G.R. No. 120274 ; November 16, 2001
SPOUSES FRANCISCO A. PADILLA and GERALDINE S. PADILLA, petitioners, vs. COURT OF APPEALS and SPOUSES CLAUDIO AÑONUEVO and CARMELITA AÑONUEVO, respondents.

FACTS

Petitioners, the Spouses Padilla, were the registered owners of a parcel of land under TCT No. 311854. On March 4, 1985, they sold the lot to respondent Spouses Añonuevo for P875,680.00, payable in installments secured by a chattel mortgage. On the same date, Francisco Padilla executed a special power of attorney authorizing the Añonuevos to mortgage the land to secure a loan. The Añonuevos paid the first two installments totaling P250,272.00.
Subsequently, homeowners of Carmel Subdivision II and II-A filed a complaint for quieting of title against the Añonuevos, alleging the lot was an open space for public use titled in the subdivision’s name under an earlier TCT. Due to this cloud on the title, the Añonuevos stopped further payments. The Padillas then filed suit to compel payment of the full purchase price.

ISSUE

Whether petitioners can compel respondents to pay the balance of the purchase price for the subject lot.

RULING

No, petitioners cannot compel payment. The Supreme Court denied the petition, affirming the lower courts. The legal logic is anchored on the resolution of a prior related case, Añonuevo v. Court of Appeals (G.R. No. 113639), promulgated on May 2, 1995. In that case, the Court definitively declared the Padillas’ title (TCT No. 311854 and all derivatives) null and void, ruling the lot was an open space for public use under the control of the Carmel homeowners.
This prior adjudication is decisive. Since the Padillas’ title was declared void, they had no valid ownership to convey at the time of the sale. A vendor cannot enforce payment for a thing they had no right to sell. The obligation to pay the price is premised on the vendor’s fulfillment of their correlative obligation to transfer ownership. Here, that foundational obligation failed ab initio due to the defective title. Consequently, the respondents were justified in suspending payment.
On the issue of restitution, the Court applied the principle against unjust enrichment under Article 22 of the Civil Code. Since the sale was effectively void due to the nullity of the vendor’s title, the Padillas had no right to retain the installment payments received. They were ordered to return the total sum of P250,272.00 to the Añonuevos, with legal interest from receipt until fully restituted. The Court also noted that a mortgage obligation with Equitable Venture Capital Corporation, secured by the lot, was entered in the Padillas’ name, not the respondents’, thus negating any liability of the Añonuevos for that debt.