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SPECIAL FIRST DIVISION

[G.R. NO. 145982 : September 13, 2004]

FRANK N. LIU, deceased, substituted by his surviving spouse Diana Liu, and children, namely: Walter, Milton, Frank, Jr., Henry and Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu Rodriguez, Petitioners, v. ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAÑO, Respondents.

DISSENTING OPINION

DAVIDE, JR., C.J.:

Upon a deeper evaluation of the established facts in this case, I am constrained to vote to grant the motion to reconsider the Decision of 3 July 2003 and to deny the instant petition.

I agree with both the trial court and the Court of Appeals that the contract entered into on 13 January 1950 between Teodoro Vao, as attorney-in-fact of Jose Vao, and Benito Liu, which is the source of petitioner Frank Liu's claim, is a contract to sell (an AGREEMENT, as the introductory portion thereof begins) and not a contract of sale. From the very beginning, however, it was petitioner Frank Liu who was the real "buyer" of the seven lots, two of which were covered by the agreement in favor of Cirilo Pangalo, and the other five covered by the agreement in favor of Benito Liu (Exh. A). The latter includes Lot Nos. 5 and 6. Thus, in footnote no. 6 of our decision of 3 July 2003, we said:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The contract between Teodoro Vao and Cirilo Pangalo provides that in case of death of the vendee, the contract shall be considered as fully paid and a final deed of sale shall be made in favor of the beneficiary, Frank N. Liu, provided vendee is not in arrears of not more than two months. Also, in his letter to Frank Liu, dated i January 1955, Teodoro Vao stated that: "I have addressed my letter to you because ever since 1949, it has always been you I dealt with, and not Mr. B. Liu, neither with Mr. C. Pangalo, though the last two gentlemen were the ones who signed the agreements for the purchase of the lots."chanroblesvirtuallawlibrary

Paragraph 5 of the agreement in favor of Benito Liu expressly provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Failure on the part of the VENDEE to pay three or more monthly installments when the same fall due, VENDOR may cancel this contract and VENDEE shall be only entitled to one-half (1/2) of what he has paid.

And paragraph 4 thereof expressly provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

4. The balance of P3,000 shall be paid by VENDEE at the rate of P100.00 per month beginning with the end of January 1950 and every month thereafter...

Neither Benito Liu nor Frank Liu complied with the contract.

Thus, in our findings of facts in the Decision of 3 July 2003, we said:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Benito Liu subsequently paid installments totaling P2,000, leaving a balance of P1,000. Apparently, Benito Liu stopped further payments because Teodoro Vao admitted his inability to transfer the lot titles to Benito Liu. Later, in a letter dated 16 October 1954, Teodoro Vao informed Frank Liu that the Supreme Court had already declared valid the will of his father Jose Vao. Thus, Teodoro Vao could transfer the titles to the buyers' names upon payment of the balance of the purchase price.

When Frank failed to reply, Teodoro Vao sent him another letter dated 1 January 1955, reminding him of his outstanding balance. It appears that it was only after nine years that Frank Liu responded through a letter dated 25 January 1964. In the letter, Frank Liu informed Teodoro Vao that he was ready to pay the balance of the purchase price of the seven lots. He requested for the execution of a deed of sale of the lots in his name and the delivery of the titles to him.

On 22 April 1966, Benito Liu sold to Frank Liu five lots (Lot Nos. 5, 6, 13, 14 and 15 of Block 2) which Benito Liu purchased from Teodoro Vao. Frank Liu assumed the balance of P1,000 for the five lots. Cirilo Pangalo likewise sold to Frank Liu the two lots (Lot nos. 14 and 15 of Block 11) that Pangalo purchased from Teodoro Vao. Frank Liu likewise assumed the balance of P417 for the two lots.

On 21 March 1968, Frank Liu reiterated in a letter his request for Teodoro Vao to execute the deed of sale covering the seven lots so he could secure the corresponding certificates of title in his name. He also requested for the construction of the subdivision roads pursuant to the original contract. In the letter, Frank Liu referred to another letter, dated 25 June 1966, which he allegedly sent to Teodoro Vao. According to Frank Liu, he enclosed PBC Check No. 0-782290 dated 6 May 1996 for P1,417, which is total balance of the accounts of Benito Liu and Cirilo Pangalo on the seven lots. However, Frank Liu did not offer in evidence the letter or the check. Frank Liu sent two other letters, dated 7 June 1968 and 29 July 1968, to Teodoro Vao reiterating his request for the execution of the deed of sale in his favor but to no avail.

It is clear then that the agreement to sell between Teodoro Vao as attorney-in-fact of Jose Vao, made during the lifetime of Jose Vao, was validly cancelled or rescinded. It follows that Benito Liu never became the owner of the lots covered by the agreement. Consequently, he could not sell the lots to petitioner Frank Liu on 22 April 1966. Therefore, the sale in favor of the latter was null and void. It could not bind the estate of Jose Vao.

It would be grossly unfair and unjust that the estate of Jose Vao should be made bound to honor an agreement to sell executed on 13 January 1950 in favor of Benito Liu who never completed the payment for the agreed purchase price. The so-called sale in favor of petitioner was only made more than sixteen (16) years later, or on 22 April 1966, long after the death of Jose Vao, and long after Teodoro Vao had lost his authority as attorney-in-fact because the power was not coupled with interest. Jose Vao's death terminated Teodoro's power as attorney-in-fact.

Likewise, it follows that Benito Liu's deed of sale in petitioner's favor did not constitute a charge or claim against the estate of Jose Vao.

Moreover, it is admitted that Teodoro Vao was the sole and only heir of Jose Vao. In such capacity he could sell a part of his rights, share and participation in the estate of Jose Vao. Such sale is not void, but may only be rendered voidable in the event claims against estate maybe impaired.

Furthermore, one should not lose sight of the fact that private respondents Alfredo Loy and Teresita Loy registered the deeds of sale in their favor, were issued transfer certificates of title in their names, declared the lots in their names for taxation purposes, religiously paid the taxes thereon, occupied the same and constructed a house thereon. Upon the other hand, petitioner Frank Liu did nothing of these. Article 1544 of the Civil Code provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription the ownership shall pertain to the person who in good faith was first in the possession; and in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The right of the Loys under the second and third paragraphs of Article 1544 is sought to be defeated by the claim that they acted in bad faith.

Again, petitioner Liu has not shown that the Loys had acted with bad faith. On the contrary, no less than the counsel for Frank Liu, Atty. Solon, candidly admitted in open court that the latter has no "positive" evidence to prove bad faith. Thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

COURT

The plaintiff has some proof that the Loy spouses knew of the former transaction?

ATTY. SOLON

Well, positive evidence, we do not have. .. because after this transaction, the plaintiff already resided in Davao and the communications were made between the plaintiff and Teodoro Vao by letters, but there was no more personal communication. (TSN), 14 January 1977, 74-75).

More specifically, upon questioning by the court, Atty. Solon admitted that the only possible evidence of bad faith on the part of the Loys was the "filing for approval of a deed of sale," thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

COURT

Your theory, Atty. Solon, is that the defendants Loys are buyers in bad faith?

ATTY. SOLON

Yes, Your Honor.

COURT

That they knew the former defect and yet they purchased the property?

ATTY. SOLON

Yes, Your Honor, to the extent of filing for approval of a deed of sale. (TSN, 14 January 1977, 72-73).

On the other hand, petitioner Frank Liu's acts proved that he was the one who acted in bad faith. First, he did not answer the letter of 16 October 1954 sent by Teodoro Vao (Exh. "C"). Second, he did not likewise respond to Teodoro Vao's letter of 1 January 1955 (Exh. "D"). It was only on 25 January 1964 when Liu wrote a letter to Teodoro, but only to express readiness to pay the balance of the purchase price of the seven lots and request for the execution of the deed of sale in his name (Exh. "E"). He did not pay. Then on 22 April 1966 and without paying the balance, he procured a deed of sale for five (5) of the seven lots from Benito Liu. Yet, he still did not pay the balance. And, it was only on 21 March 1968 that the petitioner reiterated in a letter to Teodoro Vao (Exh. "F") his request for Teodoro to execute the deed of sale. In this letter he mentioned having enclosed in a letter dated 25 June 1966 of a PBC Check dated 6 May 1966 in the amount of 1,417 for the unpaid balance. Yet, he could not even offer in evidence either the letter or the check. While it is true that he sent two letters dated 7 June 1968 and 29 July 1968 to Teodoro Vao reiterating his request for execution of the deed of sale, he did not make an offer for the payment of the balance of the unpaid portion of the consideration of the contract to sell.

If Frank Liu were sincere in his desire to pay the unpaid balance of the agreed purchase price, he could have consigned in court the amount due.

Finally, and probably to obtain relief from behind, petitioner Frank Liu filed before the Davao Court of First Instance on 2 December 1968 a complaint against Teodoro Vao for specific performance, execution of deed of absolute sale, etc.

Needless to state, the evidence, the law and equity are on the side of the respondents Alfredo Loy, Jr. and Teresita Loy.

Accordingly, I vote to GRANT the Motion for Reconsideration filed by respondents Alfredo Loy, Jr. and Teresita Loy, and to DENY the instant petition.