G.R. No.

195999, June 20, 2018

LILY S. VILLAMIL, SUBSTITUTED BY HER HEIRS RUDY E. VILLAMIL, SOLOMON

E. VILLAMIL, TEDDY E. VILLAMIL, JR., DEBORAH E. VILLAMIL, FLORENCE E.
VILLAMIL, GENEVIEVE E. VILLAMIL, AND MARC ANTHONY E.
VILLAMIL, Petitioner, v. SPOUSES JUANITO ERGUIZA AND MILA
ERGUIZA, Respondents.

DECISION

MARTIRES, J.:

This is a petition for review on certiorari seeking to reverse and set aside the
Decision,1 dated 29 June 2010, and Resolution,2 dated 2 February 2011, of the Court of
Appeals (CA) in CA-G.R. SP No. 109813 which nullified the Decision,3 dated 2 October
2008, of the Regional Trial Court, Dagupan City, Branch 44 (RTC), in Civil Case No.
2007-0014-D, an action for recovery of possession.

THE FACTS

On 6 February 2003, petitioner Lily Villamil (petitioner) filed a Complaint4 for recovery
of possession and damages against respondent-spouses Juanito and Mila Erguiza
(respondent-spouses) before the Municipal Trial Court in Cities (MTCC) of Dagupan City.
The complaint alleges, among others, the following:

xxxx

2. Plaintiff is the absolute and exclusive owner of that certain parcel ofland more
particularly described as follows:

''A parcel of land (Lot 3371-C) of the subdivision plan (LRC) Psd-111002, being a
portion of Lot 3371 Dagupan Cadastre, LRC Cad. Record No. 925, situated in the
District of Pantal, City of Dagupan, Island of Luzon, x x x containing an area or one
hundred ninety-one (191) square meters, more or less. Covered by Transfer Certificate
Title No. 31225 with assessed value of P2,290.00 under Tax Declaration No. 221092."

A copy of Transfer Certificate of Title No. 31225 and Tax Declaration No. 221092 are
hereto attached and marked as Annexes "A" and "B," respectively;

3. Previously, said parcel of land was covered by Transfer Certificate of Title No. 23988
registered under the names of plaintiff Corazon Villamil, Efren Villamil, Teddy Villamil,
Florencio Villamil, Rodrigo Villamil, Nicasio Villamil, John Villamil, Marcelina Villamil and
Feliciano Villamil, all related. Copy of Transfer Certificate of title No. 23988 is hereto
attached as Annex "C";

4. On 20 September 1972, plaintiff together with her deceased sister, Corazon Villamil,
and deceased brother, Teddy Villamil, entered into an agreement with Juanito Erguiza
for the purpose of selling the above-described property to the latter subject to the
condition that plaintiff and her siblings would file a petition to secure authorization for
minor children from the proper courts. Likewise, that in case of failure of the plaintiff
and her siblings to obtain said authority, the partial payment made by the defendant
Juanito Erguiza shall be applied as rent for twenty (20) years of the premises. A copy of
the agreement is hereto attached as Annex "D";

5. During the course of time, TCT No. 23988 was cancelled and TCT No. 30049 was
issued by virtue of a quitclaim executed by Corazon Villamil and her children in favor of
the plaintiff. Likewise, TCT No. 30049 was cancelled and TCT No. 31125 (Annex "A")
was issued by virtue of a Deed of Sale executed by Efren Villamil and Teddy Villamil in
favor of the plaintiff. Copies of TCT No. 30049 are hereto attached and marked as
Annex "E";

6. Plaintiff has been paying religiously the real estate taxes due on said property;

7. Sometime in 1992 or after the lapse of twenty (20) years and the expiration of the
twenty (20) years lease, plaintiff demanded from the defendants to return possession
of the property but the latter failed and refused, and still fails (sic) and refuses (sic) to
return possession of the property to the damage and prejudice of the plaintiff;

8. The continued occupation by the defendants of the property is by mere tolerance of

the plaintiff and has been staying thereon without paying any rent to the plaintiff;

9. On 7 January 2002, plaintiff again demanded from the defendant[s] to return the
possession of the property by way of a formal letter dated December 18, 2001 which
was received by the defendant[s] on January 11, 2002. Notwithstanding receipt of said
letter, defendants just ignored the valid pleas of the plaintiff; Annex "F";

10. A period of thirty (30) [days] had lapsed without the said agreement having been
enforced, hence, the defendants have lost whatever rights they have under said
agreement;

11. The matter was brought to the Office of the Barangay of Pantal District but no
conciliation or settlement was reached between the parties hence, a certification to file
action was issued by said office. A copy of the certification is hereto attached as Annex
"G";

x x x x5

The Agreement, which petitioner and respondent-spouses entered into in the sale and
purchase of the subject property, states:

KNOW ALL MEN BY THESE PRESENTS:

That we, CORAZON G. VILLAMIL, widow, LILY VILLAMIL, married and TEDDY S.
VILLAMIL, married, all of legal ages, Filipinos and residents of Dagupan City,
Philippines, for and in consideration of the sum two thousand six hundred fifty seven
pesos (P2,657.00), Philippine currency, to us in hand paid and a receipt of which is
hereby acknowledged of JUANITO ERGUIZA, married, of legal age, Filipino and a
resident of Dagupan City, Philippines, BY THESE PRESENTS do hereby promise to sell
absolutely unto the said Juanito Erguiza, his heirs or assigns, a parcel of land covered
[by] Transfer Certificate of Title No. 23988 of the land records of Dagupan City,
identified as Lot No. 2371, under the following terms and conditions:

1. That the total purchase price of the said land is FIVE THOUSAND ONE
HUNDRED FIFTY SEVEN PESOS P5,157.00. Because of us receiving today
the sum of two thousand six hundred and fifty seven pesos (P2,657.00),
there is still a balance of two thousand five hundred pesos (P2,500.00);

2. That because there is still lacking document or that court approval of the
sale of the shares of the minor-owners of parts of this land, the final deed
of absolute sale be made and executed upon issuance by the competent
court; that the balance of P2,500.00 will also be given in this stage of
execution of this document;

3. In the event however that the petition for the sale of the shares of the
minor-owners of the parts of this land is [disapproved] by the court, the
amount of P2,657.00 be considered as lease of the land subject matwr of
this contract for a duration of twenty (20) years.

WITNESS OUR HANDS THIS 29th of September 1972 at Dagupan City, Philippines.6

On 26 May 2003, respondent-spouses filed their Answer,7 which effectively denied the
material allegations in petitioner's complaint and by way of special and affirmative
defenses, aver that:

xxxx

5. That plaintiff has no cause of action.

6. The agreement between the co-heirs of plaintiff and defendants is for the sale on
condition of the subject property. A sale even if conditional transfers ownership to the
vendees. And before plaintiff could claim any right, there are certain proceedings which
must first be complied [with]. Defendants did not violate any of the terms and
conditions contained in the agreement to which plaintiff is trying to base her cause of
action. It was plaintiff who made sure that the condition contained under the contract
to sell will not be complied with. She caused the execution of documents to violate such
rights and it was only now that defendants learned of the same;

7. That defendants never received a letter coming from the plaintiff regarding the
subject property. As a matter of fact, defendants are trying to enforce the agreement
although the conditions contained therein will be left to the sole will of the vendors:

8. That granting arguendo that the plaintiff has the right to damages, such could only
be in the form of accrued rentals. x x x8

On 14 October 2004, the MTCC dismissed the complaint on the ground that the cause
of action thereof was one for the interpretation of the agreement and the determination
of the parties' respective rights. It reasoned that such action was incapable of pecuniary
estimation and, therefore, jurisdiction lies with the RTC.9
On appeal, the RTC reversed the decision of the MTCC on the ground that the cause of
action was one for recovery of possession of real property. Considering that the
assessed value of the subject property is P2,290.00, the MTCC has original and
exclusive jurisdiction over the case. Thus, the case was remanded to the MTCC.10

The MTCC Ruling

In its decision,11 dated 15 November 2006, the MTCC ruled in favor of petitioner. It
gave credence to petitioner's claim that she communicated to respondent-spouses the
fact of consolidation of ownership in her name. The MTCC held that being an interested
party in the collection of the remaining balance, petitioner would naturally have made
respondent-spouses aware of the consolidation of ownership over the subject property.
It declared that it was unbelievable that respondent-spouses did not exert any effort to
inquire from petitioner about the status of their agreement. The MTCC concluded that
respondent-spouses had no intention to pay the balance of the purchase price and that
they had become lessees of the subject property for twenty (20) years with their down
payment being treated as rentals. It ruled that after the lapse of the said period,
respondent-spouses were bound to leave the premises. The fallo reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiff as follows:

1. Ordering the defendants, their assigns, agents or other persons acting for
themselves, to vacate the premises in question and to restore possession
thereof to the plaintiff;

2. Ordering the defendants to pay the plaintiff jointly and severally, the
amount of P500.00 a month from date of demand which was on
December 18, 2001, until they finally vacate the premises, as reasonable
compensation for the use and occupation of the same;

3. Ordering the defendants to pay the plaintiff, jointly and severally, the
amount of P5,000.00 as attorney's fees and to pay the costs of suit.

SO ORDERED.12

Aggrieved, respondent-spouses elevated an appeal to the RTC.

The RTC Ruling

In its decision, the RTC affirmed the ruling of the MTCC. It opined that the condition
with respect to judicial approval of the sale had become irrelevant when ownership over
the subject property was consolidated in favor of petitioner in 1973; thus, at that time,
respondent-spouses were bound to comply with their undertaking to pay the balance of
the purchase price which they failed to do. The dispositive portion states:

WHEREFORE, judgment is hereby rendered AFFIRMING the appealed decision with

modification deleting the award of attorney's fees.
SO ORDERED.13

Unconvinced, respondent-spouses moved for reconsideration. However, in a

Resolution,14 dated 18 May 2009, the RTC denied the motion for lack of notice of
hearing.

The CA Ruling

In its decision, the CA reversed and set aside the decision of the RTC. As to the
procedural aspect, it observed that despite omission of the name of petitioner's counsel
in the notice of hearing, petitioner appeared at the scheduled hearing and even filed her
opposition to respondent-spouses' motion for reconsideration. The CA declared that the
right of respondent-spouses to appeal should not be curtailed by the mere expediency
of holding that there was lack of notice of hearing since the objective of Sections 4, 5,
and 7 under Rule 15 of the Rules of Court to allow the adverse party the opportunity to
oppose the motion has been clearly met in this case.

With respect to the substantive issue, the appellate court declared that the agreement
between the parties was a contract to sell involving the subject property because the
vendors reserved ownership and it was subject to a suspensive condition, i.e.,
submission of the sellers of lacking documents or court approval of the sale of the
shares of the minor owners.

The CA did not acquiesce with the trial court's reasoning that respondent-spouses were
already notified of the transfer of title in petitioner's name because such alleged notice
was not supported by any evidence on record. It lends credence to respondent-spouses'
evidence that they came to know of the fact that petitioner "was already the registered
owner of the subject property when a written demand letter was sent to them by the
former on 18 December 2001. The CA opined that respondent-spouses' passive and
complacent position in not asserting from the sellers what was incumbent under the
subject agreement should not be taken against the former. It stressed that the
obligation to secure the necessary documents or approval of the court for the minor
children to be represented in the Deed of Absolute Sale, was incumbent upon the
sellers.

While the appellate court agreed with the lower courts' disquisition that the court's
approval for the minor children to be represented in the sale would no longer be
necessary as the ownership and title in the subject property were already consolidated
to petitioner, it ruled that the same would not operate like a magic wand to
automatically make respondent-spouses perform what was required of them in the
subject agreement. On the contrary, the sellers had the positive duty to make known to
the buyers that they were ready to comply with what was mandated upon them, which
act petitioner failed to prove by any evidence. Thus, the CA concluded that respondent-
spouses had more right to possess the subject property pending consummation of the
agreement or any outcome thereof. The CA disposed of the case in this wise:

WHEREFORE, in consideration of the foregoing premises, the instant petition is

perforce GRANTED. Accordingly, the Decision dated October 02, 2008 and Resolution
dated May 18, 2009 are perforce reversed and set aside. Thus, petitioners Erguiza
shall remain in actual and peaceful possession of the subject property.
No pronouncement as to costs.

SO ORDERED.15

Petitioner moved for reconsideration but the CA denied the same in its 2 February 2011
resolution. Hence, this petition.

ISSUES

Petitioner submits the following assignment of errors:

I.

WHETHER OR NOT THE 2 OCTOBER 2008 DECISION OF RTC, BRANCH 44,

AFFIRMING THE DECISION OF MTCC, BRANCH 3, DATED 15 NOVEMBER 2006
HAS BECOME FINAL AND EXECUTORY AFTER RESPONDENTS FILED A
DEFECTIVE MOTION FOR RECONSIDERATION WHICH DID NOT TOLL THE
RUNNING OF THE REGLEMENTARY PERIOD TO FILE A PETITION FOR REVIEW;
AND WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
GAVE DUE COURSE TO THE PETITION.

II.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
REVERSED THE DECISION OF RTC, BRANCH 44, AFFIRMING THE DECISION OF
MTCC, BRANCH 3, WHICH RULED THAT PETITIONER HAD A BETTER RIGHT TO
POSSESS THE PROPERTY AFTER PETITIONERS FAILED TO PAY THE BALANCE
OF THE PURCHASE PRICE AND THE SECOND CONDITION HAD SET IN, THAT IS,
THE DOWN PAYMENT WAS APPLIED AS RENTALS FOR TWENTY (20) YEARS
FROM 1972 TO 1992.16

Petitioner argues: that the RTC decision has actually become final and executory after
respondent-spouses filed a defective motion for reconsideration which did not toll the
running of the reglementary period to appeal the decision before the CA; that the
motion for reconsideration was a mere scrap of paper as it did not contain notice of the
time and place of hearing; that respondent-spouses knew that petitioner was the owner
of the subject property because they sought her permission to build their house
thereon; and that it is contrary to human experience that, being interested persons,
respondent-spouses would not inquire about the status of the subject property.17

In their Comment,18 respondent-spouses contend that they complied with the provision
of the Rules of Court as regards notice of hearing such that on the day the motion for
reconsideration was to be heard, petitioner was present and she even filed her
opposition to the motion; that while the notice of hearing was only addressed to the
Branch Clerk of Court, petitioner was furnished with a copy of the motion for
reconsideration; that petitioner and her siblings did not take steps to fulfil the
suspensive condition; that they made an illegal act of transferring the share of the
minors in the name of petitioner; that petitioner only informed them of the
consolidation of ownership when they received a demand letter on 18 December 2001
and when they were summoned to appear before the office of the Barangay Captain
sometime in April 2002; and that if petitioner had the slightest intention of informing
them of her ownership of the subject property and for them to pay the remaining
balance, she should have done so immediately upon the transfer of the title in her
name.

In her Reply,19 petitioner avers that upon seeing the minor owners reach the age of
majority, it would be logical for respondent-spouses to follow up with her and her co-
owners since court approval was no longer necessary; that notwithstanding this
information, respondent-spouses did not pay the balance of the consideration; and that
being an interested party in the collection of the remaining balance, it is more in accord
with human experience that she would have informed respondent-spouses about the
consolidation of ownership in her name.

THE COURT'S RULING

Petitioner had the opportunity to be heard despite the lack of notice of hearing.

Sections 4 and 5, Rule 15 of the Rules of Court provide that:

Sec. 4. Hearing of motion. - Except for motions which the court may act upon without
prejudicing the rights of the adverse party, every written motion shall be set for hearing
by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a manner as to ensure its receipt by the other party at least three (3)
days before the date of hearing, unless the court for good cause sets the hearing on
shorter notice.

Sec. 5. Notice of hearing. The notice of hearing shall be addressed to all parties
concerned, and shall specify the time and date of the hearing which must not be later
than ten (10) days after the filing of the motion.

The general rule is that the three-day notice requirement in motions under Sections 4
and 5 of the Rules of Court is mandatory. It is an integral component of procedural due
process.20 "The purpose of the three-day notice requirement, which was established not
for the benefit of the movant but rather for the adverse party, is to avoid surprises
upon the latter and to grant it sufficient time to study the motion and to enable it to
meet the arguments interposed therein."21

"A motion that does not comply with the requirements of Sections 4 and 5 of Rule 15 of
the Rules of Court is a worthless piece of paper which the clerk of court has no right to
receive and which the court has no authority to act upon."22 "Being a fatal defect, in
cases of motions to reconsider a decision, the running of the period to appeal is not
tolled by their filing or pendency."23
Nevertheless, the three-day notice requirement is not a hard and fast rule. When the
adverse party had been afforded the opportunity to be heard, and has been indeed
heard through the pleadings filed in opposition to the motion, the purpose behind the
three-day notice requirement is deemed served. In such case, the requirements of
procedural due process are substantially complied with. Thus, in Preysler, Jr. v. Manila
Southcoast Development Corporation,24 the Court ruled that:

The three-day notice rule is not absolute. A liberal construction of the procedural rules
is proper where the lapse in the literal observance of a rule of procedure has not
prejudiced the adverse party and has not deprived the court of its authority. Indeed,
Section 6, Rule I of the Rules of Court provides that the Rules should be liberally
construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding. Rules of procedure are tools
designed to facilitate the attainment of justice, and courts must avoid their strict and
rigid application which would result in technicalities that tend to frustrate rather than
promote substantial justice.25

Likewise, in Jehan Shipping Corporation v. National Food Authority,26 the Court held
that despite the lack of notice of hearing in a motion for reconsideration, there was
substantial compliance with the requirements of due process where the adverse party
actually had the opportunity to be heard and had filed pleadings in opposition to the
motion. The Court declared:

This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of
the Rules of Court, mandatory is the notice requirement in a motion, which is rendered
defective by failure to comply with the requirement. As a rule, a motion without a
notice of hearing is considered pro forma and does not affect the reglementary period
for the appeal or the filing of the requisite pleading.

As an integral component of procedural due process, the three-day notice required by

the Rules is not intended for the benefit of the movant. Rather, the requirement is for
the purpose of avoiding surprises that may be sprung upon the adverse party, who
must be given time to study and meet the arguments in the motion before a resolution
by the court. Principles of natural justice demand that the right of a party should not be
affected without giving it an opportunity to be heard.

The test is the presence of opportunity to be heard, as well as to have time to study the
motion and meaningfully oppose or controvert the grounds upon which it is based. x x
x27

A perusal of the records reveals that the trial court gave petitioner ten days within
which to comment on private respondents' motion for reconsideration.28 Petitioner filed
its Opposition the Motion on 7 January 2009, and in fact, filed a Motion for Entry of
Judgment.29 Thus, it cannot be gainsaid that petitioner was not given her day in court
as she in fact contested private respondents' motion for reconsideration. While it is true
that the name of petitioner's counsel was not indicated in the notice of hearing,
nonetheless, she was furnished a copy thereof which she received before the date of
the scheduled hearing. The requirement of notice of time and hearing in the pleading
filed by a party is necessary only to apprise the other party of the actions of the
former.30 Under the circumstances of the present case, the purpose of a notice of
hearing was served. Hence, the Court finds no reversible error committed by the CA in
ruling that the motion for reconsideration was not pro forma.

Parties entered into a contract to sell

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
price 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 payment 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.31 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.32 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.33 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.34

In Coronel v. Court of Appeals,35 the Court declared:

The Civil Code defines a contract of sale, thus:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.

Sale, by its very nature, is a consensual contract because it is perfected by mere

consent. The essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale
because the first essential element is lacking. In a contract to sell, the prospective
seller explicity reserves the transfer of title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent to transfer ownership of the
property subject of the contract to sell until the happening of an event, which for
present purposes we shall take as the full payment of the purchase price. What the
seller agrees or obliges himself to do is to fulfill his promise to sell the subject property
when the entire amount of the purchase price is delivered to him. In other words the
full payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell from arising and thus, ownership is
retained by the prospective seller without further remedies by the prospective buyer.
In Roque vs. Lapuz, this Court had occasion to rule:

Hence, We hold that the contract between the petitioner and the respondent was a
contract to sell where the ownership or title is retained by the seller and is not to pass
until the full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force.

Stated positively, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, the prospective seller's obligation to sell the subject
property by entering into a contract of sale with the prospective buyer becomes
demandable as provided in Article 1479 of the Civil Code which states:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promisor if the promise is supported by a consideration distinct
from the price.36

In this case, the parties entered into an agreement with the following terms and
conditions:

KNOW ALL MEN BY THESE PRESENTS:

That we, CORAZON G. VILLAMIL, widow, LILY VILLAMIL, married and TEDDY S.
VILLAMIL, married, all of legal ages, Filipinos and residents of Dagupan City,
Philippines, for and in consideration of the sum two thousand six hundred fifty seven
pesos (P2,657.00), Philippine currency, to us in hand paid and a receipt of which is
hereby acknowledged of JUANITO ERGUIZA, married, of legal age, Filipino and a
resident of Dagupan City, Philippines, BY THESE PRESENTS do hereby promise to sell
absolutely unto the said Juanito Erguiza, his heirs or assigns, a parcel of land covered
[by] Transfer Certificate of Title No. 23988 of the land records of Dagupan City,
identified as Lot No. 2371, under the following terms and conditions:

6. That the total purchase price of the said land is FIVE THOUSAND ONE HUNDRED
FIFTY SEVEN PESOS P5,157.00. Because of us receiving today the sum of two thousand
six hundred and fifty seven pesos (P2,657.00), there is still a balance of two thousand five
hundred pesos (P2,500.00);

7. That because there is still lacking document or that court approval of the sale of the
shares of the minor-owners of parts of this land, the final deed of absolute sale he
made and executed upon issuance by the competent court; that the balance of
P2,500.00 will also be given in this stage of execution of this document;
 8. In the event however that the petition for the sale of the shares of the minor-owners of the
parts of this land is [disapproved] by the court, the amount of P2,657.00 be considered as
lease of the land subject matter of this contract for a duration of twenty (20) years.

WITNESS OUR HANDS THIS 29th of September 1972 at Dagupan City,

Philippines.37 (emphases supplied)

An examination of the agreement would reveal that the parties entered into a contract
to sell the subject property. First, petitioner and her siblings who were then co-owners
merely promised to sell the subject property, thus, signifying their intention to reserve
ownership. Second, the execution of a deed of absolute sale was made dependent upon
the proper court's approval of the sale of the shares of the minor owners. Third, the
agreement between the parties was not embodied in a deed of sale. The absence of a
formal deed of conveyance is a strong indication that the parties did not intend
immediate transfer of ownership.38Fourth, petitioner retained possession of the
certificate of title of the lot. This is an additional indication that the agreement did not
transfer to private respondents, either by actual or constructive delivery, ownership of
the property.39Finally, respondent Juanito admitted during trial that they have not
finalized the sale in 1972 because there were minor owners40 such that when they
constructed their house thereon, they sought the permission of petitioner.41

Now, the next question to be resolved is whether the suspensive condition, i.e., judicial
approval of the sale of the minor owners' shares, upon which the obligation of the
sellers to execute a deed of sale depends, is fulfilled.

Principle of constructive fulfillment applies

Article 1186 of the Civil Code reads:

Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.

This provision refers to the constructive fulfillment of a suspensive condition, whose

application calls for two requisites, namely: (a) the intent of the obligor to prevent the
fulfillment of the condition, and (b) the actual prevention of the fulfillment. Mere
intention of the debtor to prevent the happening of the condition, or to place ineffective
obstacles to its compliance, without actually preventing the fulfillment, is insufficient.42

Petitioner and her then co-owners undertook, upon receipt of the down payment from
respondent-spouses, the filing of a petition in court, after which they promised the
latter to execute the deed of absolute sale whereupon the latter shall, in turn, pay the
entire balance of the purchase price. The balance of the consideration shall be paid only
upon grant of the court's approval and upon execution of the deed of absolute sale.

Here, there is no doubt that petitioner prevented the fulfillment of the suspensive
condition. She herself admitted that they did not file any petition to seek approval of
the court as regards the sale of the shares of the minor owners.43 In addition, the other
co-owners sold their shares to petitioner such that she was able to consolidate the title
in her name.44 Thus, the condition is deemed constructively fulfilled, as the intent to
prevent fulfillment of the condition and actual prevention thereof were definitely
present. Consequently, it was incumbent upon the sellers to enter into a contract with
respondent-spouses for the purchase of the subject property.

Respondent-spouses' obligation to pay the balance of the purchase price arises only
when the court's approval of the sale of the minor owners' shares shall have been
successfully secured, in accordance with Article 1181 of the New Civil Code.45 Judicial
approval is a condition the operative act of which sets into motion the period of
compliance by respondent-spouses of their own obligation, i.e., to pay the balance of
the purchase price. Accordingly, an obligation dependent upon a suspensive condition
cannot be demanded until after the condition takes place because it is only after the
fulfillment of the condition that the obligation arises.46 Petitioner cannot invoke the non-
fulfillment of the condition in the contract to sell when she and her then co-owners
themselves are guilty of preventing the fulfillment of such condition. When it has
become evident that the condition would no longer be fulfilled, it was incumbent upon
petitioner to inform respondent-spouses of such circumstance because the choice
whether to waive the condition or continue with the agreement clearly belongs to the
latter. Petitioner's claim that respondent-spouses should have known that the condition
would no longer be necessary because the latter knew that the minor owners had
already reached the age of majority and that they should have been more proactive in
following up the status of the contract to sell, deserves scant consideration. While
petitioner may have been right in the aforementioned instances, the same will not
negate her obligation to inform respondent-spouses of the non-fulfillment of the
condition especially in view of the fact that it was her fault that the condition became
irrelevant and unnecessary.

Who has better right of possession?

Inasmuch as petitioner has not yet complied with her obligation to execute a deed of
sale after the condition has been deemed fulfilled, respondent-spouses are still entitled
to possess the subject property. Petitioner cannot anchor her claim on the supposed
conversion of their agreement from a contract to sell into a contract of lease as
provided in the third paragraph of the agreement which provides that should the court
disapprove the sale of the shares of the minor owners, the down payment would be
treated as rentals for twenty (20) years. The agreement, however, could not have been
converted into a contract of lease for the simple reason that there was no petition filed
before any court seeking the approval of the sale as regards the shares of the minor
owners. Hence, the court did not have any occasion to approve much less disapprove
the sale of such shares. As a result, there was no reason for the contract to sell to be
converted into a contract of lease.

Respondent-spouses did not become lessees. They remained to be prospective buyers

of the subject property who, up to now, are awaiting fulfillment of the obligation of the
prospective sellers to execute a deed of sale. Hence, inasmuch as the sellers allowed
them to have the subject property in their possession pending the execution of a deed
of sale, respondent-spouses are entitled to possession pending the outcome of the
contract to sell.
WHEREFORE, the petition is DENIED. The Decision, dated 29 June 2010, and
Resolution, dated 2 February 2011, of the Court of Appeals in CA-G.R. SP No. 109813
are AFFIRMED. The Entry of Judgment in Civil Case No. 2007-0014-D is
hereby LIFTED.

SO ORDERED.

Velasco, Jr., (Chairperson), Leonen, and Gesmundo, JJ., concur.

Bersamin, J., on official leave.

August 10, 2018

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on June 20, 2018 a Decision, copy attached hereto, was
rendered by the Supreme Court in the above-entitled case, the original of which was
received by this Office on August 10, 2018 at 1:19 p.m.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN

Division Clerk of Court