GR 169341; (November, 2006) (Digest)
G.R. No. 169341; November 22, 2006
CITY OF CEBU, Petitioner, vs. VICENTE B. DEL ROSARIO, represented by his Attorney-in-Fact PANTALEON U. DEL ROSARIO, Respondent.
FACTS
Vicente S. del Rosario and his niece, Teresita Reyes-de Leon, were co-owners of parcels of land in Cebu City. On August 24, 1984, Vicente S. del Rosario and his son, Pantaleon U. del Rosario, entered into a Contract to Buy and Sell with the City of Cebu, represented by Mayor Ronald Duterte, for the sale of portions of these lands (the Asinan Fishpond) for the construction of a city abattoir. The contract, effective upon presidential and COA approval, stipulated that the purchase price would be held in escrow, releasable upon transfer of clean titles to the City. The City took possession and began construction.
Subsequent events complicated the transaction. Teresita de Leon sold her share to her nephew, respondent Vicente B. del Rosario (son of Pantaleon). After the EDSA Revolution, the new city administration under OIC Mayor John Osmeña stopped the abattoir construction and sought to renegotiate the contract or use the land for other purposes. The City subsequently refused to release the escrowed funds despite the Del Rosarios’ efforts to deliver titles, leading respondent to sue for specific performance and damages.
ISSUE
Whether the City of Cebu is obligated to pay the full contract price to respondent Vicente B. del Rosario under the Contract to Buy and Sell.
RULING
Yes. The Supreme Court affirmed the CA decision ordering the City to pay. The Contract to Buy and Sell was a perfected contract, binding upon approval by the President. The subsequent letter from Vicente S. del Rosario to Pantaleon, which stipulated that the sold area be taken from the share already bought by respondent Vicente B. del Rosario, did not novate or alter the principal contract with the City. This letter was a private agreement between father and son allocating benefits and obligations between themselves, but it did not modify the City’s contractual duties to the vendors.
The City’s obligation to pay became demandable upon the vendors’ substantial compliance with their obligation to deliver the property and secure titles. The City’s lawful taking of possession and commencement of construction constituted an implicit acceptance of the property, estopping it from denying the contract’s efficacy. The change in city administration and its new policy directions do not justify unilaterally reneging on a binding contract. The City, as a juridical entity, is bound by the contracts entered into by its authorized agents, and the contract’s object—the land for a public purpose—remained viable. Therefore, the City is liable to pay the agreed purchase price to the rightful beneficiary, respondent Vicente B. del Rosario, as determined by the vendors’ internal arrangements.