Adelfa S. Rivera, Cynthia S. Rivera, and Jose S. Rivera vs.

Fidela del Rosario

(deceased and substituted by her co-respondents), and her children, Oscar
Rosita, et.al.

The facts found by the Court of Appeals in the case are as follows:

Respondents all surnamed as Del Rosario namely Fidela (now deceased), Oscar,
Rosita, Violeta, Enrique Jr., Carlos, Juanito and Eloisa were the registered
titleholders of Lot No. 1083-C, a parcel of land located at Lolomboy, Bulacan. The lot
measured an area of 15,029 square meters and was covered by TCT No. T-50.668
(M) registered in the Registry of Deeds of Bulacan.

Oscar, Rosita, Violeta, Enrique Jr., Juanito, and Eloisa, executed a Special Power of
Attorney in favor of their mother and co-respondent, Fidela, authorizing her to sell,
lease, mortgage, transfer and convey their rights over Lot No. 1083-C on May 16,
1983. In the year of 1987, Fidela borrowed P250,000 from Mariano Rivera. In order
to secure the loan, both parties agreed to execute a deed of real estate mortgage
and an agreement to sell the land.

On March 9, 1987, Mariano have prepared three documents drafted with his lawyer,
Atty. Efren Barangan namely the Deed of Real Estate Mortgage, a Kasunduan
(Agreement to Sell), and a Deed of Absolute Sale. As stated in the Kasunduan, the
children of Mariano Rivera, the petitioners would purchase Lot No. 1083-C for a
consideration of P2,141,622.50 that is to be paid in three installments: P250,000
upon the signing of the Kasunduan, P750,000 on August 31, 1987, and
P1,141,622.50 on December 31, 1987. It also issued that the Deed of Absolute Sale
would only be executed after the second payment of instalment along with the
postdated check for the last installment is deposited together with Fidela. However,
Mariano had already caused the drafting of the Deed of Absolute Sale as stated
previously. Unlike the Kasunduan, the Deed of Absolute Sale stipulated a purchase
price of P601,160 only and covered a certain Lot No. 1083-A in addition to Lot No.
1083-C. This deed as well as the Kasunduan and the Deed of Real Estate Mortgage,
was signed by Marianos children, petitioners Adelfa, Cynthia and Jose, as buyers
and mortgagees, on March 9, 1987.
On March 10, 1987, Mariano Rivera brought with him the documents to sign the
mortgage and the Kasunduan in Atty. Barangan’s office. Fidela unintentionally
affixed her signature on all three documents and Mariano then gave Fidela the
amount of P250,000.

Mariano gave Fidela a check for P200,000 on the 30 th day of October, 1987. Oscar
del Rosario, son of Fidela demand for the payment of balance despite of lacking
authority to receive under the Kasunduan in the several amounts of P67,800. Fidela
entrusted the owners copy of TCT No. T-50.668 (M) to Mariano to guarantee
compliance with the Kasunduan.

Carlos del Rosario filed an Affidavit of Loss on TCT No. T-50.668 (M) on September
7, 1992 due to the refusal of Mariano to return the TCT. However, the annotation
was then offset because Mariano registered the Deed of Absolute Sale on October
13, 1992 which caused the annotation of an Affidavit of Recovery of Title the day
after. Therefore, TCT No. T-50.668 (M) was cancelled, and in its place was issued
TCT No. 158443 (M) in the name of petitioners Adelfa, Cynthia and Jose Rivera.

However, the Riveras represent themselves as the new owners of Lot 1083-C and
started negotiating with Feliciano Nieto, the tenant and offered 4,500 sq. m. in
exchange for thye surrender of his tenurial right which Nieto accepted.

The del Rosarios filed a complaint in the RTC of Malolos in the 18th day of February
1993 requesting for the Kasunduan be rescinded due to the failure of the Riveras to
fulfil with the conditions and damages. They also sought the annulment of the Deed
of Absolute Sale on the ground of fraud, the cancellation of TCT No. T-161784 (M)
and TCT No. T-161785 (M), and the reconveyance to them of the entire property
with TCT No. T-50.668 (M) restored.

The respondents claimed that the petitioners acquired possession of the TCT
through fraud and machination. It is never Fidela’s intention to enter into a deed of
sale at the time of its execution and clearly said that she signed the said deed
mistakenly believing that it was all mere copies of the Kasunduan. The spot where
Fidela’s name was located was roughly in the same position where it was typed in
the Deed of the Absolute Sale. All the documents were stacked at the time of signing
which Fidela mistakenly presumed.
The petitioners allegedly denied and insisted that the Deed of Absolute Sale was
entered by both parties validly. They stated that Fidela del Rosario mortgaged Lot
No. 1083-C to their predecessor in interest, Mariano Rivera, on March 9, 1987. But
on the following day Fidela decided to sell the lot to petitioners for P2,161,622.50.
When Mariano agreed, the Kasunduan was consequently drawn up and signed.
After that, however, Fidela informed Mariano of the existence of Feliciano Nietos
tenancy right over the lot to the extent of 9,000 sq. m. When Mariano continued to
want the land, albeit on a much lower price of only P601,160, as he had still to deal
with Feliciano Nieto, the parties drafted the Deed of Absolute Sale on March 10,
1987, to supersede the Kasunduan. The petitioners also filed a counterclaim asking
for moral and exemplary damages and the payment of attorney fees and costs of
suit.

Issue

May or may not the contract entered by the both parties be rescinded based on
Article 1191.

Held

The decision of the Court of Appeals is MODIFIED. The Deed of Absolute Sale in
question is declared NULL and VOID in its entirety. Petitioners are ORDERED to pay
respondents P323,617.50 as actual damages, P30,000.00 as moral damages,
P20,000.00 as exemplary damages and P20,000.00 as attorney fees. No
pronouncement as to costs.

A careful reading of the Kasunduan reveals that it is in the nature of a contract to

sell, as distinguished from a contract of sale. In a contract of sale, the title to the
property passes to the vendee upon the delivery of the thing sold; while in a contract
to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the
vendee until full payment of the purchase price. In a contract to sell, the payment of
the purchase price is a positive suspensive condition the failure of which is not a
breach, casual or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force.

Respondents in this case bound themselves to deliver a deed of absolute sale and
clean title covering Lot No. 1083-C after petitioners have made the second
installment. This promise to sell was subject to the fulfillment of the suspensive
condition that petitioners pay P750,000 on August 31, 1987, and deposit a postdated
check for the third installment of P1,141,622.50.Petitioners, however, failed to
complete payment of the second installment. The non-fulfillment of the condition
rendered the contract to sell ineffective and without force and effect. It must be
stressed that the breach contemplated in Article 1191 of the New Civil Code is the
obligors failure to comply with an obligation already extant, not a failure of a
condition to render binding that obligation. Coming now to the matter of prescription.
Contrary to petitioners assertion.

On the matter of damages, the Court of Appeals awarded respondents P323,617.50

as actual damages for the loss of the land that was given to Nieto, P200,000 as
moral damages,P50,000 as exemplary damages, P50,000 as attorneys fees and the
costs of suit.

Respondents were amply compensated through the award of actual damages, which
should be sustained. The other damages awarded total P300,000, or almost
equivalent to the amount of actual damages. Practically this will double the amount
of actual damages awarded to respondents. To avoid breaching the doctrine on
enrichment, award for damages other than actual should be reduced. Thus, the
amount of moral damages should be set at only P30,000, and the award of
exemplary damages at only P20,000. The award of attorneys fees should also be
reduced to P20,000, which under the circumstances of this case appears justified
and reasonable.