G.R. No. 106837 August 4, 1993
HENRY MACION and ANGELES MACION, petitioners, vs. HON. JAPAL M. GUIANI, in his capacity as Presiding Judge of the Regional Trial Court Branch 14, Cotabato City and DELA VIDA INSTITUTE represented by MS. JOSEPHINE LANZADERAS, respondents.

FACTS

Petitioners Henry and Angeles Macion owned two adjoining lots. On April 26, 1991, they entered into a contract to sell these lots to private respondent De La Vida Institute, represented by Josephine Lanzaderas, for P1,750,000.00, with the sale to be completed on or before July 31, 1991. Petitioners surrendered physical possession, and private respondent constructed a building worth P800,000.00 on the lots. The sale did not materialize by July 31, 1991. Petitioners filed an unlawful detainer case. Private respondent filed a complaint for reformation of the contract to sell. The parties subsequently entered into a compromise agreement on February 6, 1992. The agreement stipulated that petitioners would give private respondent five months (until July 6, 1992) to raise P2,060,000.00. Paragraph 7 stated that if private respondent succeeded in obtaining the funds within that period, petitioners would execute and deliver a “Deed of Sale” and turn over the owner’s duplicate certificates of title. The trial court approved the compromise agreement on March 25, 1992. In May 1992, private respondent, alleging it had negotiated a loan, requested petitioners to execute a contract to sell. Petitioners refused. Private respondent filed an urgent motion to direct petitioners to execute a contract to sell. On July 8, 1992, petitioners filed a motion for execution of judgment, alleging private respondent failed to settle its obligations within the five-month period. On August 6, 1992, respondent judge denied the motion for execution and ordered petitioners to execute a contract to sell in favor of private respondent, opining that petitioners’ refusal was the proximate cause of private respondent’s failure to comply. Petitioners filed this petition for certiorari.

ISSUE

Whether or not respondent judge committed grave abuse of discretion in ordering petitioners to execute a contract to sell in favor of private respondent.

RULING

No, the respondent judge did not commit grave abuse of discretion. The Supreme Court dismissed the petition. The resolution hinged on interpreting the compromise agreement. While paragraph 7 expressly obligated petitioners to execute a “Deed of Sale” upon full payment, the Court looked into the contemporaneous and subsequent acts of the parties to determine their real intention. The parties had previously entered into a contract to sell on April 26, 1991. The compromise agreement, signed by both parties, was tantamount to a bilateral promise to buy and sell, giving each party the right to demand fulfillment from the other. The Court opined that the compromise agreement must be interpreted as bestowing upon private respondent the power to demand a contract to sell. Where the seller promises to execute a deed of absolute sale upon complete payment, it is a contract to sell. The sale was still in the executory stage, with the passing of title subject to the suspensive condition of private respondent securing the funds. The order to execute a contract to sell did not place petitioners in danger of losing their property without consideration, as in a contract to sell, there is no immediate transfer of ownership; payment is a positive suspensive condition. Since the five-month period had lapsed, the Court ordered the trial court to fix a new period for private respondent to raise the funds. Private respondent was also ordered to deposit current rentals with the trial court pending consummation. Petitioners were ordered to execute a contract to sell in favor of private respondent.