FIRST DIVISION.
FIDELA DEL
CASTILLO
VDA. DE MISTICA,
Petitioner,
G.R.
No.
137909
December 11, 2003
-versus-
SPOUSES
BERNARDINO
NAGUIATAND
MARIA PAULINA
GERONA-NAGUIAT,
Respondents.
D E C I S I O N
PANGANIBAN,
J.:
The failure to pay
in full the purchase price stipulated in a deed of sale does not ipso
facto
grant the seller the right to rescind the agreement. Unless otherwise
stipulated
by the parties, rescission is allowed only when the breach of the
contract
is substantial and fundamental to the fulfillment of the obligation.
The Case
Before us is a Petition
for Review[1]
under Rule 45 of the Rules
of Court, seeking to nullify the October 31, 1997 Decision[2]
and the February 23, 1999 Resolution[3]
of the Court of Appeals (CA) in CA-GR CV No. 51067. The assailed
Decision
disposed as follows:chanrobles virtuallaw libraryred
"WHEREFORE, modified
as indicated above, the decision of the Regional Trial Court is hereby
AFFIRMED."[4]
The assailed Resolution
denied petitioner's Motion for Reconsideration.
The Facts
The facts of the case
are summarized by the CA as follows:
"Eulalio
Mistica,
predecessor-in-interest of herein petitioner, is the owner of a parcel
of land located at Malhacan, Meycauayan, Bulacan. A portion thereof was
leased to Respondent Bernardino Naguiat sometime in 1970.chanrobles virtuallaw libraryred
"On 5 April 1979,
Eulalio
Mistica entered into a contract to sell with [Respondent Bernardino
Naguiat]
over a portion of the aforementioned lot containing an area of 200
square
meters. This agreement was reduced to writing in a document entitled
'Kasulatan
sa Pagbibilihan' which reads as follows:chanrobles virtuallaw libraryred
'NAGSASALAYSAY:
'Na ang
NAGBIBILI ay
nagmamay-aring tunay at naghahawak ng isang lagay na lupa na nasa Nayon
ng Malhacan, Bayan ng Meycauayan, Lalawigan ng Bulacan, na ang kabuuan
sukat at mga kahangga nito gaya ng sumusunod:chanrobles virtuallaw libraryred
x
x
x
x x
x
x x x
'Na
alang-alang sa halagang
DALAWANG PUNG LIBONG PISO (P20,000.00) Kualtang Pilipino, ang NAGBIBILI
ay nakipagkasundo ng kanyang ipagbibili ang isang bahagi o sukat na
DALAWANG
DAAN (200) METROS PARISUKAT, sa lupang nabanggit sa itaas, na ang mga
kahangga
nito ay gaya ng sumusunod:chanrobles virtuallaw libraryred
x
x
x
x x
x
x x x
'Na
magbibigay ng paunang
bayad ang BUMIBILI SA NAGBIBILI na halagang DALAWANG LIBONG PISO
(P2,000.00)
Kualtang Pilipino, sa sandaling lagdaan ang kasulatang ito.chanrobles virtuallaw libraryred
'Na ang
natitirang halagang
LABING WALONG LIBONG PISO (P18,000.00) Kualtang Pilipino, ay babayaran
ng BUMIBILI sa loob ng Sampung (10) taon, na magsisimula sa araw din ng
lagdaan ang kasulatang ito.
'Sakaling
hindi makakabayad
ang Bumibili sa loob ng panahon pinagkasunduan, an[g] BUMIBILI ay
magbabayad
ng pakinabang o interes ng 12% isang taon, sa taon nilakaran hanggang
sa
ito'y mabayaran tuluyan ng Bumibili:chanrobles virtuallaw libraryred
'Sa
katunayan ng lahat
ay nilagdaan ng Magkabilang Panig ang kasulatang ito, ngayon ika 5 ng
Abril,
1979, sa Bayan ng Meycauayan. Lalawigan ng Bulacan, Pilipinas.chanrobles virtuallaw libraryred
(SGD.)
(SGD.)
BERNARDINO NAGUIAT EULALIO MISTICA
Bumibili
Nagbibili'
"Pursuant to said
agreement,
Respondent Bernardino Naguiat gave a downpayment of P2,000.00. He made
another partial payment of P1,000.00 on 7 February 1980. He failed to
make
any payments thereafter. Eulalio Mistica died sometime in October 1986.chanrobles virtuallaw libraryred
"On 4 December
1991,
petitioner filed a complaint for rescission alleging inter alia: that
the
failure and refusal of respondents to pay the balance of the purchase
price
constitutes a violation of the contract which entitles her to rescind
the
same; that respondents have been in possession of the subject portion
and
they should be ordered to vacate and surrender possession of the same
to
petitioner; that the reasonable amount of rental for the subject land
is
P200.00 a month; that on account of the unjustified actuations of
respondents,
petitioner has been constrained to litigate where she incurred expenses
for attorney's fees and litigation expenses in the sum of P20,000.00.chanrobles virtuallaw libraryred
"In their answer
and
amended answer, respondents contended that the contract cannot be
rescinded
on the ground that it clearly stipulates that in case of failure to pay
the balance as stipulated, a yearly interest of 12% is to be paid.
Respondent
Bernardino Naguiat likewise alleged that sometime in October 1986,
during
the wake of the late Eulalio Mistica, he offered to pay the remaining
balance
to petitioner but the latter refused and hence, there is no breach or
violation
committed by them and no damages could yet be incurred by the late
Eulalio
Mistica, his heirs or assigns pursuant to the said document; that he is
presently the owner in fee simple of the subject lot having acquired
the
same by virtue of a Free Patent Title duly awarded to him by the Bureau
of Lands; and that his title and ownership had already become
indefeasible
and incontrovertible. As counterclaim, respondents pray for moral
damages
in the amount of P50,000.00; exemplary damages in the amount of
P30,000.00;
attorney's fees in the amount of P10,000.00 and other litigation
expenses.chanrobles virtuallaw libraryred
"On 8 July 1992,
respondents
also filed a motion to dismiss which was denied by the court on 29 July
1992. The motion for reconsideration was likewise denied per its Order
of 17 March 1993.chanrobles virtuallaw libraryred
"After the
presentation
of evidence, the court on 27 January 1995 rendered the now assailed
judgment,
the dispositive portion of which reads:
'WHEREFORE,
premises
considered, judgment is hereby rendered:
'1.
Dismissing
the complaint and ordering the [petitioner] to pay the respondents
attorney's
fee in the amount of P10,000.00 and costs of the suit;chanrobles virtuallaw libraryred
'2. Ordering the
respondents:
'a. To
pay
petitioner and the heirs of Eulalio Mistica the balance of the purchase
price in the amount of P17,000.00, with interest thereon at the rate of
12% per annum computed from April 5, 1989 until full payment is made,
subject
to the application of the consigned amount to such payment;chanrobles virtuallaw libraryred
'b. To return
to petitioner
and the heirs of Eulalio Mistica the extra area of 58 square meters
from
the land covered by OCT No. 4917 (M), the corresponding price therefor
based on the prevailing market price thereof.'"[5]
(Citations
omitted.) CA's Decision
Disallowing rescission,
the CA held that respondents did not breach the Contract of Sale. It
explained
that the conclusion of the ten-year period was not a resolutory term,
because
the Contract had stipulated that payment - with interest of 12 percent
- could still be made if respondents failed to pay within the period.
According
to the appellate court, petitioner did not disprove the allegation of
respondents
that they had tendered payment of the balance of the purchase price
during
her husband's funeral, which was well within the ten-year period.chanrobles virtuallaw libraryred
Moreover, rescission
would be unjust to respondents, because they had already transferred
the
land title to their names. The proper recourse, the CA held, was to
order
them to pay the balance of the purchase price, with 12 percent interest.chanrobles virtuallaw libraryred
As to the matter of
the extra 58 square meters, the CA held that its reconveyance was no
longer
feasible, because it had been included in the title issued to them. The
appellate court ruled that the only remedy available was to order them
to pay petitioner the fair market value of the usurped portion.cralaw:red
Hence, this Petition.[6]
Issues
In her Memorandum,[7]
petitioner raises the following issues:
"1. Whether
or not the Honorable Court of Appeals erred in the application of Art.
1191 of the New
Civil Code, as it ruled that there is no breach of obligation
inspite
of the lapse of the stipulated period and the failure of the private
respondents
to pay.chanrobles virtuallaw libraryred
"2. Whether or not
the
Honorable Court of Appeals [e]rred in ruling that rescission of the
contract
is no longer feasible considering that a certificate of title had been
issued in favor of the private respondents.chanrobles virtuallaw libraryred
"3. Whether or not
the
Honorable Court of Appeals erred in ruling that since the 58 sq. m.
portion
in question is covered by a certificate of title in the names of
private
respondents reconveyance is no longer feasible and proper."[8]chanrobles virtuallaw libraryred
The Court's
Ruling
The Petition is without
merit.cralaw:red
First Issue: Rescission
in Article 1191
Petitioner claims that
she is entitled to rescind the Contract under Article 1191 of the Civil
Code, because respondents committed a substantial breach when they
did not pay the balance of the purchase price within the ten-year
period.
She further avers that the proviso on the payment of interest did not
extend
the period to pay. To interpret it in that way would make the
obligation
purely potestative and, thus, void under Article 1182 of the Civil
Code.chanrobles virtuallaw libraryred
We disagree. The transaction
between Eulalio Mistica and respondents, as evidenced by the Kasulatan,
was clearly a Contract of Sale. A deed of sale is considered absolute
in
nature when there is neither a stipulation in the deed that title to
the
property sold is reserved to the seller until the full payment of the
price;
nor a stipulation giving the vendor the right to unilaterally resolve
the
contract the moment the buyer fails to pay within a fixed period.[9]
In a contract of sale,
the remedy of an unpaid seller is either specific performance or
rescission.[10]
Under Article 1191 of the Civil Code, the right to rescind an
obligation
is predicated on the violation of the reciprocity between parties,
brought
about by a breach of faith by one of them.[11]
Rescission, however, is allowed only where the breach is substantial
and
fundamental to the fulfillment of the obligation.[12]chanrobles virtuallaw libraryred
In the present case,
the failure of respondents to pay the balance of the purchase price
within
ten years from the execution of the Deed did not amount to a
substantial
breach. In the Kasulatan, it was stipulated that payment could be made
even after ten years from the execution of the Contract, provided the
vendee
paid 12 percent interest. The stipulations of the contract constitute
the
law between the parties; thus, courts have no alternative but to
enforce
them as agreed upon and written.[13]chanrobles virtuallaw libraryred
Moreover, it is undisputed
that during the ten-year period, petitioner and her deceased husband
never
made any demand for the balance of the purchase price. Petitioner even
refused the payment tendered by respondents during her husband's
funeral,
thus showing that she was not exactly blameless for the lapse of the
ten-year
period. Had she accepted the tender, payment would have been made well
within the agreed period.chanrobles virtuallaw libraryred
If petitioner would
like to impress upon this Court that the parties intended otherwise,
she
has to show competent proof to support her contention. Instead, she
argues
that the period cannot be extended beyond ten years, because to do so
would
convert the buyer's obligation to a purely potestative obligation that
would annul the contract under Article 1182 of the Civil
Code.chanrobles virtuallaw libraryred
This contention is likewise
untenable. The Code prohibits purely potestative, suspensive,
conditional
obligations that depend on the whims of the debtor, because such
obligations
are usually not meant to be fulfilled.[14]
Indeed, to allow the fulfillment of conditions to depend exclusively on
the debtor's will would be to sanction illusory obligations.[15]
The Kasulatan does not allow such thing. First, nowhere is it
stated
in the Deed that payment of the purchase price is dependent upon
whether
respondents want to pay it or not. Second, the fact that they
already
made partial payment thereof only shows that the parties intended to be
bound by the Kasulatan.chanrobles virtuallaw libraryred
Both the trial and the
appellate courts arrived at this finding. Well-settled is the rule that
findings of fact by the CA are generally binding upon this Court and
will
not be disturbed on appeal, especially when they are the same as those
of the trial court.[16]
Petitioner has not given us sufficient reasons to depart from this rule.chanrobles virtuallaw libraryred
Second Issue:
Rescission Unrelated to Registration
The CA further ruled
that rescission in this case would be unjust to respondents, because a
certificate of title had already been issued in their names. Petitioner
nonetheless argues that the Court is still empowered to order
rescission.chanrobles virtuallaw libraryred
We clarify. The issuance
of a certificate of title in favor of respondents does not determine
whether
petitioner is entitled to rescission. It is a fundamental principle in
land registration that such title serves merely as an evidence of an
indefeasible
and incontrovertible title to the property in favor of the person whose
name appears therein.[17]chanrobles virtuallaw libraryred
While a review of the
decree of registration is no longer possible after the expiration of
the
one-year period from entry, an equitable remedy is still available to
those
wrongfully deprived of their property.[18]
A certificate of title cannot be subject to collateral attack and can
only
be altered, modified or canceled in direct proceedings in accordance
with
law.[19]
Hence, the CA correctly held that the propriety of the issuance of
title
in the name of respondents was an issue that was not determinable in
these
proceedings.chanrobles virtuallaw libraryred
Third Issue: Reconveyance
of the Portion Importunately Included
Petitioner argues that
it would be reasonable for respondents to pay her the value of the lot,
because the CA erred in ruling that the reconveyance of the extra
58-square
meter lot, which had been included in the certificate of title issued
to
them, was no longer feasible.chanrobles virtuallaw libraryred
In principle, we agree
with petitioner. Registration has never been a mode of acquiring
ownership
over immovable property, because it does not create or vest title, but
merely confirms one already created or vested.[20]
Registration does not give holders any better title than what they
actually
have.[21]
Land erroneously included in the certificate of title of another must
be
reconveyed in favor of its true and actual owner.[22]chanrobles virtuallaw libraryred
Section 48 of Presidential
Decree 1529, however, provides that the certificate of title shall
not be subject to collateral attack, alteration, modification, or
cancellation
except in a direct proceeding.[23]
The cancellation or removal of the extra portion from the title of
respondents
is not permissible in an action for rescission of the contract of sale
between them and petitioner's late husband, because such action is
tantamount
to allowing a collateral attack on the title.cralaw:red
It appears that an action
for cancellation/annulment of patent and title and for reversion was
already
filed by the State in favor of petitioner and the heirs of her husband.[24]
Hence, there is no need in this case to pass upon the right of
respondents
to the registration of the subject land under their names. For the same
reason, there is no necessity to order them to pay petitioner the fair
market value of the extra 58-square meter lot importunately included in
the title.cralaw:red
WHEREFORE, the assailed
Decision and Resolution are AFFIRMED with the MODIFICATION that the
payment
for the extra 58-square meter lot included in respondents' title is
DELETED.chanrobles virtuallaw libraryred
SO ORDERED.chanrobles virtuallaw libraryred
Davide, Jr., C.J., Ynares-Santiago,
Carpio and Azcuna, JJ.,
concur.chanrobles virtuallaw libraryred
____________________________
Endnotes:
[1]
Rollo, pp. 22–33.chanrobles virtuallaw libraryred
[2]
Id., pp. 49–56. Fourth Division. Penned by Justice Antonio M. Martinez
(Division chairman), with the concurrence of Justices Corona
Ibay-Somera
and Oswaldo D. Agcaoili (members).
[3]
Id., p. 65; penned by Justice Corona Ibay-Somera and concurred in by
Justices
Oswaldo D. Agcaoili and Mariano M. Umali.
[4]
CA Decision, p. 7; rollo, p. 55.chanrobles virtuallaw libraryred
[5]
Id., pp. 1–4 & 49–52.chanrobles virtuallaw libraryred
[6]
The case was deemed submitted for decision on December 13, 2001, upon
this
Court's receipt of respondents' Memorandum signed by Atty. Ernesto S.
Salunat.
It was noted in the Court's Resolution dated February 6, 2002.
Petitioner's
Memorandum, signed by Atty. Manuel P. Punzalan, was received by this
Court
on October 26, 2000.chanrobles virtuallaw libraryred
[7]
Rollo, pp. 92–105.chanrobles virtuallaw libraryred
[8]
Petitioner's Memorandum, p. 5; rollo, p. 96.chanrobles virtuallaw libraryred
[9]
People's Industrial and Commercial Corp. v. Court of Appeals, 346 Phil.
189, 203, October 24, 1997; Sps. Babasa v. Court of Appeals, 352 Phil.
1142, May 21, 1998.
[10]
Jacinto v. Kaparaz, 209 SCRA 246, 257, May 22, 1992; Heirs of Escanlar
v. Court of Appeals, 346 Phil. 158, 172, October 23, 1997.
[11]
Uy v. Court of Appeals, 372 Phil. 743, September 9, 1999.chanrobles virtuallaw libraryred
[12]
Power Commercial and Industrial Corp. v. Court of Appeals, 274 SCRA
597,
608, June 20, 1997; Development Bank of the Philippines v. Court of
Appeals,
344 SCRA 492, 509, October 30, 2000.
[13]
Valarao v. Court of Appeals, 363 Phil. 495, 506, March 3, 1999.chanrobles virtuallaw libraryred
[14]
Vitug, Compendium of Civil Law & Jurisprudence (1993 rev. ed.), p.
488; Perez v. Court of Appeals, 380 Phil. 592, 600, January 28, 2000.chanrobles virtuallaw libraryred
[15]
Tolentino, Commentaries and Jurisprudence on the Civil Code, Vol. IV
(1991
ed.), p. 152.chanrobles virtuallaw libraryred
[16]
Lubos v. Galupo, 373 SCRA 618, January 16, 2002, Manufacturers
Building,
Inc. vs. CA, 354 SCRA 521, March 16, 2001; Xentrex Automotive, Inc. v.
CA, 353 Phil. 258, June 18, 1998.
[17]
Vda. de Retuerto v. Barz, 372 SCRA 712, 719, December 19, 2001; Heirs
of
Brusas v. Court of Appeals, 372 Phil. 47, August 26, 1999; Liao v.
Court
of Appeals, 380 Phil. 400, January 27, 2000.
[18]
Villanueva-Mijares v. Court of Appeals, 386 Phil. 555, April 12, 2000;
Heirs of Ramon Durano Sr. v. Uy, 344 SCRA 238, 263, October 24, 2000.chanrobles virtuallaw libraryred
[19]
Seville v. National Development Company, 351 SCRA 112, 125, February 2,
2001; Zaragoza v. Court of Appeals, 341 SCRA 309, 317, September 29,
2000;
Tan v. Philippine Banking Corporation, 355 SCRA 292, 299, March 26,
2001;
Vda. de Retuerto v. Barz, supra, p. 722; Mallilin Jr. vs. Castillo, 389
Phil. 153, June 16, 2000.chanrobles virtuallaw libraryred
[20]
Development Bank of the Philippines v. Court of Appeals, 387 Phil. 283,
April 28, 2000; Republic v. Court of Appeals, 335 SCRA 693, 700, July
14,
2000; Republic of the Phils. v. Court of Appeals, 361 Phil. 319,
January
21, 1999; Garcia v. Court of Appeals, 371 Phil. 107, August 10, 1999.chanrobles virtuallaw libraryred
[21]
Heirs of Ingjug-Tiro v. Sps. Casals, 415 Phil. 665, August 20, 2001.chanrobles virtuallaw libraryred
[22]
Development Bank of the Philippines v. Court of Appeals, supra, p. 285;
Republic v. CA, supra, p. 384; De Ocampo v. Arlos, 343 SCRA 716, 727,
October
19, 2000.chanrobles virtuallaw libraryred
[23]
Mallilin Jr. v. Castillo, supra.chanrobles virtuallaw libraryred
[24]
Docketed as Civil Case No. 182-M-95 and filed with the RTC of Malolos,
Bulacan (Branch 12); rollo, pp. 106–112.chanrobles virtuallaw libraryred |