G.R. No. 231936, November 25, 2020
Fil-Estate Properties, Inc., Petitioner, vs. Hermana Realty, Inc., Respondent.

FACTS

On October 11, 1997, Jose C. Alvarez, chairperson of respondent Hermana Realty, Inc. (HRI), placed an option to purchase a condominium unit in petitioner Fil-Estate Properties, Inc.’s (FEPI) West Tower Condominium Corporation. On March 20, 2000, FEPI and HRI executed a contract to sell the unit for ₱20,998,400.00. HRI made full payment. FEPI executed an undated and unnotarized Deed of Absolute Sale in favor of HRI, pending HRI’s transmittal of payment for the Documentary Stamp Tax (DST) and other taxes and a final agreement with the Makati City Assessor’s Office on valuation costs for real estate taxation. HRI asserted that upon full payment, it became entitled to the execution of an absolute deed of sale and delivery of the owner’s duplicate copy of the Condominium Certificate of Title (CCT). FEPI’s refusal allegedly caused Century Properties, Inc. to withdraw its offer to buy the unit from HRI. HRI filed a complaint for specific performance with damages before the Housing and Land Use Regulatory Board (HLURB). The HLURB ruled in favor of HRI, ordering FEPI to execute a dated and notarized Deed of Absolute Sale, deliver the CCT, and pay damages. The HLURB Board of Commissioners affirmed with modification, deleting the award of actual and exemplary damages. The Office of the President affirmed with further modification, deleting attorney’s fees. The Court of Appeals affirmed in favor of HRI, holding that under Section 25 of Presidential Decree No. 957, the buyer has the right to demand delivery of title upon full payment, and nothing in the contract made tax payment a prerequisite to title delivery. FEPI now petitions the Supreme Court, arguing that HRI’s payment of DST and local transfer taxes is a condition sine qua non to the delivery of the CCT per their contract and relevant tax laws.

ISSUE

Is payment of the Documentary Stamp Tax and other local taxes a condition precedent to FEPI’s execution of a notarized Deed of Absolute Sale and the subsequent delivery to HRI of the owner’s duplicate copy of the Condominium Certificate of Title?

RULING

No. Upon HRI’s full payment of the purchase price, the contract to sell was converted to an absolute sale, and HRI became rightfully entitled to demand the execution of a Deed of Absolute Sale in its favor. The contract to sell merely stated that taxes and expenses for the transfer of title “shall be for the account of the BUYER”; it did not specifically state that payment of these expenses was a prerequisite to the delivery of the title. While FEPI executed a deed, it was undated and unnotarized. Under Article 1358 of the Civil Code, acts creating real rights over immovable property must appear in a public document, but a private document remains valid though unenforceable. Under Article 1357, a party may compel the other to observe the required form once the contract is perfected. HRI, therefore, has the right to compel FEPI to execute a notarized Deed of Absolute Sale. Furthermore, the Deed of Absolute Sale itself is a prerequisite for the assessment and payment of the taxes in question by the Bureau of Internal Revenue and the City Treasurer’s Office. FEPI’s obligation to execute the deed and deliver the title is independent of HRI’s tax liabilities. FEPI’s refusal to deliver the title despite full payment makes it liable under Section 25 of P.D. No. 957.