Heirs of Corazon Villeza vs. Aliangan

Contracts of sale and contracts to sell involving real property are valid and enforceable, and the obligations to convey title and deliver possession are transmissible to the heirs of the deceased sellers. Heirs cannot evade these obligations by claiming lack of privity or invoking the Statute of Frauds when the buyers have fully paid the purchase price, as patrimonial obligations survive death and pass to successors-in-interest under Article 1311 of the Civil Code.

Corazon Villeza, during her lifetime, entered into a Deed of Conditional Sale for a residential lot and house in Centro I, Angadanan, Isabela, with respondents Elizabeth and Rosalina Aliangan, and orally agreed to sell two other agricultural and residential properties (Bunay and Poblacion) to them. Respondents paid the full purchase prices through monthly remittances from abroad, which Corazon acknowledged via signed receipts and an acknowledgment receipt. Corazon died intestate on August 3, 2009, without executing the corresponding deeds of absolute sale or transferring the titles. When respondents demanded the execution of the conveyance documents, Corazon's heirs (petitioners) refused, asserting the sales were void and that respondents should have filed claims in probate court. Respondents subsequently filed three separate complaints for specific performance and damages directly against the heirs.

• Three parcels of land in Angadanan, Isabela (Centro I, Bunay, and Poblacion properties) were registered under the name of Corazon Villeza.
• On January 10, 2006, Corazon and Rosario Agpaoa executed a Deed of Conditional Sale for the Centro I property (540.5 sq.m.) with respondents for P450,000, explicitly stipulating that a Deed of Absolute Sale would be executed only upon full payment of the balance.
• Respondents made monthly remittances from Canada to Corazon, fully paying the P450,000 purchase price by April 2008, with payments acknowledged by signed receipts.
• Corazon orally sold the Bunay agricultural property (36,834 sq.m.) to respondent Elizabeth for P250,000, which Elizabeth paid in full via two remittances acknowledged by Corazon.
• Corazon orally sold the Poblacion residential property (225 sq.m.) to respondent Rosalina, who paid the purchase price through remittances and received a signed Acknowledgment Receipt on February 11, 2005, stating full payment of P85,000 for the balance.
• Corazon died on August 3, 2009, without transferring ownership or executing deeds of conveyance. Petitioners, as her heirs, refused to honor the agreements.
• Respondents filed three separate actions for specific performance to compel petitioners to execute the deeds, surrender titles, and deliver possession.

• The Deed of Conditional Sale for the Centro I property is void ab initio because Corazon did not hold registered ownership at the time of its execution in January 2006.
• Respondents' cause of action should have been filed against Corazon's estate in probate proceedings under Rules 86, 87, and 89 of the Rules of Court, not directly against the heirs in an ordinary civil action.
• Petitioners are not privies to the contracts and cannot be sued for enforcement absent a stipulation pour autrui in their favor under Article 1311 of the Civil Code.
• The oral contracts for the Bunay and Poblacion properties violate the Statute of Frauds, as they lack written memoranda subscribed by the party charged, and remittance receipts do not constitute proof of sale.

• The contracts were perfected and fully consummated through complete payment of the purchase prices, evidenced by remittance receipts and signed acknowledgments from Corazon.
• An ordinary action for specific performance is the proper remedy, as probate courts lack jurisdiction to adjudicate ownership disputes over property claimed under title adverse to the decedent's estate.
• Heirs are bound by the transmissible patrimonial obligations of their predecessor-in-interest under Article 1311 of the Civil Code, and cannot evade contractual duties to convey property.

• Procedural Issues:
  • Whether the actions for specific performance should have been filed against the decedent's estate in probate court under Rules 86, 87, and 89 of the Rules of Court instead of directly against the heirs.
• Substantive Issues:
  • Whether the Deed of Conditional Sale and the oral contracts of sale are valid and enforceable despite the sellers' deaths, alleged initial lack of ownership, and absence of formal written instruments.
  • Whether the heirs of the deceased sellers are legally bound to execute deeds of conveyance and deliver possession pursuant to the contracts entered into by their predecessor.

• Procedural:
  • The Supreme Court ruled that the institution of ordinary civil actions for specific performance was proper and not premature. Probate courts or administration proceedings lack jurisdiction to determine ownership of property alleged to be part of a decedent's estate but claimed by third persons under title adverse to the estate. Section 8, Rule 89 of the Rules of Court presupposes a pending probate proceeding and the absence of controversy over the contract; since petitioners actively disputed the validity of the sales, an ordinary action is the correct remedy.
• Substantive:
  • The Court held that the Deed of Conditional Sale is a valid contract to sell, and the oral sales are valid contracts of sale. Full payment by respondents consummated the contracts, rendering the Statute of Frauds inapplicable to the oral agreements under the doctrine of part performance and ratification by acceptance of benefits. The initial lack of Corazon's registered ownership over the Centro I property did not void the contract, as Article 1434 dictates that title passes by operation of law to the buyer once the seller subsequently acquires it. Under Article 1311 and succession laws, patrimonial obligations arising from contracts are transmissible to heirs, who succeed to the rights and duties of the decedent and are therefore compelled to execute the necessary deeds and deliver physical possession.

• Relativity of Contracts and Succession (Article 1311) — Contracts take effect between the parties, their assigns, and heirs, unless intransmissible by nature, stipulation, or law. Applied to establish that heirs step into the juridical shoes of the deceased and are bound by transmissible patrimonial obligations, including the duty to convey real property.
• Contract to Sell vs. Contract of Sale — A contract to sell reserves ownership until full payment, whereas a contract of sale transfers ownership upon delivery or execution of a public instrument. Applied to classify the Deed of Conditional Sale as a contract to sell where ownership transfers only upon execution of the Deed of Absolute Sale after full payment.
• Statute of Frauds and Part Performance — The Statute of Frauds applies only to executory contracts and not to partially or fully executed ones. Applied to uphold the oral sales as fully paid, thereby removing them from the Statute's coverage and making them enforceable to prevent fraud.
• After-Acquired Title Doctrine (Article 1434) — When a non-owner sells a thing and later acquires title, the title passes by operation of law to the buyer. Applied to validate the sale of the Centro I property despite Corazon acquiring the certificate of title months after the contract's perfection.

• "He who contracts does so for himself and his heirs." — Cited to emphasize the fundamental principle that contractual obligations are generally transmissible to successors-in-interest unless expressly intransmissible by nature or law.
• "The Statute of Frauds is applicable only to executory contracts and not to partially or totally consummated ones... if a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith." — Explains why fully paid oral contracts for land remain enforceable despite lacking a formal written instrument, as part performance removes the contract from the statute's operation.
• "It is settled jurisprudence, to the point of being elementary, that an agreement which stipulates that the seller shall execute a deed of sale only upon or after full payment of the purchase price is a contract to sell, not a contract of sale." — Clarifies the legal classification of conditional sale agreements and the reservation of ownership until the purchase price is fully paid.

• Diego v. Diego — Cited to affirm the settled rule that stipulations to execute a deed of absolute sale upon full payment characterize the agreement as a contract to sell rather than a contract of sale.
• Berg v. Magdalena Estate, Inc. — Cited for established principles on what constitutes a sufficient memorandum under the Statute of Frauds, noting that multiple connected writings can collectively satisfy the requirement.
• Carbonnel v. Poncio — Cited to establish that the Statute of Frauds is inapplicable to contracts that have been totally or partially performed, as part performance takes the contract out of the statute's operation to prevent inequity.
• Mojica v. Fernandez — Cited to rule that heirs are not "third persons" with respect to contracts involving the decedent's estate and succeed to all rights and obligations by operation of law.
• Alvarez v. Intermediate Appellate Court — Cited to reinforce that heirs cannot escape the legal consequences of their predecessor's transactions and are bound by transmissible contractual obligations.

• Article 1311, Civil Code — Establishes the relativity of contracts and provides that contracts bind parties, assigns, and heirs, serving as the primary legal basis for holding petitioners liable for their predecessor's obligation to convey property.
• Articles 1458 & 1478, Civil Code — Define the contract of sale and permit parties to stipulate that ownership shall not pass until full payment, legally justifying the classification of the agreement as a contract to sell.
• Articles 1403(2) & 1405, Civil Code (Statute of Frauds) — Require certain contracts to be evidenced in writing for enforceability, but provide that ratification by acceptance of benefits or partial performance renders them binding.
• Article 1434, Civil Code — Provides that if a non-owner sells property and later acquires title, the title passes by operation of law to the buyer, validating the sale despite the seller's initial lack of ownership.
• Section 8, Rule 89, Rules of Court — Governs court authorization for an executor/administrator to convey realty contracted by the deceased; deemed inapplicable due to the active controversy over ownership requiring an ordinary civil action.