case matters because it draws the classic dividing line between a contract of sale and a contract to sell, and because it explains when an appellate court may rule on matters not assigned as errors on appeal.

Procedural History

The Tayamens filed a complaint for recovery of possession and damages before the Regional Trial Court of Manila, Branch 34. After trial, the trial court rendered judgment dismissing the complaint for want of merit and likewise dismissing the counterclaim. On motion for reconsideration, the trial court modified its judgment and ordered the Vidads to pay the Tayamens 200,000 pesos, representing one third of the 600,000 pesos paid to Dr. Rebecca Cabanos, with six percent interest per annum from April 22, 1997 until fully paid.

The Vidads appealed to the Court of Appeals, which reversed the trial court. The appellate court ordered the Vidads and all other persons living in the subject apartment unit to vacate it, and to pay the Tayamens 1,000 pesos per month as rental plus legal interest from September 1982 to the time the complaint was filed in May 1997, and 5,000 pesos per month thereafter until the unit is finally vacated. The prayer for attorney's fees and costs was denied. The Court of Appeals also denied the Vidads' motion for reconsideration. Hence, the Vidads elevated the matter to the Supreme Court by petition.

Facts

On August 27, 1982, the spouses Elpidio and Laureana Tayamen purchased from the spouses Henry and Roselita Batara a parcel of land with a three-door apartment, covered by a transfer certificate of title of the Registry of Deeds of Manila. The deed of sale was notarized on August 31, 1982. The Tayamens claimed that when the deed was executed they knew of no infirmity or adverse claim over the land other than a mortgage lien in favor of Veterans Bank, and that the Vidads were then renting an apartment covered by the purchase.

After the Tayamens had fully paid the Bataras' loan with Veterans Bank, a certain Dr. Rebecca Cabanos confronted them, claiming that she had bought the property in an auction sale and was the new owner. To protect their rights, the Tayamens filed an affidavit of adverse claim with the Registry of Deeds on August 27, 1986, and later filed a civil case on May 23, 1988 to annul the sheriff's sale in favor of Dr. Cabanos. Meanwhile, the Vidads filed their own complaint before the Regional Trial Court of Manila, Branch 20, alleging that three years before the Tayamens' purchase, the Bataras had already entered into a contract of sale with them over the apartment unit they were occupying, under a memorandum of agreement for which they made a downpayment of 25,000 pesos, and that the Bataras later agreed to sell the entire three-door apartment for 160,000 pesos, which the Vidads had paid in full. That complaint was dismissed on July 21, 1994 for failure to prosecute.

The Tayamens' case against Dr. Cabanos was amicably settled through a compromise agreement approved by the trial court on April 30, 1997, after Dr. Cabanos waived and quitclaimed all her rights, interest, and participation over the property and allowed the transfer of title and ownership to the Tayamens. The Tayamens then demanded that the Vidads vacate the apartment, but the Vidads refused. On May 23, 1997, the Tayamens filed the complaint for recovery of possession and damages.

Issues

• Whether or not the Court of Appeals may grant an affirmative relief other than that obtained from the lower court.
• Whether or not the Court of Appeals erred in deciding the issue of ownership, which was allegedly not among the assigned errors in the appeal.
• Whether or not the Court of Appeals erred in reversing the trial court's decision declaring that the property in question belonged to the petitioners.

Applicable Provisions

Section 8, Rule 51 of the Revised Rules of Court provides:

Section 8. Questions that may be decided. No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may pass upon plain errors and clerical errors.

This rule governs the first issue, on whether the appellate court may pass upon matters beyond the assigned errors.

Ruling

On the first issue, the Court held that the Court of Appeals did not err in passing upon an unassigned error. While the general rule is that an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than those granted in the decision below, the Court explained that the Court of Appeals is imbued with sufficient authority and discretion to review matters not otherwise assigned as errors on appeal if it finds that their consideration is necessary in arriving at a complete and just resolution of the case, or to serve the interests of justice, or to avoid dispensing piecemeal justice. The Court recalled its ruling in Sesbreño versus Central Board of Assessment Appeals that an appellate court has an inherent authority to review unassigned errors which are closely related to an error properly raised, upon which the determination of the error properly assigned is dependent, or where the Court finds that consideration of them is necessary in arriving at a just decision of the case.

On the second issue, the Court held that the Court of Appeals did not err in deciding the issue of ownership. The Vidads themselves had assigned ownership as one of the errors of the lower court, having alleged that the trial court erred in not declaring the deed of sale between Henry Batara and the Tayamens null and void. Moreover, to determine whether the Vidads were really liable to the Tayamens for 200,000 pesos, the appellate court first had to determine who actually owned the property.

On the third issue, the Court held that the memorandum of agreement relied upon by the Vidads was a contract to sell, not a contract of sale. The Court laid down the distinctions: in a contract of sale, the non-payment of the price is a resolutory condition which extinguishes the transaction that, for a time, existed and discharges the obligations created thereunder; in a contract to sell, full payment of the purchase price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. In a contract of sale, title over the property generally passes to the buyer upon delivery; in a contract to sell, ownership is retained by the seller, regardless of delivery, and is not to pass until full payment of the price. In a contract of sale, after delivery has been made, the seller has lost ownership and cannot recover it unless the contract is resolved or rescinded; in a contract to sell, since the seller retains ownership despite delivery, he is enforcing and not rescinding the contract if he seeks to oust the buyer for failure to pay.

The Court noted that the memorandum of agreement contained an implicit agreement that the seller retained ownership regardless of whether or not there was delivery, since ownership was not to pass until full payment of the price, as the agreement provided that the balance of the entire amount shall be paid and a deed of absolute sale be executed as per agreement later on by the parties. The payment in full of the price was a positive suspensive condition, a peculiar characteristic of a contract to sell. The Court also noted the term "commit to sell" in the first paragraph of the agreement. Since the agreement was a contract to sell, the Vidads did not have full ownership rights over the subject property.

The Court further agreed with the Court of Appeals that the deed of absolute sale between the Tayamens and Batara was valid, the deed having been made in accordance with law, since Dr. Cabanos had waived and quitclaimed any and all rights, interest, or participation she may have had over the subject property arising from the execution sale, and thereby allowed the consolidation of title and ownership in the Tayamens. Thus, title and ownership in the name of the Tayamens could already be consolidated by reason of the deed of absolute sale dated August 27, 1982.

Doctrine

A contract of sale is distinguished from a contract to sell in three ways. First, in a contract of sale the non-payment of the price is a resolutory condition that extinguishes the transaction and discharges the obligations created thereunder, while in a contract to sell full payment of the price is a positive suspensive condition whose failure is not a breach but an event that prevents the vendor's obligation to convey title from becoming effective. Second, in a contract of sale title generally passes to the buyer upon delivery, while in a contract to sell ownership is retained by the seller regardless of delivery and does not pass until full payment of the price. Third, in a contract of sale the seller who has delivered has lost ownership and cannot recover it unless the contract is resolved or rescinded, while in a contract to sell the seller who retains ownership is enforcing, not rescinding, the contract when he seeks to oust the buyer for failure to pay. An appellate court may review matters not assigned as errors on appeal when their consideration is necessary to arrive at a complete and just resolution of the case, to serve the interests of justice, or to avoid piecemeal justice, consistent with Section 8, Rule 51 of the Revised Rules of Court.

Disposition

The petition was denied, and the decision and resolution of the Court of Appeals were affirmed; the Vidads lost and were ordered to vacate the apartment unit and pay rentals.

Remember This

Memorize the line that in a contract to sell, full payment of the price is a positive suspensive condition, so that failure to pay is not a breach but an event that prevents the vendor's obligation to convey title from becoming effective. Examiners use this case to test the contract of sale against the contract to sell, and to test the appellate court's authority to rule on unassigned errors under Section 8, Rule 51.