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1370-1379 - Interpretation of Contracts

The document summarizes a Supreme Court case regarding a dispute over ownership of land between Thelma Rodriguez and the Municipality of Orani, Bataan. Neri delos Reyes originally owned the land and agreed to sell it to Rodriguez in 1997, but Rodriguez only paid a portion of the agreed price. There were two deeds of sale presented, one undated and unnotarized, and another dated and notarized. The Court determined that the agreement between Neri and Rodriguez was a contract to sell, not a sale, since ownership would only pass upon full payment of the price, which did not occur. Therefore, Rodriguez did not obtain ownership, and Neri was free to sell the land to others

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43 views

1370-1379 - Interpretation of Contracts

The document summarizes a Supreme Court case regarding a dispute over ownership of land between Thelma Rodriguez and the Municipality of Orani, Bataan. Neri delos Reyes originally owned the land and agreed to sell it to Rodriguez in 1997, but Rodriguez only paid a portion of the agreed price. There were two deeds of sale presented, one undated and unnotarized, and another dated and notarized. The Court determined that the agreement between Neri and Rodriguez was a contract to sell, not a sale, since ownership would only pass upon full payment of the price, which did not occur. Therefore, Rodriguez did not obtain ownership, and Neri was free to sell the land to others

Uploaded by

Sarah Jane Usop
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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RODRIGUEZ V. SIOSON G.R. No.

199180 JULY 27, 2016


1370-1379 – Interpretation of Contracts

FACTS: Sometime in 1997, the Municipality of Orani, Bataan (Municipality) purchased from Neri an area of about 1.7 hectare of Lot 398, to be used for the extension of the
Municipality's public market. Among other things, it was agreed that upon full payment of the purchase price, Neri will surrender the mother title to the Municipality for
subdivision of the property on the condition that Neri will equitably share in the expense thereof. Lot 398 was subsequently subdivided into 5 lots.

Consequently, only Lots 398-A and 398-B were left as the remaining portions over which Neri retained absolute title. TCT Nos. T-209894 and T-209895 were then respectively
issued over Lots 398-A and 398-B and were both registered in the name of "Neri delos Reyes, married to Violeta Lacuata." The owner's duplicate copies of TCT Nos. T-209894
and T-209895, however, were retained by the Municipality pending Neri's payment of his share in the expenses incurred for the subdivision of Lot 398. These were placed under
the custody of the Municipal Treasurer, where they continue to remain.

Neri, however, alleged that then Municipal Mayor Mario Zuñiga suggested that he sell Lot 398-A to his aunt, petitioner Thelma Rodriguez (Thelma). The Municipality would
then expropriate the same from Thelma. Neri agreed to the suggestion.8
After agreeing to the amount of ₱1,243,000.00 as the selling price, Thelma, on March 20, 1997, issued a check for said amount payable to Neri. When it fell due, no sufficient
funds were available to cover the check. Consequently, it was agreed that Thelma would pay the purchase price in installments from March 20, 1997 to September 4, 1997.
Thelma, however, was only able to pay ₱442,293.50.

Thelma saw an announcement that a new Orani Common Terminal would be built on Lot 398-A. As she has not yet entered into any agreement regarding the utilization of said
lot, Thelma filed a Complaint for Injunction docketed as Civil Case No. 7394 against then incumbent mayor Efren Pascual, Jr. (Mayor Pascual), and the Municipality under
claim of ownership. To support her claim, Thelma incorporated in her complaint a copy of an undated and unnotarized deed of absolute sale allegedly executed by Neri in her
favor.

In their joint verified answer, Mayor Pascual and the Municipality acknowledged that Thelma became the owner of Lot 398-A by way of purchase from Neri.

After Thelma learned of the second sale of Lot 398-A, she filed against the respondents a complaint for the Declaration of Nullity of the Second Sale and TCT No. T-226775 on
February 11, 2003, docketed as Civil Case No. 7664. In support of her claim, Thelma once again presented a deed of absolute sale executed by Neri in her favor. This time, the
deed of sale she presented was duly signed by her and Neri, witnessed, notarized and dated April 10, 1997.

ISSUE: WON the transaction between Neri and Thelma is a contract of sale or a contract to sell (there exists two deeds of absolute sale, though identically worded)

HELD: "The real character of the contract is not the title given, but the intention of the parties."34 In this case, there exist two deeds of absolute sale. Though identically worded,
the first contract was undated, not notarized, signed only by Neri, and was presented in Civil Case No. 7394 for Injunction,35 while the second deed was dated April 10, 1997,
notarized on September 5, 1997, signed by both Neri and Thelma.

In determining the nature of the agreement between Thelma and Neri, the CA took note of these two documents, and, coupled with Thelma's own admissions, correctly found
that it was a mere contract to sell.

The undated and unnotarized deed of sale served only as a "receipt" which was signed by Neri when the latter received the downpayment for the lot. The dated and notarized
deed of sale, on the other hand, was signed by both Thelma and Neri upon Thelma's alleged full payment of the purchase price.

Despite the denomination of their agreement as one of sale, the circumstances tend to show that Neri agreed to sell the subject property to Thelma on the condition that title and
ownership would pass or be transferred upon the full payment of the purchase price as contemplated in Article 1371 of the New Civil Code – subsequent and
contemporaneous acts show the intent of contract to sell. This is the very nature of a contract to sell, which is a "bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, i.e., the full payment of the purchase price."

As stated by the Court, the agreement to execute a deed of sale upon full payment of the purchase price "shows that the vendors reserved title to the subject property until full
payment of the purchase price."

There was no testimony or any proof on her part showing when and how she took possession of the property. At best, what is extant from the records is that Thelma paid taxes
on the property for the years 2000 and 2001, which was three years after the alleged sale. "But tax declarations, by themselves, are not conclusive evidence of ownership of real
property." Aside from this, the tax receipts showed that the property was still declared in the name of Neri.

Accordingly, the CA did not commit any reversible error in concluding that "the contract between Thelma and Neri was a mere contract to sell, the transfer of ownership over Lot
398-A being conditioned on Thelma's full payment of the purchase price. Having failed to pay the purchase price in full, Thelma cannot claim ownership over Lot 398-A and Neri
is not legally proscribed from alienating the same lot to other buyers."

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