G.R. No. 137162; January 24, 2007
Corazon L. Escueta, et al. vs. Rufina Lim

FACTS

Respondent Rufina Lim filed an action for specific performance and damages against petitioners Ignacio Rubio, the heirs of Luz Baloloy (Baloloys), and Corazon Escueta. Lim alleged she purchased the vendors’ hereditary shares in ten lots via a Contract to Sell dated April 10, 1990, paying earnest money. The vendors obligated themselves to first secure individual certificates of title for their shares, upon presentation of which Lim would pay the balance. The Baloloys defaulted at pre-trial, leading to a partial decision against them ordering execution of a deed of sale. They filed a petition for relief from judgment, which was denied. Meanwhile, Rubio and Escueta proceeded to trial, claiming no valid sale existed—Rubio argued his supposed attorney-in-fact had no authority, and the payment was a loan, while Escueta claimed to be a buyer in good faith of the same lots from Rubio.
The trial court dismissed Lim’s complaint against Rubio and Escueta, only ordering Rubio to return the earnest money received. On appeal, the Court of Appeals affirmed the denial of the Baloloys’ petition for relief and the partial decision against them. However, it reversed the trial court’s decision regarding Rubio and Escueta, ordering Rubio to execute a deed of sale for his shares and declaring the sale to Escueta simulated and void.

ISSUE

The core issues were: (1) whether the Baloloys were properly denied relief from judgment; and (2) whether a perfected contract of sale existed between Lim and Rubio, and if the subsequent sale to Escueta was valid.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals. First, the Baloloys failed to prove the extrinsic fraud, accident, mistake, or excusable negligence required for relief from judgment under Rule 38. Their counsel’s alleged negligence in missing the pre-trial was not a valid ground, as a client is bound by the actions of their counsel. Their proper remedy was an appeal, not a petition for relief.
Second, the Court upheld the finding of a perfected contract of sale between Lim and Rubio. The April 10, 1990 document was a binding contract, not a mere offer. The agreement obligated Rubio to first deliver the certificates of title, a suspensive condition for the payment of the balance, not for the perfection of the contract. Rubio’s failure to deliver the titles constituted a breach, entitling Lim to specific performance. The subsequent sale to Escueta was declared void, as it was a simulated transaction designed to defraud Lim, given Escueta’s knowledge of the prior sale. The Court emphasized that a contract of sale is perfected upon meeting of the minds on the object and price, and the vendor’s obligation to transfer ownership is immediately demandable.