G.R. No. 154402 ; July 21, 2008
HEIRS OF ANTONIO F. BERNABE, Petitioners, vs. COURT OF APPEALS and TITAN CONSTRUCTION CORPORATION, Respondents.

FACTS

Respondent Titan Construction Corporation entered into an undated Deed of Sale with the Bernabe siblings, co-owners of an undivided one-half share in two parcels of land. The contract stipulated a purchase price of ₱17.7 million, with a ₱1 million down payment and the balance payable within 60 days after Titan, at its expense, acquired a right of way from the Parañaque government. The vendors were also obligated to present an agreement with Eriberta Development Corporation waiving its right of first refusal and to surrender the titles. Titan paid portions of the down payment but the vendors failed to perform their undertakings. The vendors’ counsel later sent a letter unilaterally canceling the deed. Titan filed a complaint for specific performance.
During the pendency of the case, a compromise agreement was forged, leading to separate Deeds of Conditional Sale dated March 3, 1994, between Titan and the vendors, including Antonio Bernabe, who was represented by his children under a Special Power of Attorney (SPA). Antonio died, and his heirs (petitioners) refused to execute a formal deed of sale. Titan filed a supplemental complaint, alleging it had made substantial advances and that the properties had been successfully partitioned. The Regional Trial Court ruled in favor of Titan, ordering specific performance. The Court of Appeals affirmed the decision.

ISSUE

Whether the Deeds of Conditional Sale are valid and binding upon the heirs of Antonio Bernabe, obliging them to execute a formal deed of absolute sale.

RULING

Yes. The Supreme Court affirmed the validity of the Deeds of Conditional Sale and ordered specific performance. The Court held that the SPA executed by Antonio Bernabe in favor of his children was clear and unequivocal, authorizing them to negotiate and conclude the sale of his share. The authority to “negotiate and conclude” necessarily includes the power to enter into a binding contract. The subsequent execution of the Deed of Conditional Sale by the attorneys-in-fact was a valid exercise of this authority, creating a binding obligation upon the principal, Antonio Bernabe.
The Court further ruled that the contract was not a mere contract to sell but a conditional contract of sale where ownership had already passed to the vendee, Titan, subject only to the suspensive condition of full payment. Titan had substantially complied with its obligations by making significant payments and, through its efforts, causing the segregation of the co-owners’ share and the issuance of a new title. Petitioners, as heirs, merely stepped into the shoes of their predecessor and are bound by the contracts he authorized. Their refusal to execute the final deed constituted a breach, justifying the order for specific performance. The unilateral cancellation by the original vendors was invalid as they were the party in default for failing to perform their undertakings under the original deed.