G.R. No. 108228 (2014)
Topics:
Contract of sale v. contract to sell, rescission, sale of a property under co-ownership
Summary:
Petition for Review on Certiorari assailing CA Decision and Resolution which ruled that there was a valid contract of sale between Cabrera and Ysaac.
Doctrines:
Validity of a contract of sale, co-ownership, contract to sell
Facts:
Henry Ysaac leased a portion of his co-owned land and subsequently sold it to Juan Cabrera who is one of the lessees. Henry also added two adjoining portions of the land to comply with Juan’s concern that the currently leased land was too small for his needs. Juan Cabrera paid for the initial payment but failed to pay the balance, citing Henry’s unavailability and his wife’s refusal to accept payment.
Consequently, Henry’s counsel wrote Juan’s counsel indicating that: 1) Henry wants to rescind the contract because Juan failed to pay the balance between May 1990 and May 1992; 2) Juan’s payments will be applied for the overdue rent of the leased land; and 3) Henry denies shouldering the resurvey costs.
Eventually, Henry refused to sell the property and told Juan that Franklin Ysaac is the new administrator. This compelled Juan to file a complaint in RTC, praying for the execution of a formal deed of sale and for the transfer of the title of the property in his name. He also paid the remaining balance of the sale price to the clerk of court.
During the pendency of the case, the Heirs of Ysaac sold the land to the local government of Naga for the urban poor project. One of the lessees contested to the allegation that they agreed to the initial sale between Juan and Henry. The lessee also purchased the land from Naga under said program.
Issue:
Whether a valid contract of sale exists between Juan Cabrera and Henry Ysaac
Ruling:
No. The Civil Code provides that a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Thus, for there to be a valid contract, the essential requisites must be complied with: consent, object, and cause. On the other hand, sale is a special contract where the seller obligates himself to deliver a determinate thing and to transfer its ownership to the buyer. In turn, the buyer pays for a price certain in money or its equivalent. Thus, a contract of sale is perfected at the moment there is a meeting of minds upon the object of the contract and upon the price. The object of a valid sales contract must be owned by the seller. If the seller is not the owner, the seller must be authorized by the owner to sell the object.
Specific rules also attach if the seller is a co-owner of the object of the contract since the sale of a portion of the property is considered an alteration of the thing owned in common. The Civil Code allows the alienation of a co-owner only with respect to his portion in the co-owned property; however, a sale of the thing owned in common requires the unanimous consent of the other co-owners.
In this case, there was no valid contract of sale between Juan Cabrera and Henry Ysaac, since Henry Ysaac had no consent from his other co-owners as to the sale of the definite portion of the co-owned property. Henry had no right to define a 95-square-meter parcel of land, a 439-square-meter parcel of land, or a 321-square-meter parcel of land for purposes of selling to Juan. The determination of those metes and bounds is not binding to the co-ownership for wanting consent. The case also illustrates the absence of consent through Henry’s mention of Franklin as the administrator of the estate. Likewise, Juan Cabrera never sought the consent of the administrator or the co-owners.
Thus, the Court found that there was no valid contract of sale between the parties. At best, it was a contract to sell a definite portion of the property which is subject to suspensive condition of the partition of the property—unless the co-owners consent to sell is obtained, no sale will be effected.