G.R. No. 202820 , January 13, 2021
HOME GUARANTY CORPORATION, PETITIONER, VS. ELVIRA S. MANLAPAZ, RESPONDENT.

FACTS

On September 20, 1995, Vive Eagle Land, Inc. (VELI), Planters Development Bank (Bank), and petitioner Home Guaranty Corporation (HGC) entered into an Asset Pool Formation and Trust Agreement for the development of lots in Eagle Crest Village in Baguio City, which included the disputed property. HGC extended a guaranty on the Participation Certificates sold to investors. The Bank acted as trustee and held the titles. Due to project delay, the Asset Pool was declared in default, and HGC paid the guaranty call. On August 19, 1998, the Bank assigned and transferred the assets of the Asset Pool, including the contested land, to HGC via a Deed of Assignment and Conveyance.
Prior thereto, on January 8, 1998, VELI entered into a Contract to Sell with First La Paloma Properties, Inc. (FLPPI) involving bulk properties, including the disputed lot. On June 22, 1998, FLPPI entered into a Contract to Sell with respondent Elvira S. Manlapaz over the disputed property for P913,000.00. On October 8, 1998, VELI, FLPPI, and HGC entered into a Memorandum of Agreement (superseding the prior Contract to Sell between VELI and FLPPI) wherein FLPPI assumed to pay HGC the value of the properties. Accordingly, HGC and FLPPI executed a Contract to Sell dated October 15, 1998. FLPPI failed to pay, and HGC informed FLPPI on November 15, 2000 that it was invoking its right to cancel their contract.
Manlapaz filed a Complaint for delivery of title with damages with the HLURB’s Legal Services Group (LSG) against FLPPI, the Bank, VELI, and HGC, alleging full payment but failure to deliver title. The LSG-HLURB dismissed the complaint against the Bank and VELI but ordered HGC to execute a Deed of Absolute Sale and deliver the title to Manlapaz. The HLURB Board of Commissioners (BOC) reversed, dismissing the complaint against HGC and ordering FLPPI to refund Manlapaz with damages. The Office of the President affirmed the BOC-HLURB decision. The Court of Appeals reversed the OP and reinstated the LSG-HLURB decision, ordering HGC to deliver the title. HGC filed this Petition for Certiorari.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in setting aside the Office of the President’s decision and holding that HGC is obligated to release the title of the disputed property to Manlapaz.

RULING

Yes. The Supreme Court granted the petition, reversed the Court of Appeals Decision and Resolution, and reinstated the Office of the President’s Decision which affirmed the HLURB Board of Commissioners’ ruling.
The Supreme Court held that HGC, as the absolute owner of the property by virtue of the Deed of Assignment and Conveyance dated August 19, 1998, had the right to enter into a Contract to Sell with FLPPI on October 15, 1998. This later contract explicitly prohibited FLPPI from selling the properties without full payment and HGC’s written consent. The contract between FLPPI and Manlapaz dated June 22, 1998 was executed without HGC’s knowledge and consent, and prior to HGC’s ownership. HGC was not privy to this contract. When FLPPI failed to pay HGC, HGC validly cancelled their Contract to Sell. Consequently, FLPPI had no authority to sell the property to Manlapaz, and HGC retained ownership. The Court emphasized that in a contract to sell, ownership remains with the seller until full payment. Since FLPPI did not fully pay HGC, ownership never passed to FLPPI, and it could not validly transfer title to Manlapaz. The Court found no grave abuse of discretion by the Office of the President, whose findings were supported by substantial evidence. Thus, HGC is under no obligation to deliver the title to Manlapaz; her remedy is to seek refund and damages from FLPPI.