25.uraca v. ca

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THIRD DIVISION

[G.R. No. 115158. September 5, 1997]

EMILIA M. URACA, CONCORDIA D. CHING !" ONG SENG,repre#e!te" b$ ENEDINO H. %ERRER, petitioners, vs. COUR& O%A''EALS, (ACIN&O )ELE*, (R., CARMEN )ELE* &ING,A)ENUE MERCHANDISING, INC., %ELI+ &ING AND AL%REDOGO, respondents.

D E C I S I O N

'ANGANIAN, J.-

Novation is never presumed; it must be sufficiently established that a valid newareement or obliation has e!tinuished or chaned an e!istin one" The reistrationof a later sale must be done in ood faith to entitle the reistrant to priority in ownershipover the vendee in an earlier sale"

Stteme!t o t/e C#e

These doctrines are stressed by this #ourt as it resolves the instant petitionchallenin the December $%& '(() Decision *'+ of Respondent #ourt of ,ppeals*$+ in #,-."R" S/ No" )))01& which reversed and set aside the 2udment of the Reional Trial#ourt of #ebu #ity& 3ranch '(& and entered a new one dismissin the petitioners4complaint" The dispositive portion of the RT# decision reads5*)+

WHEREFORE, judgment is hereby rendered:

1) declaring as null and void the three () deeds o! sale e"ecuted by the #ele$es to

Feli" %& 'ing, anuel 'ing and l!redo *o+

) ordering %armen #ele$ 'ing and -acinto & #ele$, -r& to e"ecute a deed o!absolute sale in !avor o! %oncordia .& %hing and Emilia & /raca !or the 0ro0erties

in uestion !or 21,344,444&44, 5hich sum must be delivered by the 0lainti!!s to the

#ele$es immediately a!ter the e"ecution o! said contract+

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) ordering %armen #ele$ 'ing and -acinto & #ele$, -r& to reimburse Feli" %&

'ing, anuel %& 'ing and l!redo *o 5hatever amount the latter had 0aid to the

!ormer+

3) ordering Feli" %& 'ing, anuel %& 'ing and l!redo *o to deliver the 0ro0erties

in uestion to the 0lainti!!s 5ithin !i!teen (16) days !rom recei0t o! a co0y o! thisdecision+

6) ordering all the de!endants to 0ay, jointly and severally, the 0lainti!!s the sum

o! 24,444&44 as attorney7s !ees&

8O OR.ERE.&9

&/e A!te0e"e!t %0t#

The facts narrated by the #ourt of ,ppeals are as follows5 *6+

'he #ele$es (herein 0rivate res0ondents) 5ere the o5ners o! the lot and commercial

building in uestion located at 2rogreso and &%& ;riones 8treets in %ebu %ity&

Herein (0etitioners) 5ere the lessees o! said commercial building&, 1?>6, the #ele$es through %armen #ele$ 'ing 5rote a letter to herein

(0etitioners) o!!ering to sell the subject 0ro0erty !or 21,464,444&44 and at the same

time reuesting (herein 0etitioners) to re0ly in three days&

On -uly 14, 1?>6, (herein 0etitioners) through tty& Escolastico .aitol sent a re0ly@

letter to the #ele$es acce0ting the a!oresaid o!!er to sell&

On -uly 11, 1?>6, (herein 0etitioner) Emilia /raca 5ent to see %armen 'ing about the

o!!er to sell but she 5as told by the latter that the 0rice 5as 21,344,444&44 in cash or

manager7s checA and not 21,464,444&44 as erroneously stated in their letter@o!!er a!ter

some haggling& Emilia /raca agreed to the 0rice o! 21,344,444&44 but counter@

0ro0osed that 0ayment be 0aid in installments 5ith a do5n 0ayment o! 21,444,444&44

and the balance o! 2344,444 to be 0aid in 4 days& %armen #ele$ 'ing did not acce0tthe said counter@o!!er o! Emilia /raca although this !act is dis0uted by /raca&

Bo 0ayment 5as made by (herein 0etitioners) to the #ele$es on -uly 1, 1?>6 and -uly

1, 1?>6&

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On -uly 1, 1?>6, the #ele$es sold the subject lot and commercial building to the

venue *rou0 (2rivate Res0ondent venue erchandising Cnc&) !or 21,464,444&44

net o! ta"es, registration !ees, and e"0enses o! the sale&

t the time the venue *rou0 0urchased the subject 0ro0erty on -uly 1, 1?>6 !rom

the #ele$es, the certi!icate o! title o! the said 0ro0erty 5as clean and !ree o! anyannotation o! adverse claims or lis pendens.

On -uly 1, 1?>6 as a!orestated, herein (0etitioners) !iled the instant com0laint against

the #ele$es&

On ugust 1, 1?>6, (herein 0etitioners) registered a notice o! lis pendens over the

0ro0erty in uestion 5ith the O!!ice o! the Register o! .eeds&6, the venue *rou0 !iled an ejectment case against (herein

0etitioners) ordering the latter to vacate the commercial building standing on the lot inuestion&

'herea!ter, herein (0etitioners) !iled an amended com0laint im0leading the venue

*rou0 as ne5 de!endants (a!ter about 3 years a!ter the !iling o! the original

com0laint)&9

The trial court found two perfected contracts of sale between the Vele7es and thepetitioners& involvin the real property in 8uestion" The first sale was for /'&090&000"00and the second was for /'&600&000"00" In respect to the first sale& the trial court held

that :*d+ue to the un8ualified acceptance by the plaintiffs within the period set by theVele7es& there conse8uently came about a meetin of the minds of the parties not onlyas to the ob2ect certain but also as to the definite consideration or cause of thecontract" *1+ ,nd even assumin arguendo that the second sale was not perfected& thetrial court ruled that the same still constituted a mere modificatory novation which didnot e!tinuish the first sale" Hence& the trial court held that :the Vele7es were not freeto sell the properties to the ,venue .roup" *%+ It also found that the ,venue .rouppurchased the property in bad faith"*(+

/rivate respondents appealed to the #ourt of ,ppeals" ,s noted earlier& the #,found the appeal meritorious"

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there was areement as to the price and a second contract was perfected& the later contract would be unenforceable under the Statute of @rauds" It further held that suchsecond areement& if there was one& constituted a mere promise to sell which was notbindin for lac= of acceptance or a separate consideration" *''+

&/e I##e#

/etitioners allee the followin :errors in the Decision of Respondent #ourt5

2I

8ince it ruled in its decision that there 5as no meeting o! the minds on the second7

0rice o!!ered (21,344,444&44), hence no contract o! sale 5as 0er!ected, the %ourt o!

00eals erred in not holding that the original 5ritten contract to buy and sell

!or 21,464,444&44 the #ele$es 0ro0erty continued to be valid and en!orceable 0ursuant

to rt& 1? in relation 5ith rt& 13?, !irst 0aragra0h, and rt& 134, sub0aragra0h (e) o! the %ivil %ode&

II

'he %ourt o! 00eals erred in not ruling that 0etitioners have better rights to buy and o5n the

#ele$es7 0ro0erty !or registering their notice o! lis pendens ahead o! the venue *rou07s

registration o! their deeds o! sale taAing into account rt& 1633, nd 0aragra0h, o! the %ivil%ode&9

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and cause concurred"*')+ Thus& this 8uestion is posed for our resolution5 Aas there anovation of this perfected contractC

,rticle '00 of the #ivil #ode provides that :EsFales are e!tinuished by the samecauses as all other obliations& ! ! !" ,rticle '$)' of the same #ode states thatnovation is one of the ways to wipe out an obliation" >!tinctive novation re8uires5

E'F the e!istence of a previous valid obliation; E$F the areement of all the parties tothe new contract; E)F the e!tinuishment of the old obliation or contract; and E6F thevalidity of the new one" *'6+ The foreoin clearly show that novation is effected only whena new contract has e!tinuished an earlier contract between the same parties" In thisliht& novation is never presumed; it must be proven as a fact either by e!pressstipulation of the parties or by implication derived from an irreconcilable incompatibilitybetween old and new obliations or contracts" *'9+ ,fter a thorouh review of the records&we find this element lac=in in the case at bar"

,s aptly found by the #ourt of ,ppeals& the petitioners and the Vele7es did notreach an areement on the new price of /'&600&000"00 demanded by the latter" In this

case& the petitioners and the Vele7es clearly did not perfect a new contract because theessential re8uisite of consent was absent& the parties havin failed to aree on theterms of the payment" True& petitioners made a 8ualified acceptance of this offer byproposin that the payment of this hiher sale price be made by installment&with /'&000&000"00 as down payment and the balance of /600&000"00 payable thirtydays thereafter" Gnder ,rticle ')'( of the #ivil #ode&*'+ such 8ualified acceptanceconstitutes a counter-offer and has the ineludible effect of re2ectin the Vele7es4 offer"*'1+ Indeed& petitioners4 counter-offer was not accepted by the Vele7es" It is well-settledthat :EaFn offer must be clear and definite& while an acceptance must be unconditionaland unbounded& in order that their concurrence can ive rise to a perfectedcontract" *'%+ In line with this basic postulate of contract law& :a definite areement on the

manner of payment of the price is an essential element in the formation of a bindin andenforceable contract of sale"*'(+ Since the parties failed to enter into a new contract thatcould have e!tinuished their previously perfected contract of sale& there can be nonovation of the latter" #onse8uently& the first sale of the property in controversy& by theVele7es to petitioners for /'&090&000"00& remained valid and e!istin"

In view of the validity and subsistence of their oriinal contract of sale as previouslydiscussed& it is unnecessary to discuss public respondent4s theses that the secondareement is unenforceable under the Statute of @rauds and that the areementconstitutes a mere promise to sell"

Se0o!" I##e- Double Sale of an Immovable

The foreoin holdin would have been simple and straihtforward" 3utRespondent Vele7es complicated the matter by sellin the same property to the other private respondents who were referred to in the assailed Decision as the ,venue .roup"

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3efore us therefore is a classic case of a double sale -- first& to the petitioner;second& to the ,venue .roup" Thus& the #ourt is now called upon to determine which of the two roups of buyers has a better riht to said property"

,rticle '966 of the #ivil #ode provides the statutory solution5

:!!! !!!!!!

8hould it be immovable 0ro0erty, the o5nershi0 shall belong to the 0erson acuiring it

5ho in good !aith !irst recorded it in the Registry o! 2ro0erty&

8hould there be no inscri0tion, the o5nershi0 shall 0ertain to the 0erson 5ho in good

!aith 5as !irst in the 0ossession+ and, in the absence thereo!, to the 0erson 5ho

0resents the oldest title, 0rovided there is good !aith&9

Gnder the foreoin& the prior reistration of the disputed property by the second

buyer does not by itself confer ownership or a better riht over the property" ,rticle'966 re8uires that such reistration must be coupled with ood faith" Burisprudenceteaches us that :EtFhe overnin principle is primus tempore, potior jure Efirst in time&stroner in rihtF" nowlede ained by the first buyer of the second sale cannot defeatthe first buyer4s rihts e!cept where the second buyer reisters in good faith the secondsale ahead of the first& as provided by the #ivil #ode" Such =nowlede of the first buyer does not bar her from availin of her rihts under the law& amon them& toreister first her purchase as aainst the second buyer" 3ut in converso =nowledeained by the second buyer of the first sale defeats his rihts even if he is first toreister the second sale& since such =nowlede taints his prior reistration with badfaith This is the price e!acted by ,rticle '966 of the #ivil #ode for the second buyer

bein able to displace the first buyer; that before the second buyer can obtain priorityover the first& he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer’s rights) ---- from the time of acquisition until the titleis transferred to him by registration or failing registration, by delivery of

possession.*$0+ E>mphasis suppliedF

,fter a thorouh scrutiny of the records of the instant case& the #ourt finds that badfaith tainted the ,venue .roup4s purchase on Buly ')& '(%9 of the Vele7es4 real propertysub2ect of this case& and the subse8uent reistration thereof on ,uust '& '((9" The

,venue .roup had actual =nowlede of the Vele7es4 prior sale of the same property tothe petitioners& a fact antithetical to ood faith" @or a second buyer li=e the ,venue

.roup to successfully invo=e the second pararaph& ,rticle '966 of the #ivil #ode& itmust possess ood faith from the time of the sale in its favor until the reistration of thesame" This re8uirement of ood faith the ,venue .roup sorely failed to meet" That ithad =nowlede of the prior sale& a fact undisputed by the #ourt of ,ppeals& is e!plainedby the trial court thus5

'he venue *rou0, 5hose store is close to the 0ro0erties in uestion, had Ano5n the

0lainti!!s to be the lessee@occu0ants thereo! !or uite a time& Feli" 'ing admitted to

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have a talA 5ith Ong 8eng in 1?> or 1?>3 about the 0ro0erties& Cn the cross@

e"amination, anuel 'ing also admitted that about a month a!ter Ester ;orromeo

allegedly o!!ered the sale o! the 0ro0erties Feli" 'ing 5ent to see Ong 8eng again& C!

these 5ere so, it can be sa!ely assumed that Ong 8eng had conseuently told Feli"

about 0lainti!!s7 o!!er on -anuary 11, 1?>6 to buy the 0ro0erties !or 21,444,444&44 and

o! their timely acce0tance on -uly 14, 1?>6 to buy the same at21,464,444&44&

'he t5o a!oresaid admissions by the 'ings, considered together 5ith /raca7s 0ositive

assertion that Feli" 'ing met 5ith her on -uly 11th and 5ho 5as told by her that the

0lainti!!s had transmitted already to the #ele$es their decision to buy the 0ro0erties

at 21,464,444&44, clinches the 0roo! that the venue *rou0 had 0rior Ano5ledge o!

0lainti!!s7 interest& Hence, the venue *rou0 de!endants, earlier !ore5arned o! the

0lainti!!s7 0rior contract 5ith the #ele$es, 5ere guilty o! bad !aith 5hen they

0roceeded to buy the 0ro0erties to the 0rejudice o! the 0lainti!!s&9milia Graca supports this findin of the trial court" Thesalient portions of her testimony follow5

:3 ,TT" 3ORROJ>O5 ETo witnessF

K ,ccordin to Januel Tin in his testimony& even if they =now& referrin to the ,venue .roup& that you were tenants of the property in 8uestion and they wereneihbors to you& he did not in8uire from you whether you were interested inbuyin the property& what can you say about thatC

, It was @eli! Tin who approached me and as=ed whether I will buy the property&both the house and the land and that was on Buly '0& '(%9"

,TT 3ORROJ>O5 ETo witnessFK Ahat was your reply& if anyC

, es& sir& I said we are oin to buy this property because we have stayed for alon time there already and we have a letter from #armen Tin as=in us whether we are oin to buy the property and we have already iven our answer that weare willin to buy"

#OGRT5 ETo witnessF

K Ahat do you mean by that& you mean you told @eli! Tin and you showed him thatletter of #armen TinC

AITN>SS5

, Ae have a letter of #armen Tin where she offered to us for sale the house andlot and I told him that I have already areed with #oncordia #hin& On Sen andmy self that we buy the land" Ae want to buy the land and the buildin" *$$+

Ae see no reason to disturb the factual findin of the trial court that the ,venue.roup& prior to the reistration of the property in the Reistry of /roperty& already =newof the first sale to petitioners" It is hornboo= doctrine that :findins of facts of the trialcourt& particularly when affirmed by the #ourt of ,ppeals& are bindin upon this


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#ourt*$)+ save for e!ceptional circumstances *$6+which we do not find in the factual milieu of the present case" True& this doctrine does not apply where there is a variance in thefactual findins of the trial court and the #ourt of ,ppeals" In the present case& the#ourt of ,ppeals did not e!plicitly sustain this particular holdin of the trial court& butneither did it controvert the same" Therefore& because the reistration by the ,venue

.roup was in bad faith& it amounted to no :inscription at all" Hence& the third and notthe second pararaph of ,rticle '966 should be applied to this case" Gnder thisprovision& petitioners are entitled to the ownership of the property because they werefirst in actual possession& havin been the property4s lessees and possessors for decades prior to the sale"

Havin already ruled that petitioners4 actual =nowlede of the first sale tainted their reistration& we find no more reason to pass upon the issue of whether the annotationof lis pendensautomatically neated ood faith in such reistration"

HERE%ORE& the petition is G!"#$%" The assailed Decision of the #ourt of ,ppeals is hereby &$# !&'%$ and the dispositive portion of the trial court4s decision

dated October '(& '((0 is $'$% with the followin *%'+'!#'*" -- theconsideration to be paid under par" $ of the disposition is /'&090&000"00 andnot /'&600&000"00" No #osts"

SO ORDERED.

(no digest)

25.uraca v. ca

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