Dawson vs. Register of Deeds of Quezon City

Heirs who assumed a deceased vendee's obligations under a contract to sell and completed payment from their own funds may resort to the summary proceedings under Section 108 of PD 1529 to correct a certificate of title erroneously issued in the deceased's name, because title in a contract to sell vests only upon full payment and a dead person has no juridical capacity to acquire it.

Petitioners are the surviving heirs of Louis P. Dawson, who had dealt with Siska Development Corporation as vendee of a Quezon City lot, while respondents are the Register of Deeds of Quezon City and the Presiding Judge of the Regional Trial Court of Quezon City, Branch 85, as the offices concerned with registration. Section 108 of Presidential Decree No. 1529, substantially similar to Section 112 of Act No. 496, provides a summary petition procedure for amendment or alteration of certificates of title upon grounds including omission or error in entering a certificate and other reasonable grounds.

On May 2, 1967, during his lifetime, Louis P. Dawson offered to buy on installment from Siska Development Corporation, per contract to sell, a parcel of land in Quezon City consisting of 638 square meters for ₱27,632.00, now covered by Transfer Certificate of Title No. RT-58706 (248057). On June 3, 1971, Louis P. Dawson died intestate without having completed the installments on the property. Upon his death, petitioners, his only surviving heirs, assumed his rights and obligations under the contract to sell and paid in full the selling price of the lot from their own funds, completing payment in 1978.

With said full payment, vendor Siska Development Corporation executed on March 16, 1978 a deed of absolute sale in favor of the deceased Louis P. Dawson, who had died seven years earlier, instead of in favor of petitioners who had assumed and to whom were transferred his rights and obligations. Because of the obvious error, Transfer Certificate of Title No. RT-58706 (248057), entered at the Office of the Register of Deeds of Quezon City on August 17, 1978, was issued in the name of deceased Louis P. Dawson. The tax declaration and real property tax bill remained in his name, and his wife Soledad Dawson died in 1988.

Thereafter, on October 7, 1993, petitioners filed a petition pursuant to Section 108 of PD 1529 for cancellation and correction of the title in the name of Louis P. Dawson and issuance of a new title in their names as co-owners in the stated shares: Dr. Ernesto C. Dawson (1/5), Louis P. Dawson, Jr. (1/5), Benjamin C. Dawson (1/5), Josephine Dawson Soliven (1/5), Ralph D. Cudilla (1/15), Eliza C. Isip (1/15) and Larry D. Cudilla (1/15). The trial court found the petition to pertain more to partition of the estate which would transfer ownership to petitioners as compulsory heirs, and the Court of Appeals sustained the dismissal while questioning the 1993 filing as a possible device to evade payment of necessary taxes.

• Assumption of Contract to Sell and Full Payment: Petitioner argued that as the sole heirs of Louis P. Dawson, they assumed upon his death in 1971 the obligations under the contract to sell entered into in 1967, and having completed payment of the contract price from their own funds in 1978, ownership should have been transferred to them and not to the deceased.
• Manifest Error Correctible under Section 108: Petitioner maintained that the issuance of the TCT in the name of the deceased was manifestly an error, that the petition was not controversial given unanimity among all interested parties as the only surviving heirs, and that they could therefore avail of the summary remedy provided under Section 108 of PD 1529.

• Applicability of Section 108: Whether Section 108 of PD 1529 applies to allow correction of a certificate of title issued in the name of a deceased contract-to-sell vendee in favor of his heirs who completed payment.

• Applicability of Section 108: Yes. Section 108 of PD 1529 is available because title never vested in the deceased vendee, the property never became part of his estate, and the issuance of title in his name was an error correctible by summary petition upon compliance with statutory requirements.

• Applicability of Section 108: By the nature of a contract to sell, title is retained by the vendor until full payment of the price, with payment operating as a positive suspensive condition preventing the vendor's obligation to convey from becoming effective. Since Louis P. Dawson died in 1971 without completing installments and his heirs completed payment from their own funds in 1978, ownership had not vested in him during his lifetime. The 1978 deed of absolute sale could not have transferred title to a person dead for seven years, who had lost juridical capacity and civil personality through death, so the lot did not become part of his estate and partition was not the proper remedy. Substantially similar facts had been resolved in favor of Section 112, now Section 108, in Cruz vs. Tan, and speculation about tax evasion without specification of taxes avoided or showing of nonpayment could not withhold relief, though petitioners still had to satisfy the requirements and conditions of the provision including notice to all parties in interest.

• Contract to Sell vs. Contract of Sale — In a contract of sale, title passes to the vendee upon delivery of the thing sold and the vendor loses ownership unless the contract is resolved or rescinded; in a contract to sell, ownership is by agreement reserved in the vendor and does not pass until full payment of the purchase price, with payment as a positive suspensive condition whose failure prevents the vendor's obligation to convey from becoming effective. Applied here, no ownership vested in Louis P. Dawson because the price was completed only after his death by his heirs.
• Loss of Juridical Capacity and Civil Personality by Death — Juridical capacity, the fitness to be the subject of legal relations, is lost only through death, and civil personality is extinguished by death. Applied here, Siska Development Corporation could not convey to Louis P. Dawson in 1978 because he had died in 1971 and no longer possessed juridical capacity.
• Summary Correction under Section 108 of PD 1529 — A registered owner or other person having an interest in registered property may petition the proper court upon grounds including termination of registered interests, arising of new interests, omission or error in entering a certificate, or any other reasonable ground, with the court authorized after notice to all parties in interest to order entry or cancellation of a new certificate, provided the judgment of registration is not reopened and a purchaser for value in good faith is not impaired without consent. Applied here, the erroneous issuance of title in the deceased's name was a manifest error remediable by such petition, following Cruz vs. Tan.
• Property Not Part of Estate Excluded from Partition — Where ownership never vested in the decedent, the property did not become part of his estate. Applied here, partition was not the required remedy to determine ownership and consolidate title in petitioners who had stepped into the deceased's shoes and become lawful owners by completing payment.

• "In a contract to sell, the title over the subject property vests in the vendee only upon full payment of the consideration." — States the controlling characterization of the 1967 agreement that prevented ownership from vesting in the deceased before his death.
• "In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price." — Defines the canonical distinction between the two contracts, borrowed from Salazar vs. Court of Appeals, upon which the ruling on non-vesting turns.
• "His juridical capacity, which is the fitness to be the subject of legal relations, was lost through death." — Explains why the 1978 deed in favor of the long-deceased vendee could not transfer title and why the resulting TCT was erroneous.

• Salazar vs. Court of Appeals, 258 SCRA 317 — Followed as authority for the distinction between a contract of sale and a contract to sell, particularly that payment of the price in the latter is a positive suspensive condition.
• Cruz vs. Tan, 93 Phil. 348 — Followed as directly analogous precedent allowing Section 112 of the Land Registration Law, now Section 108 of PD 1529, to substitute the person entitled to the property where title was issued in the name of a deceased installment buyer after completion of payment, with heirs' conformity.
• Dumlao vs. Quality Plastic Products, Inc., 70 SCRA 472; Ching vs. Court of Appeals, 181 SCRA 9 — Cited to support that juridical capacity is lost through death and civil personality is extinguished by death.

• Section 108, Presidential Decree No. 1529 — Authorizes amendment and alteration of certificates upon petition on grounds including error or omission in entry or any other reasonable ground, after notice to parties in interest, without reopening the registration judgment or impairing a good-faith purchaser. Applied to permit cancellation of the title in the deceased's name and issuance of a new title to petitioners upon fulfillment of its requirements.
• Articles 37 and 42, Civil Code — Provide that juridical capacity is lost only through death and civil personality is extinguished by death. Applied to hold that the deceased vendee could not acquire title in 1978.
• Section 112, Act No. 496 — Identified as substantially similar to and predecessor of Section 108 of PD 1529, supporting reliance on Cruz vs. Tan decided under the former provision.

Davide, Jr., J. and Quisumbing, J., concur. Bellosillo, J. and Vitug, J., concur in the result.