Coronel v. CA

G.R. No. 103577 (October 7, 1996)

Facts:

The case revolves around a complaint for specific performance filed by Ramona Patricia Alcaraz and her family against the Coronel siblings, who were the heirs of Constancio P. Coronel. The dispute originated from a transaction that took place on January 19, 1985, when the Coronels executed a document titled "Receipt of Down Payment" in favor of Ramona for the sale of a parcel of land located in Quezon City, with a total purchase price of P1,240,000.00. The document indicated that Ramona made a down payment of P50,000.00, with the balance of P1,190,000.00 to be paid upon the execution of a deed of absolute sale after the Coronels transferred the title of the property from their deceased father to themselves.

On February 6, 1985, the property was successfully transferred to the Coronels, who then sold it to Catalina B. Mabanag on February 18, 1985, for P1,580,000.00. The Coronels subsequently rescinded their agreement with Ramona by depositing the down payment in a bank in trust for her. Ramona and her family filed a complaint for specific performance on February 22, 1985, and a notice of lis pendens was annotated on the title of the property. Meanwhile, Catalina registered her adverse claim on April 2, 1985, and the sale to her was formalized with a deed of absolute sale on April 25, 1985.

The trial court ruled in favor of Ramona, ordering the Coronels to execute a deed of absolute sale in her favor and to deliver possession of the property. The Coronels' motion for reconsideration was denied, and they subsequently appealed to the Court of Appeals, which affirmed the trial court's decision.

Legal Issues:

1. Whether the "Receipt of Down Payment" constituted a perfected contract of sale or merely an executory contract to sell.
2. Whether the Coronels had the right to rescind the contract with Ramona after the property was transferred to them.
3. The implications of the double sale of the property and the rights of the parties involved.

Arguments:

• Petitioners (Coronels): They argued that the "Receipt of Down Payment" was merely an executory contract to sell, subject to the condition that they would first transfer the title to their names. They contended that since Ramona was not present to complete the sale, they were justified in rescinding the contract. They also claimed that they were not the absolute owners of the property at the time of the agreement, which prevented a perfected contract of sale.

• Respondents (Alcaraz family): They maintained that the "Receipt of Down Payment" constituted a perfected contract of sale, as it indicated a clear intent to transfer ownership. They argued that the Coronels had fulfilled their obligation by transferring the title to themselves, thus making the contract binding. They also contended that the Coronels could not unilaterally rescind the contract without valid grounds.

Court's Decision and Legal Reasoning:

The Supreme Court ruled in favor of the Alcaraz family, affirming the lower courts' decisions. The Court found that the "Receipt of Down Payment" was indeed a perfected contract of sale, as it demonstrated a meeting of minds regarding the sale of the property. The Court emphasized that the Coronels had committed to transferring the title to themselves and executing the deed of absolute sale upon receipt of the down payment.

The Court clarified the distinction between a contract to sell and a contract of sale, noting that in a contract to sell, ownership is retained by the seller until the buyer fulfills certain conditions. In this case, the Coronels had no express reservation of ownership, and the only condition was the transfer of the title, which was fulfilled on February 6, 1985. Therefore, the obligations of both parties became mutually demandable at that point.

The Court also addressed the issue of rescission, stating that the Coronels could not unilaterally rescind the contract without valid grounds, especially since they had not presented evidence to support their claims of Ramona's absence preventing the sale's consummation. The Court ruled that the sale to Catalina B. Mabanag constituted a double sale, and since the contract with Ramona was perfected first, her rights took precedence.

Significant Legal Principles Established:

1. A contract of sale is perfected by mere consent, and the essential elements include a meeting of minds, a determinate subject matter, and a price certain.
2. The distinction between a contract to sell and a contract of sale is crucial; a contract to sell retains ownership with the seller until certain conditions are met, while a contract of sale transfers ownership upon agreement.
3. A party cannot unilaterally rescind a contract without valid grounds, and allegations must be substantiated by evidence.
4. In cases of double sale, the first buyer's rights are protected, provided they acted in good faith and registered their claim first.