Jomoc vs. Court of Appeals

A contract of sale of real property, even if not complete in form, is valid and effective as between the parties so long as the essential requisites of consent, object, and cause concur, and partial payment renders the Statute of Frauds inapplicable; in a double sale of immovable property, the buyer who first records in good faith prevails, and mere registration without good faith does not confer better right.

The subject lot in Cagayan de Oro City forms part of the estate of the late Pantaleon Jomoc. Maria P. Vda. de Jomoc served as administratrix of the estate and acted on behalf of all the heirs. The property had been fictitiously sold and transferred to third persons, prompting Jomoc to file a recovery suit (Civil Case No. 4750) in Misamis Oriental. Mariano So, the husband of private respondent Maura So, was the last transferee and intervened in that case. While his appeal from the recovery decision was pending before the Court of Appeals, the Jomoc heirs entered into a sale arrangement with Maura So. The resolution of that appeal and the reconveyance of the property back to the Jomoc heirs set the stage for the competing claims over the lot.

The subject lot in Cagayan de Oro City forms part of the estate of the late Pantaleon Jomoc. The property had been fictitiously sold and transferred to third persons, prompting Maria P. Vda. de Jomoc, as administratrix of the estate and on behalf of all the heirs, to file a recovery suit (Civil Case No. 4750) before the trial court of Misamis Oriental. Mariano So, the last of the transferees and the husband of Maura So, intervened in the case. The suit was decided in favor of the Jomoc heirs, and Mariano So and one Gaw Sur Cheng appealed to the Court of Appeals.

Pending that appeal, in February 1979, the Jomoc heirs executed a Deed of Extrajudicial Settlement and Sale of Land (Exhibit "A") with private respondent Maura So for a consideration of P300,000.00. The document was not yet signed by all the parties nor notarized. In the meantime, Maura So made partial payments amounting to P49,000.00. The agreement provided that the consideration of P300,000.00, or whatever balance remained after deducting the advanced payments, would be paid upon the termination of Mariano So's appeal in the recovery case.

In 1983, Mariano So agreed to settle the recovery case by executing a Deed of Reconveyance of the land in favor of the Jomoc heirs, in compliance with the decision in the recovery case. This resulted in the dismissal of his appeal. On February 28, 1983, the Jomoc heirs executed another extrajudicial settlement with absolute sale in favor of intervenors spouses Lim Leong Kang and Lim Pue King for P200,000.00, part of which was allegedly intended to be returned to Maura So as reimbursement. The Jomocs allegedly executed this sale upon the belief that Maura So had backed out from the earlier transaction. The spouses Lim, however, registered their settlement and sale only on April 27, 1983.

Maura So had meanwhile demanded from the Jomoc family the execution of a final deed of conveyance. When they ignored the demand, she filed suit for specific performance to compel them to execute and deliver the proper registrable deed of sale over the lot, docketed as Civil Case No. 8983. On February 28, 1983 — the same date the Jomocs sold the lot to the spouses Lim — Maura So filed a notice of lis pendens with the Register of Deeds. The Jomocs and the spouses Lim alleged that Maura So had backed out, citing oral testimony that she expressed frustration in evicting squatters who demanded large sums as a condition for vacating. They also pointed to the lack of signatures of four of the Jomoc heirs and of Maura So herself, as well as the lack of notarization of Exhibit "A."

The lower court found no sufficient evidence to show Maura So's withdrawal from the sale. It concluded that the case was one of double sale and that the spouses Lim were registrants in bad faith who registered their deed long after the notice of lis pendens in Civil Case No. 8983 had been recorded. On appeal, the Court of Appeals affirmed the trial court's decision, except for the award of moral and exemplary damages and attorney's fees and litigation expenses.

• Statute of Frauds: Petitioners-heirs contended that the contract of sale by Maria P. Jomoc with Maura So is unenforceable under the Statute of Frauds, citing the lack of signatures of four heirs and of Maura So herself, as well as the lack of notarization of Exhibit "A."
• Abandonment/Back-out: Petitioners alleged that Maura So abandoned or backed out from the agreement, evidenced by oral testimony that she expressed frustration in evicting squatters who demanded large sums as a condition for vacating, during a conference with the Jomocs' lawyers.
• Improper Relief — Annulment vs. Specific Performance: Petitioners argued that the trial court and appellate court erred in declaring void the subsequent deed of extrajudicial settlement with the spouses Lim, since specific performance and not annulment of contract due to double sale was the thrust of Maura So's complaint.
• Better Right of Spouses Lim: Petitioners spouses Lim contended that they had a better right to the property as subsequent buyers who registered their sale, asserting good faith in their purchase.

• Validity of Contract: Respondent Maura So maintained that Exhibit "A" constituted a valid and existing contract of sale, as there was a meeting of minds and partial payment had been made and accepted by the vendors.
• No Abandonment: Respondent argued that she never abandoned the purchase; the partial payments she made indicated continuing interest in acquiring the lot, and the agreement expressly tied the balance payment to the termination of Mariano So's appeal.
• Double Sale and Bad Faith of Spouses Lim: Respondent contended that the spouses Lim purchased the lot with full knowledge of the prior sale and without requiring proof of revocation, and that they registered after a notice of lis pendens had already been annotated, making them buyers in bad faith.

• Validity of the Contract: Whether the contract of sale (Exhibit "A") between the Jomoc heirs and Maura So is valid and enforceable notwithstanding its incomplete form and the alleged applicability of the Statute of Frauds.
• Abandonment: Whether Maura So abandoned or backed out from the agreement to purchase the lot, justifying the subsequent sale to the spouses Lim.
• Double Sale and Better Right: Whether the subsequent sale to the spouses Lim is void, and who has the better right to the property under Article 1544 of the Civil Code.
• Good Faith of Subsequent Buyers: Whether the spouses Lim are buyers in good faith entitled to protection under the Torrens system.

• Validity of the Contract: Yes. The contract is valid and enforceable; partial payment rendered the Statute of Frauds inapplicable, and the essential requisites of consent, object, and cause were present.
• Abandonment: No. Maura So did not abandon the purchase; the factual findings of both lower courts, supported by substantial evidence, established her continuing interest in acquiring the lot.
• Double Sale and Better Right: Yes, the case is one of double sale, and Maura So has the better right. The spouses Lim registered in bad faith, after a notice of lis pendens had been annotated, and cannot claim protection under Article 1544.
• Good Faith of Subsequent Buyers: No. The spouses Lim were not buyers in good faith; they purchased with knowledge of the prior sale and registered after the lis pendens was recorded, and mere registration without good faith does not confer better right.

• Validity of the Contract: The Court found that the essential requisites of a valid contract — consent of the contracting parties, object, and cause — were clearly established to be present. The meeting of minds and the delivery of sums as partial payment was admitted by both parties. Because partial payment had been made and accepted, the contract was not merely perfected but partly executed, rendering the Statute of Frauds inapplicable. Under Article 1357 of the Civil Code, the enforceability of the contract is recognized, and each contracting party is granted the right to compel the other to execute the proper public instrument so that the sale of registered land can be duly registered and bind third persons. The petitioners themselves admitted in their appellate brief that the extrajudicial settlement with sale in favor of Maura So is valid and enforceable under the Statute of Frauds.

• Abandonment: The Court found no cogent reason to reverse the factual findings of the RTC and the Court of Appeals that Maura So did not subsequently abandon her intention to purchase the lot. The terms of Exhibit "A" provided that the balance would be paid upon termination of Mariano So's appeal, and this finding was supported by substantial evidence. The Court reasoned that even if the sums paid by Maura So were allegedly intended to expedite the dismissal of the appeal, such payment only indicated interest in acquiring the lot. The claim that payments were for gathering heirs from far places to sign Exhibit "A" further confirmed her continuing interest. The oral evidence offered by petitioners to show subsequent refusal could not overcome the express intention in the contract, and the two lower courts had definite findings on this factual issue that the Supreme Court saw no reason to reject.

• Double Sale and Better Right: The Court held that the issue of double sale had to be resolved to determine whether Maura So was entitled to the reliefs prayed for. There was no evidence that the contractual relationship between the Jomoc heirs and Maura So had been severed, yet the heirs sold the same lot to the spouses Lim. Under Article 1544 of the Civil Code, in case of double sale of immovable property, ownership belongs to the person acquiring it who in good faith first recorded it in the Registry of Property. The spouses Lim did not have a better right because they purchased with full knowledge of the previous sale and without requiring proof of revocation. They should have exercised extra caution, especially since the land was still covered by TCT No. 19648 in the name of Mariano So at the time of their purchase, though it had been reconveyed to the Jomoc heirs.

• Good Faith of Subsequent Buyers: The Court ruled that the spouses Lim registered their sale on April 27, 1983, after having been charged with notice of lis pendens annotated as early as February 28, 1983 — the same date of their purchase. Under Article 1544, mere registration is not enough to acquire new title; good faith must concur. The spouses Lim's failure to verify the status of the property and their registration after the lis pendens was annotated demonstrated bad faith. The Court cited Bergado vs. Court of Appeals and Concepcion vs. Court of Appeals in support. Finding no reversible error in the lower courts' conclusions, the petitions were dismissed.

• Statute of Frauds and Partly Executed Contracts — The Statute of Frauds does not apply when a contract of sale has been partly executed, as when partial payment has been made and accepted by the vendor. The contract is valid and effective as between the parties so long as the essential requisites of consent, object, and cause are present, even if the contract is not complete in form. Under Article 1357 of the Civil Code, either party may compel the other to execute the proper public instrument to enable registration and binding effect on third persons.

• Double Sale of Immovable Property (Article 1544) — In case of double sale of immovable property, ownership belongs to the person acquiring it who in good faith first recorded it in the Registry of Property. Mere registration without good faith does not confer better right. Good faith must concur with first registration. A buyer who purchases with knowledge of a prior sale and registers after a notice of lis pendens has been annotated is a buyer in bad faith.

• Factual Findings of Lower Courts — The Supreme Court will not disturb the factual findings of the trial court and the Court of Appeals when supported by substantial evidence and when no reversible error is shown, especially on questions of whether a party abandoned a contractual intention.

• "The contract of sale of real property even if not complete in form, so long as the essential requisites of consent of the contracting parties, object, and cause of the obligation concur and they were clearly established to be present, is valid and effective as between the parties." — This passage articulates the ratio decidendi on the validity of incomplete contracts of sale and the inapplicability of the Statute of Frauds when partial performance exists.

• "Under Article 1544, mere registration is not enough to acquire new title. Good faith must concur." — This is the canonical formulation of the requirement of good faith in double sale cases, frequently cited in subsequent jurisprudence on Article 1544.

• "The oral evidence offered by defendants-petitioners to show a subsequent refusal to proceed with the sale cannot be considered to reverse the express intention in the contract." — This passage establishes that parol evidence of subsequent oral refusal cannot override the express terms of a written contract, reinforcing the primacy of the written instrument's intention.

• Bergado vs. Court of Appeals, 173 SCRA 497 (1989) — Cited as controlling authority for the proposition that under Article 1544, mere registration is not enough to acquire new title and good faith must concur. The Court applied this rule to find the spouses Lim were buyers in bad faith.
• Concepcion vs. Court of Appeals, G.R. No. 83208, February 6, 1991 — Cited alongside Bergado for the same proposition on the concurrence of good faith with first registration in double sale cases.

• Article 1357, Civil Code — Recognizes the enforceability of a contract of sale of registered land even if not complete in form, granting each contracting party the right to compel the other to execute the proper public instrument so the contract can be registered and bind third persons. The Court applied this provision to uphold Maura So's action for specific performance.
• Article 1544, Civil Code — Governs double sale of property; for immovable property, ownership belongs to the person acquiring it who in good faith first recorded it in the Registry of Property. The Court applied this provision to determine that the spouses Lim, having registered in bad faith, had no better right than Maura So.

Fernan, C.J., Feliciano, Bidin, and Davide, Jr., JJ., concurred.