GR 157493; (February, 2007) (Digest)
G.R. No. 157493 ; February 5, 2007
RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed OESMER, Petitioners, vs. PARAISO DEVELOPMENT CORPORATION, Respondent.
FACTS
Petitioners, together with two non-party siblings, are co-owners of two unregistered parcels of land inherited from their parents. In March 1989, petitioners Ernesto and Enriqueta, and later Rizalino, Leonora, Bibiano, Jr., and Librado, signed a Contract to Sell covering the properties with respondent Paraiso Development Corporation for a total price of ₱3,316,560.00. Respondent gave a check for ₱100,000.00, described in the contract as “option money,” to petitioner Ernesto. Two other co-owners, Adolfo and Jesus, did not sign the agreement. Subsequently, petitioners sought to rescind the contract and offered to return the ₱100,000.00. Respondent refused, leading petitioners to file an action for declaration of nullity or annulment of the agreement.
The Regional Trial Court ruled the Contract to Sell was valid and binding only as to the share of Ernesto Oesmer, the sole recipient of the payment. On appeal, the Court of Appeals modified the decision, declaring the contract valid and binding with respect to the undivided proportionate shares of all six signatory petitioners, ordering them to execute a deed of absolute sale for their 6/8 share and to pay attorney’s fees. The appellate court also ordered respondent to pay the balance of the purchase price.
ISSUE
Whether the Contract to Sell is valid and binding upon all six petitioner-signatories, notwithstanding that only one of them received the ₱100,000.00 payment.
RULING
Yes, the Contract to Sell is valid and binding upon all six signatory petitioners. The Supreme Court affirmed the Court of Appeals’ decision. The legal logic rests on the characterization of the agreement and the application of agency principles. The contract was not a mere unilateral promise to sell (an option contract) but a bilateral Contract to Sell, as it imposed reciprocal obligations: upon the vendors to sell and upon the vendee to pay. The ₱100,000.00, though labeled “option money,” functioned as earnest money or a down payment, forming part of the purchase price, which is indicative of a perfected contract of sale.
Regarding the payment received only by Ernesto, the Court found that he acted as agent for his co-owner-signatories. His receipt of the check was with their knowledge and consent, as they all subsequently signed the contract without objection. This established implied agency, making the payment effective for all. The contract could therefore be enforced against the six signatories for their collective 6/8 share of the property. The obligations under the contract are divisible, and the non-participation of the two non-signatory co-owners does not invalidate the agreement as to the shares of the consenting owners.