OMULO A. CORONEL, ET. AL.

, petitioners,
103577
vs.

G.R. No.
October 07, 1996

COURT OF APPEALS, CONCEPCION D. ALCARAZ

and RAMONA PATRICIA ALCARAZ ,respondents.
FACTS:
Coronel et al. consummated the sale of his property located in Quezon City to
respondent Alcaraz. Since the title of the property was still in the name of the
deceased father of the Coronels, they agreed to transfer its title to their name upon
payment of the down payment of 50K. and thereafter an absolute deed of sale will
be executed.
Alcarazs mother paid the down payment in behalf of her daughter and as such,
Coronel made the transfer of title to their name. Notwithstanding this fact, Coronel
sold the property to petitioner Mabanag and rescinded its prior contract with
Alcaraz.
ISSUE:
WON the rescission of the first contract between Coronel and Alcaraz is valid.
HELD:
The case is a contract of sale subject to a suspensive condition in which
consummation is subject only to the successful transfer of the certificate of title
from the name of petitioners' father, to their names. Thus, the contract of sale
became obligatory.
With regard to double sale, the rule that the first in time, stronger in right should
apply. The contention of the petitioner that she was a buyer in good faith because
the notice of lis pendens in the title was annotated after she bought the property is
of no merit. In case of double sale, what finds relevance and materiality is not
whether or not the second buyer was a buyer in good faith but whether or not said
second buyer registers such second sale in good faith, that is, without knowledge of
any defect in the title of the property sold.
The ruling should be in favor of Alcaraz because Mabanag registered the property
two months after the notice of lis pendens was annotated in the title and hence, she
cannot be a buyer in good faith.

Coronel vs. CA/Alcaraz

G.R. No. 103577 Oct. 7, 1996

1.
a.

2.
a.

FACTS:
CORONEL: ISSUED RECEIPT OF DOWN PAYMENT TO ALCARAZ
Conditions:
i.
1,240,000
total amount
ii.
50,000
down payment
iii.
1,190,000
balance
iv.
received by Ramona Alcaraz
v.
Coronel to bind themselves in transferring of names (from deceased father), transfer
certificate of title immediate to down payment, deed of absolute sale immediate upon payment of balance.
ALCARAZ:
Conditions:
i.
Ramona will pay down payment
ii.
Coronel will transfer names
iii.
Upon transfer, issue absolute deed of sale; Ramona will pay remaining balance.

3.
a.
b.

Mother of Ramona paid the down payment.

Following month, Coronel transferred name to Alcaraz.
Suddenly sold property to CATALINA MABANAG for 1,580,000 after Catalina paid for 300,000.
i.
Cancelled contract of Ramona, deposited back the down payment to Ramonas
account.
c.
Filed complaint against the Coronels.
4.
a.
b.

CATALINA filed annotation of notice of adverse claim.

Coronel executed deed of absolute sale to Catalina
Title was issued to Catalina

5.
a.
b.
c.

LOWER COURT sided with Alcaraz

Pay whole 1,190,000
Mabanag deed cancelled
Coronel to vacate property and deliver possession to Alcaraz, plus damages and attorney fees.

6.

CORONEL: appealed but denied

ISSUE:
Receipt of down payment offered on both Alcaraz and Mabanag.
1. Article 1305: A contract is meeting of minds whereby one binds himself to give something/render service.
2. Coronel should insist that document is executor contract to sell, subject to suspensive conditions
a.
Because of Ramonas absence (went to US), contract could not ripen to contract of absolute sale.
b.
SALE should be a consensual contract:
i.
Requisites:
Consent
Determinate subject matter
Price certain/equivalent
ii.
In case at hand, CONSENT or MEETING OF THE MINDS is lacking.

a.
b.

a.
a.

b.
a.
CCS:

c.
a.

b.

3. CONTRACT TO SELL IS DIFFERENT FROM CONTRACT OF SALE:

CONTRACT TO SELL: seller explicitly reserves right to transfer title to prospective buyer.
Therefore, seller does not agree until happening of event.
CASE AT HAND: full payment of purchase price is the happening of event and the SUSPENSIVE
CONDITION.
i.
Hence, fulfillment of SUSPENSIVE CONDITION (full payment) makes the obligation to
sell demandable.
4. CONTRACT TO SELL IS DIFFERENT FROM CONDITIONAL CONTRACT TO SELL
SIMILARITIES:
Both are bilateral contracts:
i.
Seller reserves ownership of subject property
ii.
Buyer binds himself exclusively upon fulfillment of condition.
DIFFERENCES:
CS:
may not be considered conditional contract to sell
seller may reserve subject property UNTIL fulfillment of suspensive condition.
1ST CONDITION MUST BE PRESENT.
If suspensive condition not fulfilled, sale is abated.
If suspensive condition fulfilled, automatic transfer of ownership
CASE AT HAND: OWNERSHIP NOT AUTOMATIC EVEN IF PROPERTY IS DELIVERED: THERE HAS TO BE A
TITLE.
CS:
i.
3rd person (MABANAG) cant be buyer of bad faith even if suspensive condition
fulfilled.
ii.
Prospective buyer (Alcaraz) can not seek reconveyance = no double sale.
iii.
Transfer of title to buyer.
iv.
No defect in owner-seller title although owner (CORONEL) can be sued for
damages by intending buyer.
CCS:
i.
Sale has to become absolute/ affect sellers title upon fulfillment of suspensive
condition.

ii.
If there is a previous delivery of subject property, automatic transfer of title
to buyer. Seller has no more title for 3rd party.
iii.
3rd party, if with knowledge, considered in bad faith. First buyer may seek
reconveyance.
HELD:
INSTANT PETITION DISMISSED/ APPEALED JUDGMENT AFFIRMED.
DOUBLE SALE: Mabanag could not be in good faith or without knowledge.
Notice of lis pendens (Alcaraz) is Feb 1985. Notice of lis pendense (Mabanag) is April 1985.
First in time, stronger in right: PRIUS TEMPORE, POTIOR JURE.
DOUBLE SALE EXCEPTIONS: Second buyer registers ahead of first buyer (good faith).
No inscription of either two buyers (when 2nd buyer in good faith acquires possession ahead of first)
IMMOVABLE PROPERTY:
ownership to first registered in Registry of Property.
No question to conceptions authority to represent Ramona.
Condition was fulfilled when new title was issued

Page
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of
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Sales
I.
Introduction1.
Coronel v. CA (GR 103577, 7 October 1996)
Coronel v. CA [G.R. No. 103577. October 7, 1996.]
Third division, Melo (J): 3 concur, 1 took no part.
Facts: On 19 January 1985, Romulo Coronel, et al. executed a document entitled Receipt
of Down Payment in favor of Ramona
Patricia Alcaraz for P50,000 downpayment of the total amount of P1.24M as purchase
price for an inherited house and lot (TCT119627, Registry of Deeds of Quezon City),
promising to execute a deed of absolute sale of said property as soon as such hasbeen
transferred in their name. The balance of P1.19M is due upon the execution of said deed.
On the same date, ConcepcionD. Alcaraz, mother of Ramona, paid the down payment of
P50,000.00. On 6 February 1985, the property originally registered in
the name of the Coronels father was
transferred in their names (TCT 327043). However, on 18 February 1985, the Coronels
soldthe property to Catalina B. Mabanag for P1,580,000.00 after the latter has paid
P300,000.00. For this reason, Coronels canceledand rescinded the contract with

Alcaraz by depositing the down payment in the bank in trust for Alcaraz.On 22 February
1985, Alcaraz filed a complaint for specific performance against the Coronels and caused
the annotation of anotice of lis pendens at the back of TCT 327403. On 2 April
1985, Mabanag caused the annotation of a notice of adverse claimcovering the same
property with the Registry of Deeds of Quezon City. On 25 April 1985, the Coronels
executed a Deed of Absolute Sale over the subject property in favor of Mabanag. On 5
June 1985, a new title over the subject property was issued inthe name of Mabanag under
TCT 351582.In the course of the proceedings, the parties agreed to submit the case for
decision solely on the basis of documentary exhibits.Upon submission of their respective
memoranda and the corresponding comment or reply thereto, and on 1 March
1989, judgment was handed down in favor of the plaintiffs, ordering the defendant to
execute a deed of absolute sale of the landcovered by TCT 327403 and canceling TCT
331582 and declaring the latter without force and effect. Claims for damages byplaintiffs
and counterclaims by the defendants and intervenors were dismissed. A motion for
reconsideration was thereafterfiled, which was denied.Petitioners interposed an appeal,
but on 16 December 1991, the CA rendered its decision fully agreeing with the trial
court.Hence, the instant petition.The Supreme Court dismissed the petition and affirmed
the appealed judgment.
1. Receipt of downpayment a binding contract; Meeting of the minds
The document embodied the binding contract between Ramona Patricia Alcaraz and the
heirs of Constancio P. Coronel,pertaining to a particular house and lot covered by TCT
119627, as defined in Article 1305 of the Civil Code of the Philippines.
2. Definition of contract of sale
The Civil Code defines a contract of sale, in Article 1458, as one of the contracting
parties obligates himself to transfer
theownership of and to deliver a determinate thing, and the other to pay therefor a price
certain in
money or its equivalent. Sale,
thus, by its very nature a consensual contract because it is perfected by mere consent.
3. Elements of contract of sale; Contract to sell not contract of sale due to the lack
of first element; Distinction necessarywhen property is sold to a third person
The essential elements of a contract of sale are (a) Consent or meeting of the minds, that
is, consent to transfer ownership inexchange for the price; (b) Determinate subject
matter; and (c) Price certain in money or its equivalent. A Contract to Sell maynot be
considered as a Contract of Sale because the first essential element is lacking. It is
essential to distinguish between acontract to sell and a conditional contract of sale
specially in cases where the subject property is sold by the owner not to theparty the
seller contracted with, but to a third person.
4. Contract to sell: Seller agrees to sell property when purchase price is delivered
to him; seller reserves transfer of titleuntil fulfillment of suspensive condition
(payment)

In a contract to sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, theprospective seller does not as yet agree or consent to
transfer ownership of the property subject of the contract to sell until thehappening of
an event, which for present purposes taken to be 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 isdelivered to him. In other words
the full payment of the purchase price partakes of a suspensive condition, the nonfulfillmentof which prevents the obligation to sell from arising and thus, ownership is
retained by the prospective seller without furtherremedies by the prospective buyer.
5. Contract to sell: failure to deliver payment is not a breach but event preventing
vendor to convey title; obligationdemandable upon full payment of price; promise
binding if supported by payment distinct from the price
When a contract is a contract to sell where the ownership or title is retained by the seller
and is not to pass until the fullpayment 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 (Roque v. Lapuz).Upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, the
prospective sellers
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 (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
promissor if the promise is supported by a consideration distinct from the price.
6. Contract to sell defined
A contract to sell be 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 theprospective
buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase
price.
7. Contract to sell not a conditional contract of sale (existence of first element)
A contract to sell may not even be considered as a conditional contract of sale where
the seller may likewise reserve title to theproperty subject of the sale until the
fulfillment of a suspensive condition, because in a conditional contract of sale,
the firstelement of consent is present, although it is conditioned upon the happening of a
contingent event which may or may notoccur.
8. Conditional contract of sale: if suspensive condition not fulfilled, pefection abated;
if fulfilled, contract of sale perfectedand ownership automatically transfers to buyer

If the suspensive condition is not fulfilled, the perfection of the contract of sale is
completely abated (cf. Homesite and HousingCorp. vs. Court of Appeals, 133 SCRA 777
[1984]). However, if the suspensive condition is fulfilled, the contract of sale is
therebyperfected, such that if there had already been previous delivery of the property
subject of the sale to the buyer, ownershipthereto automatically transfers to the buyer
by operation of law without any further act having to be performed by the seller.
9. Contract to sell: if suspensive condition fulfilled, seller has still to convey title
even if property is previously delivered
In a contract to sell, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, ownershipwill not automatically transfer to the
buyer although the property may have been previously delivered to him. The
prospectiveseller still has to convey title to the prospective buyer by entering into a
contract of absolute sale.
10. Contract to sell: there is no double sale; if property sold to another, the seller
may be sued for damages
In a contract to sell, there being no previous sale of the property, a third person buying
such property despite the fulfillment of the suspensive condition such as the full payment
of the purchase price, for instance, cannot be deemed a buyer in bad faithand the
prospective buyer cannot seek the relief of reconveyance of the property. There is no
double sale in such case. Title tothe property will transfer to the buyer after registration
because there is no defect in the ownersellers title per se, but the
latter, of course, may be sued for damages by the intending buyer.
11. Conditional contract of sale: sale becomes absolute upon fulfillment of condition;
if property sold to another, first buyermay seek reconveyance
In a conditional contract of sale, upon the fulfillment of the suspensive condition, the sale
becomes absolute and this will
definitely affect the sellers title thereto. In fact, if there had been previous delivery of
the subject property, the sellers
ownership or title to the property is automatically transferred to the buyer such that, the
seller will no longer have any title totransfer to any third person. Applying Article 1544 of
the Civil Code, such second buyer of the property who may have had
actual or constructive knowledge of such defect in the sellers title, or at least
was charged with the obligation to discover
suchdefect, cannot be a registrant in good faith. Such second
buyer cannot defeat the first buyers title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property subject of the sale.
12. Interpretation of contracts, natural and meaning of words unless technical
meaning was intended

It is a canon in the interpretation of contracts that the words used therein should be
given their natural and ordinary meaningunless a technical meaning was intended (Tan vs.
Court of Appeals, 212 SCRA 586 [1992]).
13. Document entitled
Receipt of Down Payment indicates Conditional Contract of Sale and not contract
to sell
The agreement could not have been a contract to sell because the sellers made no express
reservation of ownership or title tothe subject parcel of land. Furthermore, the
circumstance which prevented the parties from entering into an absolute contractof sale
pertained to the sellers themselves (the certificate of title was not in their names)
and not the full payment of thepurchase price. Under the established facts and
circumstances of the case, had the certificate of title been in the names of petitionerssellers at that time, there would have been no reason why an absolute contract of sale
could not have beenexecuted and consummated right there and then. Moreover, unlike in a
contract to sell, petitioners did not merely promise tosell the property to private
respondent upon the fulfillment of the suspensive condition. On the contrary, having
already agreedto sell the subject property, they undertook to have the certificate of title
changed to their names and immediately thereafter,to execute the written deed of
absolute sale. What is clearly established by the plain language of the subject document is
that
when the said Receipt of Down Payment was prepared and
signed by petitioners, the parties had agreed to a conditionalcontract of sale,
consummation of which is subject only to the successful transfer of the certificate of
title from the name of
petitioners father to their names. The suspensive condition was
fulfilled on 6 February 1985 and thus, the conditional contractof sale between the parties
became obligatory, the only act required for the consummation thereof being the delivery
of theproperty by means of the execution of the deed of absolute sale in a public
instrument, which petitioners unequivocally
committed themselves to do as evidenced by the Receipt of Down Payment.
14. Article 1475 and 1181 applies to present case; Perfection of a contract of sale
and Conditional obligation based on thehappening of the event
Article 1475 of the New Civil Code provides that the contract of sale is perfected at the
moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price. From that
moment, the parties may reci
procally demandperformance, subject to the provisions of the law governing the form of
contracts. Article 1181 of the same code provides that

in conditional obligations, the acquisition of rights, as well as the extinguishment or loss

of those already ac
quired, shall
depend upon the happening of the event which constitutes the condition. In the present
case, since the conditioncontemplated by the parties which is the issuance of a certificate
of title in petitioners names was fulfilled on 6 February
1985,the respective obligations of the parties under the contract of sale became mutually
demandable, i.e. the sellers were obliged topresent the TCT already in their names to he
buyer, and to immediately execute the deed of absolute sale, while the buyer onher part,
was obliged to forthwith pay the balance of the purchase price amounting to
P1,190,000.00.
15. Condition deemed fulfilled when obligor voluntary prevents its
fulfillment; Condition fulfilled, such fact controlling overhypothetical arguments
Article 1186 provides that the condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment. T
hus, inthe present case, the petitioners having recognized that they entered into
a contract of sale subject to a suspensive condition,as evidenced in the first paragraph
in page 9 of their petition, cannot now contend that there could have been no
perfectedcontract of sale had the petitioners not complied with the condition of first
transferring the title of the property under theirnames. It should be stressed and
emphasized that the condition was fulfilled on 6 February 1985, when TCT 327403
was issued
in petitioners name, and such fact is more controlling than mere hypothetical arguments.
16. Retroactivity of conditional obligation to day of constitution of obligation
Article 1187 provides that the effects of conditional obligation to give, once the condition
has been fulfilled, shall retro
act to
the day of the constitution of the obligation. In obligations to do or not
to do, the courts shall determine, in each case, theretroactive effect of the condition that
has been complied with. In the present case, the rights and obligations of the partieswith
respect to the perfected contract of sale became mutually due and demandable as of the
time of fulfillment or occurrenceof the suspensive condition on 6 February 1985. As of
that point in time, reciprocal obligations of both seller and buyer arose.
17. Succession as a mode of transferring ownership
Article 774 of the Civ
il Code defines Succession as a mode of transferring ownership, providing succession is a
mode of
acquisition by virtue of which the property, rights and obligations to the extent and value
of the inheritance of a person aretransmitted through his death
to another or others by his will or by operation of law. In the present case, petitioners

-sellersbeing the sons and daughters of the decedent Constancio P. Coronel are compulsory
heirs who were called to succession byoperation of law. Thus, at the insta
nce of their fathers death, petitioners stepped into his shoes insofar as the subject
property
is concerned, such that any rights or obligations pertaining thereto became binding and
enforceable upon them. It is expressly