G.R. No. 147869; January 26, 2005
V.V. SOLIVEN REALTY CORP., petitioner, vs. LUIS KUNG BENG T. ONG., respondent.

FACTS

On July 18, 1979, petitioner V.V. Soliven Realty Corp. and respondent Luis Kung Beng T. Ong entered into a Contract to Sell for a parcel of land in Pasig City. Respondent completed full payment of the purchase price by July 20, 1989. Despite this, petitioner refused to execute the deed of absolute sale and deliver the title. Respondent filed a complaint with the HLURB, which ordered petitioner to execute the sale and refund an overpayment of ₱3,744.96. This decision was affirmed by the HLURB Board of Commissioners and the Office of the President.
Unknown to respondent, the subject lot had been levied upon execution in 1985 due to a separate civil case against petitioner. Petitioner redeemed the lot in 1999 but subsequently subdivided it and sold one-half to a third party, Rogelio Vizon Carpio, Jr., in March 2000. Petitioner argued before the Court of Appeals that the levy constituted a fortuitous event that extinguished its obligation and that it could no longer transfer the entire lot as half was already sold to a buyer in good faith.

ISSUE

The primary issue is whether petitioner’s obligation to execute a deed of absolute sale was extinguished by the levy on execution and subsequent sale of half the lot to a third party.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals with modification on the award of damages. The levy on execution did not constitute a fortuitous event that extinguished petitioner’s obligation. A fortuitous event, by definition, must be an occurrence that is independent of the will of the obligor. The levy resulted from petitioner’s own separate civil liability, making it not fortuitous. Petitioner’s obligation under the perfected Contract to Sell was precisely to ensure the lot was free from encumbrances and deliverable upon full payment.
Petitioner’s act of subdividing and selling half of the lot to another buyer constituted bad faith. This sale did not prejudice respondent’s rights, as his ownership was established upon the perfection of the contract and full payment. The Court upheld the appellate court’s orders for petitioner to: (1) execute a deed of sale for the remaining half-lot; (2) pay respondent the value of the sold half (₱350,000) with legal interest; and (3) refund the overpayment with interest. However, the Supreme Court deleted the awards for moral and exemplary damages and attorney’s fees, finding no sufficient basis in the complaint’s prayer or evidence to justify them. The legal interest on the monetary awards was set at 6% per annum from the filing of the complaint until finality, then 12% per annum until full satisfaction.