Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190016 October 2, 2013
FREDERICK VENTURA, MARITES VENTURA-
ROXAS, and PHILIP VENTURA (HEIRS OF
DECEASED DOLORES C. VENTURA), Petitioners,
vs.
HEIRS OF SPOUSES EUSTACIO T. ENDAYA and
TRINIDAD L. ENDAYA, namely, TITUS L.
ENDAYA, ENRICO L. ENDAYA, and JOSEPHINE
ENDAYA-BANTUG,1 Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari2 is the
Decision3 dated August 18, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No.68465 which
reversed and set aside the Decision4 dated August
7, 2000 of the Regional Trial Court of Parañaque
City, Branch 258 (RTC) in Civil Case No. 96-0500,
dismissing petitioners' complaint for specific
performance seeking to compel respondents to
execute a deed of sale over the properties subject of
this case.
The facts
On June 29, 1981, Dolores Ventura (Dolores)
entered into a Contract to Sell5 (contract to sell) with
spouses Eustacio and Trinidad Endaya (Sps.
Endaya) for the purchase of two parcels of land
covered by Transfer Certificates of Title (TCT) Nos.
3922256 and (343392) S-679757 (subject properties),
denominated as Lots 8 and 9, Block 3, situated in
Marian Road II, Marian Park8 (now Barangay San
Martin de Porres),9 Parañaque City, Metro Manila.
The contract to sell provides that the purchase price
of ₱347,760.00shall be paid by Dolores in the
following manner: (a) down payment of ₱103,284.00
upon execution of the contract; and (b) the balance
of ₱244,476.00 within a 15-year period (payment
period), plus 12% interest per annum (p.a.) on the
outstanding balance and 12% interest p.a. on
arrearages. It further provides that all payments
made shall be applied in the following order: first, to
the reimbursement of real estate taxes and other
charges; second, to the interest accrued to the date
of payment; third, to the amortization of the principal
obligation; and fourth, to the payment of any other
accessory obligation subsequently incurred by the
owner in favor of the buyer. It likewise imposed upon
Dolores the obligation to pay the real property taxes
over the subject properties, or to reimburse Sps.
Endaya for any tax payments made by them, plus
1% interest per month. Upon full payment of the
stipulated consideration, Sps. Endaya undertook to
execute a final deed of sale and transfer ownership
over the same in favor of Dolores.10
Meanwhile, Dolores was placed in possession of the
subject properties and allowed to erect a building
thereon.11However, on April 10, 1992, before the
payment period expired, Dolores passed away.12
On November 28, 1996, Dolores’ children, Frederick
Ventura, Marites Ventura-Roxas, and Philip Ventura
(petitioners), filed before the RTC a Complaint13 and,
thereafter, an Amended Complaint14 for specific
performance, seeking to compel Sps. Endaya to
execute a deed of sale over the subject properties.
In this regard, they averred that due to the close
friendship between their parents and Sps. Endaya,
the latter did not require the then widowed Dolores
to pay the down payment stated in the contract to
sell and, instead, allowed her to pay amounts as her
means would permit. The payments were made in
cash as well as in kind,15 and the same were
recorded by respondent Trinidad herself in a
passbook16 given to Dolores to evidence the receipt
of said payments. As of June 15, 1996, the total
payments made by Dolores and petitioners
amounted to ₱952,152.00, which is more than the
agreed purchase price of ₱347,760.00, including the
12%interest p.a. thereon computed on the
outstanding balance.17
However, when petitioners demanded18 the
execution of the corresponding deed of sale, Sps.
Endaya refused.
For their part, Sps. Endaya filed their
Answer,19 admitting the execution and genuineness
of the contract to sell and the passbook. However,
they countered that Dolores did not pay the
stipulated down payment and remitted only a total of
22 installments. After her death in1992, petitioners
no longer remitted any installment. Sps. Endaya also
averred that prior to Dolores' death, the parties
agreed to a restructuring of the contract to sell
whereby Dolores agreed to give a "bonus" of
₱265,673.93 and to pay interest at the increased
rate of 24% p.a. on the outstanding balance. They
further claimed that in April 1996, when the balance
of the purchase price stood at ₱1,699,671.69, a final
restructuring of the contract to sell was agreed with
petitioners, fixing the obligation at ₱3,000,000.00.
Thereafter, the latter paid a total of ₱380,000.00 on
two separate occasions,20 leaving a balance of
₱2,620,000.00. In any event, Sps. Endaya pointed
out that the automatic cancellation clause under the
foregoing contract rendered the same cancelled as
early as 1981 with Dolores’ failure to make a down
payment and to faithfully pay the
installments;21 hence, petitioners’ complaint for
specific performance must fail. In addition, Sps.
Endaya interposed a counterclaim for the alleged
unpaid balance of ₱2,620,000.00, plus damages,
attorney's fees and costs of suit.22
In their Reply with Answer to
Counterclaim,23 petitioners denied the existence of
any restructuring of the contract to sell,
invoking24 the Dead Man's Statute25 and the Statute
of Frauds.26 In turn, Sps. Endaya filed a
Rejoinder,27challenging the inapplicability of the
foregoing principles since the case was not filed
against an estate or an administrator of an estate,
and in view of the partial performance of the contract
to sell.28
While the oral depositions of Sps. Endaya were
taken at the 4th Municipal Circuit Trial Court of
Malvar-Balete, Batangas on account of their frailty
and old age, they, however, did not make a formal
offer of their depositions and documentary evidence.
Hence, the case was submitted for decision on the
basis of the petitioners' evidence.29
The RTC Ruling
In a Decision30 dated August 7, 2000, the RTC found
that petitioners were able to prove by a
preponderance of evidence the fact of full payment
of the purchase price for the subject properties.31 As
such, it ordered Sps. Endaya to execute a deed of
absolute sale covering the sale of the subject
properties in petitioners’ favor and to pay them
attorney's fees and costs of suit.32 Dissatisfied, Sps.
Endaya elevated the matter to the CA.
The CA Ruling and Subsequent Proceedings
In a Decision33 dated August 18, 2006 (August 18,
2006 Decision),the CA reversed and set aside the
RTC ruling. It found that petitioners were not able to
show that they fully complied with their obligations
under the contract to sell. It observed that aside from
the payment of the purchase price and 12% interest
p.a. on the outstanding balance, the contract to sell
imposed upon petitioners the obligations to pay 12%
interest p.a. on the arrears and to reimburse Sps.
Endaya the amount of the pertinent real estate taxes
due on the subject properties, which the former,
however, totally disregarded as shown in their
summary of payments.34
Meanwhile, counsel for petitioners, Atty. German A.
Gineta, passed away on June 12, 2006,35 hence, the
notice of the August 18, 2006 Decision sent to him
was returned unserved.36 On the other hand, the
notice sent to petitioners at No. 2, Barangay San
Martin de Porres, Parañaque City, was likewise
returned unserved for the reason "insufficient
address."37 Nonetheless, the CA deemed the service
of the said notice to them as valid and complete as
of March 9, 2007 pursuant to Section 8,38 Rule 13 of
the Rules of Court (Rules). Accordingly, it
directed39 the Division Clerk of Court to issue the
corresponding Entry of Judgment. An Entry of
Judgment40 was, thus, made in the CA Book of
Entries of Judgments certifying that the August 18,
2006 Decision became final and executory on March
25, 2007.The records were thereafter remanded41 to
the RTC.
In July 2009, respondent Titus Endaya, heir of Sps.
Endaya,42 demanded43 petitioners to vacate the
subject properties, which they refused.
On November 10, 2009, petitioners filed the instant
petition invoking the benevolence of the Court to set
aside the CA’s August 18, 2006 Decision and,
instead, reinstate the RTC Decision in the interest of
substantial justice. They claimed that they had no
knowledge of the demise of their counsel; therefore,
they were unable to file a timely motion for
reconsideration before the CA or the proper petition
before the Court. Further, they contend that they
have proven full payment of the purchase price
within the payment period as required by the
contract to sell.
For their part, the heirs of Sps. Endaya
(respondents) objected44 to the belated filing of the
petition long after the said CA Decision had lapsed
into finality, especially as the petition raised factual
issues that are improper in a petition for review on
certiorari under Rule 45 of the Rules. In any case,
they countered that the CA correctly held that
petitioners failed to fully comply with their obligations
under the contract to sell; thus, respondents are
under no obligation to execute any deed of sale over
the subject properties in favor of petitioners.
On September 22, 2010, the Court gave due course
to the petition and required the parties to file their
respective memoranda,45 which they duly submitted.
The Issues Before the Court
The principal issues in this case are: (a) whether or
not petitioners’ right to appeal before the Court
should be upheld; and (b) whether or not
respondents should execute a deed of sale over the
subject properties in favor of petitioners.
The Court's Ruling
The petition is partly meritorious.
Anent the first issue, it is observed that the CA
erroneously sent the notice of the assailed August
18, 2006 Decision to petitioners at No. 2, Barangay
San Martin de Porres, Parañaque City, instead of
their address of record, i.e., Marian Road 2, Brgy.
San Martin de Porres, Parañaque, Metro
Manila46 and thus, was returned unserved for the
reason "insufficient address."47
The notices of the Entry of Judgment48 and the
transmittal letter49 to the Clerk of Court of the RTC
indicate this fact. As such, there was clearly no
proper and valid service of the said CA Decision
which deprived petitioners of the opportunity to file a
motion for reconsideration before the CA and/or
further appeal to the Court. Verily, it would be unjust
and unfair to allow petitioners to suffer the adverse
effects of the premature entry of judgment made by
the CA. Therefore, the Court deems it prudent to set
aside the foregoing entry and upholds petitioners'
right to appeal.
Nevertheless, with respect to the second issue, a
thorough review of the records reveals no sufficient
reason to warrant the reversal of the CA’s August
18, 2006 Decision dismissing petitioners' complaint
for specific performance which sought to enforce the
contract to sell and to compel respondents to
execute a deed of sale over the subject
properties.1âwphi1
A contract to sell is defined as a bilateral contract
whereby the prospective seller, while expressly
reserving the ownership of the subject property
despite delivery thereof to the prospective buyer,
binds himself to sell the said property exclusively to
the latter upon his fulfillment of the conditions
agreed upon, i.e., the full payment of the purchase
price50 and/or compliance with the other obligations
stated in the contract to sell. Given its contingent
nature, the failure of the prospective buyer to make
full payment51 and/or abide by his commitments
stated in the contract to sell prevents the obligation
of the prospective seller to execute the
corresponding deed of sale to effect the transfer of
ownership to the buyer from arising. As discussed in
Sps. Serrano and Herrera v. Caguiat:52
A contract to sell is akin to a conditional sale where
the efficacy or obligatory force of the vendor's
obligation to transfer title is subordinated to the
happening of a future and uncertain event, so that if
the suspensive condition does not take place, the
parties would stand as if the conditional obligation
had never existed. x x x.53
To note, while the quality of contingency inheres in a
contract to sell, the same should not be confused
with a conditional contract of sale. In a contract to
sell, the fulfillment of the suspensive condition will
not automatically transfer ownership to the buyer
although the property may have been previously
delivered to him. The prospective seller still has to
convey title to the prospective buyer by entering into
a contract of absolute sale.54 On the other hand, in a
conditional contract of sale, the fulfillment of the
suspensive condition renders the sale absolute and
the previous delivery of the property has the effect of
automatically transferring the seller’s ownership or
title to the property to the buyer.55
Keeping with these principles, the Court finds that
respondents had no obligation to petitioners to
execute a deed of sale over the subject properties.
As aptly pointed out by the CA, aside from the
payment of the purchase price and 12% interest p.a.
on the outstanding balance, the contract to sell
likewise imposed upon petitioners the obligation to
pay the real property taxes over the subject
properties as well as 12% interest p.a. on the
arrears.56 However, the summary of payments57 as
well as the statement of account58 submitted by
petitioners clearly show that only the payments
corresponding to the principal obligation and the
12% interest p.a. on the outstanding balance were
considered in arriving at the amount of ₱952,152.00.
The Court has examined the petition59 as well as
petitioners' memorandum60 and found no justifiable
reason for the said omission. Hence, the reasonable
conclusion would therefore be that petitioners
indeed failed to comply with all their obligations
under the contract to sell and, as such, have no right
to enforce the same. Consequently, there lies no
error on the part of the CA in reversing the RTC
Decision and dismissing petitioners’ complaint for
specific performance seeking to compel respondents
to execute a deed of sale over the subject
properties.
WHEREFORE, the Entry of Judgment in CA-G.R.
CV No. 68465 is hereby LIFTED. The Decision
dated August 18, 2006 of the Court of Appeals in the
said case is, however, AFFIRMED.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL
ARTURO D. BRION
CASTILLO
Associate Justice
Associate Justice
JOSE PORTUGAL PEREZ
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision
had been reached in consultation before the case
was assigned to the writer opinion of the Court's
Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson's
Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before
the case was assigned to the writer of the opinion of
the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice