GR 121200; (September, 1996) (Digest)
G.R. No. 121200 September 26, 1996
GLORIA A. SAMEDRA LACANILAO and PLUTARCO CADURNIGARA, petitioners, vs. COURT OF APPEALS, EUSEBIO C. ENCARNACION and Sps. RAMON and TERESITA A. ACEBO, respondents.
FACTS
Petitioners were long-term lessees of a residential lot owned by respondent Eusebio Encarnacion. In May 1988, after negotiations, Encarnacion verbally agreed to sell the lot to petitioners for P120,000.00, with payment due on June 15, 1988. Petitioners requested and were granted a one-month extension to gather the funds. However, they failed to pay the purchase price on the agreed date. Subsequently, in August and November 1988, Encarnacion sold the property to respondent spouses Ramon and Teresita Acebo for P145,000.00, executing a Deed of Absolute Sale in their favor. Upon learning of the sale, petitioners filed a complaint to annul the deed to the Acebos and to compel Encarnacion to sell the lot to them instead.
ISSUE
The core legal issue is whether petitioners, based on an unperformed verbal contract to sell, obtained an enforceable right superior to the Acebos’ rights derived from a subsequent deed of absolute sale.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals. The agreement between Encarnacion and petitioners was a contract to sell, where ownership is retained by the seller until full payment of the price. Full payment is a positive suspensive condition; its non-occurrence prevents the obligation to convey title from arising. The Court upheld the factual finding that petitioners failed to pay the purchase price on the stipulated date. This failure allowed Encarnacion to extrajudicially terminate the oral agreement. While the Statute of Frauds (Article 1403[2][e]) renders such a verbal contract over realty unenforceable, and its defense was arguably waived, petitioners still did not prove they were ready to fulfill the essential condition of payment. Consequently, no enforceable right to purchase was created in their favor. The subsequent sale to the Acebos, who were purchasers in good faith for value, was therefore valid. The Court emphasized that while it is mindful of equity, it cannot enforce equitable considerations to override established legal principles and the factual conclusions of the lower courts.