Mandin-Trotin vs. Bongo

A contract to sell becomes automatically null and void upon the buyer's failure to pay the full purchase price within the stipulated period, and the buyer cannot invoke novation based on evidence not presented during trial and raised for the first time on appeal in a Rule 45 petition.

Lot No. 3982, situated in Danao, Panglao, Bohol, is a 32,668-square-meter parcel originally claimed by Diosdado Bongo through a 1929 Escritura de Venta from Ancelma Bongcas, and later titled in 1990 under Original Certificate of Title No. 64051 in the name of Candido Bongo, Diosdado's only brother, through a free patent application. Candido Bongo's heirs—his wife Irene Arbulo vda. de Bongo and children Francisco, Sabina, and Artemia—are the respondents. The Heirs of Diosdado Bongo filed the underlying action for annulment of title and recovery of ownership. Paz Mandin-Trotin, an intervenor, entered the litigation asserting a contractual claim to a one-hectare portion of the lot based on a Deed of Conditional Sale executed by three of Candido's heirs in her favor.

Lot No. 3982, situated in Danao, Panglao, Bohol, is a parcel of land containing approximately 32,668 square meters. The Heirs of Diosdado Bongo claimed ownership through their father Diosdado, who allegedly purchased the land from Ancelma Bongcas on March 9, 1929 by virtue of an Escritura de Venta covering five parcels including one with an area of 7,080 square meters. According to the Heirs of Diosdado Bongo, after the purchase, Diosdado took possession and cultivated the land with the help of his brother Candido. When Candido married Irene Arbulo, Diosdado permitted him to build a house on the land and till it while sharing the produce. The Heirs of Candido Bongo likewise built their own houses on the property upon marriage.

The Heirs of Candido Bongo presented a different account. According to them, Candido had worked in the United States and sent money home, including funds to purchase lands in Panglao. Upon his return in 1956, Candido occupied the disputed land, built his house, and possessed it in the concept of an owner for over thirty years until his death. They maintained that long before Diosdado's death, the brothers had agreed that Lot No. 3982 would belong to Candido while Diosdado would receive other parcels.

In 1990, Candido caused the filing of a Free Patent Application over Lot No. 3982, resulting in the issuance of OCT No. 64051 in his name on November 27, 1990. On September 5, 1997, the Heirs of Diosdado Bongo learned of the title and filed an adverse claim with the Register of Deeds. On March 10, 1999, they filed an action for annulment of title, recovery of ownership and possession, and damages, contending that Candido's free patent application was surreptitious and spurious, rendering the subsequent registration and title null and void ab initio. The Heirs of Candido Bongo countered that the claim had prescribed and was barred by laches.

On August 21, 1997, before the adverse claim was filed, respondents Francisco Bongo, Sabina Bongo-Buntag, and Artemia Bongo-Liquit—three of Candido's heirs—executed a Deed of Conditional Sale in favor of Paz Mandin-Trotin over a one-hectare portion of Lot No. 3982 for a total consideration of ₱1,000,000.00. Trotin paid ₱100,000.00 upon signing, with the balance of ₱900,000.00 due not later than two months or on or before October 31, 1997. The DCS provided that a definite or absolute deed of sale would be executed only upon full payment, and that failure to pay the balance would render the DCS automatically null and void without further formality. Upon learning of the adverse claim filed by the Heirs of Diosdado Bongo on September 5, 1997, Trotin suspended payment of the balance.

On March 14, 2000, Trotin filed an Urgent Motion for Intervention, which the RTC granted on March 21, 2000. In her Answer in Intervention with Cross-Claim, Trotin alleged that respondents had delivered the one-hectare portion to her and that she was about to develop it when Celiana Buntag, asserting to be a direct heir of Diosdado, claimed ownership. Trotin prayed that judgment be rendered in favor of the Heirs of Candido Bongo and that respondents be ordered to execute and deliver a deed of absolute sale upon full payment. The RTC declared respondents in default as to the cross-claim, as they filed no pleading relative to it.

The RTC, in its Decision dated February 28, 2011, dismissed the complaint for lack of cause of action, holding that the OCT became indefeasible one year after issuance and that the Heirs of Diosdado Bongo's claim was barred by prescription. The RTC gave no weight to the Escritura de Venta, noting it was unregistered and thus valid only between parties, and that the area of 7,080 square meters did not coincide with the 32,668 square meters of Lot No. 3982. As to Trotin's cross-claim, the RTC left its settlement to Trotin and the Heirs of Candido Bongo. The CA affirmed the RTC on April 10, 2014, additionally ruling that the DCS was a contract to sell and that Trotin's failure to pay the balance by October 31, 1997 relieved the vendors of any obligation. Trotin then filed the instant Rule 45 Petition without filing a motion for reconsideration.

• Default and Relief Granted: Petitioner argued that since respondents were declared in default as to her cross-claim, the RTC should have granted such relief as her cross-claim warranted under Section 3, Rule 9 of the Rules of Court, rather than leaving the settlement to the parties.
• Novation of the DCS: Petitioner maintained that the DCS was novated when respondents, through subsequent Agreements executed in June 2000 and February 2001, agreed to go on with the sale without the two-months limit and to execute a final deed of sale after the civil case was terminated, invoking Article 1291 of the Civil Code on modification of obligations.
• Remand for Reception of Evidence: Petitioner sought remand to the RTC to allow her to testify on the contents of her Affidavit of Merit and present other witnesses, contending that the relevant facts and documents were determinative of the contractual relations between her and respondents.

• Questions of Fact Prohibited in Rule 45: Respondents argued that the Petition calls for a review of evidence and introduction of new evidence, both prohibited in a Rule 45 petition which allows only questions of law.
• Prior Adjudication of the DCS: Respondents contended that petitioner's claim was anchored on the DCS, which had already been decided against her, and reconsidering the probative value of the DCS is a question of fact barred by Rule 45.
• New Issues and Evidence Barred on Appeal: Respondents maintained that the Affidavit of Merit and the alleged Agreements were being introduced for the first time on appeal, in violation of Section 15, Rule 44 of the Rules, and that evidence not formally offered during trial is a mere scrap of paper.
• Doubtful Existence of Agreements: Respondents observed that the existence of the Agreements was very doubtful, as they were purportedly executed in 2000 and 2001 while trial was ongoing but were surprisingly introduced only on appeal.

• RTC's Handling of Cross-Claim: Whether the RTC erred in leaving the settlement of the cross-claim to the parties rather than granting relief as warranted.
• Contract to Sell and Effect of Non-Payment: Whether the CA erred in ruling that petitioner's failure to pay the balance of the purchase price within the period provided in the DCS relieved respondents of any obligation to hold the property in reserve.
• Novation Theory and Newly Discovered Evidence: Whether the petitioner's novation theory, supported by purported Agreements executed in 2000 and 2001, may be entertained in a Rule 45 petition.

• RTC's Handling of Cross-Claim: Moot. The first issue is superfluous because the CA already ruled on the merits of the cross-claim.
• Contract to Sell and Effect of Non-Payment: No. The DCS is a contract to sell, and the CA correctly ruled that petitioner's failure to pay the ₱900,000.00 balance by October 31, 1997 rendered the DCS automatically null and void without further formality.
• Novation Theory and Newly Discovered Evidence: No. The novation theory raises factual questions prohibited in a Rule 45 petition, was raised for the first time on appeal, and the alleged Agreements do not qualify as newly discovered evidence.

• RTC's Handling of Cross-Claim: The first issue is already superfluous because the CA ruled on the merits of the cross-claim. Since the CA already addressed the substance of the cross-claim, any error by the RTC in leaving its settlement to the parties has been rendered academic.
• Contract to Sell and Effect of Non-Payment: The CA correctly determined that the DCS was a contract to sell, not a contract of sale, based on the stipulations therein. The DCS provided that the vendors would execute a definite or absolute deed of sale only upon full payment, that failure to pay the balance would render the DCS automatically null and void without further formality, and that upon rescission the vendee would peacefully deliver the property to the vendors. Citing Heirs of Paulino Atienza vs. Espidol, in a contract to sell, ownership is retained by the seller until full payment, and the buyer's full payment is a positive suspensive condition. Since petitioner did not question the CA's legal conclusion that the DCS is a contract to sell, and she failed to pay the balance by October 31, 1997, the DCS became ineffective on that date. The CA's ruling on this legal matter has attained finality.
• Novation Theory and Newly Discovered Evidence: Petitioner is precluded from raising factual issues in a Rule 45 petition, which allows only questions of law. Her novation theory requires factual review, and she failed to identify which exception to the rule applies. Moreover, the novation theory cannot be entertained for the first time on appeal. In her Answer in Intervention and her Brief before the CA, petitioner only mentioned the DCS as the basis of her claim; she never alleged novation or the existence of the Agreements. The Agreements, purportedly executed in June 2000 and February 2001, were available during the trial and could have been presented then. They do not satisfy the requisites of newly discovered evidence under Section 1, Rule 37, particularly the requirement that the evidence could not have been discovered and produced at trial even with the exercise of reasonable diligence. Petitioner's explanation that she found the Agreements only in June 2014, over a decade after their execution, is highly suspicious and incredulous. Accordingly, the Agreements are not newly discovered evidence and cannot be considered.

• Contract to Sell vs. Contract of Sale — In a contract to sell, ownership is retained by the seller by agreement and does not pass to the buyer until full payment of the purchase price. The buyer's full payment is a positive suspensive condition to the coming into effect of the agreement. If the buyer fails to comply with the condition precedent of payment at the time specified, title simply remains in the seller. The Court applied this doctrine to the DCS, which provided that a definite deed of sale would be executed only upon full payment and that non-payment would render the DCS automatically null and void.
• Newly Discovered Evidence — The requisites for the introduction of newly discovered evidence are: (1) the evidence was discovered after trial; (2) such evidence could not have been discovered and produced at the trial even with the exercise of reasonable diligence; (3) it is material, not merely cumulative, corroborative, or impeaching; and (4) the evidence is of such weight that it would probably change the judgment if admitted. If the evidence could have been presented during trial with reasonable diligence, it cannot be considered newly discovered. The Court found that the Agreements, purportedly executed in 2000 and 2001, were available during trial and thus failed the second requisite.
• Rule 45 Limited to Questions of Law — A petition for review on certiorari under Rule 45 shall raise only questions of law. Factual issues may not be raised, and while certain exceptions exist, the petitioner must identify the applicable exception. The Court held that petitioner's novation theory required factual review and she failed to cite any exception.
• Issues Cannot Be Raised for the First Time on Appeal — Issues and theories not raised during trial or in the lower appellate court cannot be raised for the first time on appeal. The Court held that petitioner's novation theory and the Agreements supporting it were never alleged in her Answer in Intervention or in her CA Brief and thus could not be entertained.

• "Intervenor Trotin is precluded in a Rule 45 certiorari petition to raise factual issues. Section 1 of Rule 45 is unmistakable: 'The petition x x x shall raise only questions of law, which must be distinctly set forth.'" — This passage states the controlling rule on the limitation of Rule 45 petitions to questions of law and explains why the novation theory was rejected.
• "Also, her theory of novation cannot be entertained for the first time on appeal." — This establishes the procedural bar against raising new theories at the appellate stage, a principle central to the disposition.
• "The Court finds the explanation of intervenor Trotin x x x highly suspicious. Intervenor Trotin had all the opportunity to introduce them as evidence during the trial given her assertion that the Agreements were executed in 2000 and 2001. It is incredulous that she only remembered the Agreements when she prepared her Petition sometime in 2014, or over a decade when they were executed." — This passage articulates the Court's reasoning for rejecting the alleged Agreements as newly discovered evidence, emphasizing the reasonable diligence requirement.
• "Inasmuch as intervenor Trotin does not question before the Court the legal conclusion of the CA that the DCS is a contract to sell x x x the DCS became ineffective on October 31, 1997 upon the failure of intervenor Trotin to pay the balance of P900,000.00 to respondents." — This passage defines the operative effect of non-payment in a contract to sell and marks the date the DCS became void.

• Heirs of Paulino Atienza vs. Espidol, 642 Phil. 408 (2010) — Cited by the CA as controlling authority for the distinction between a contract to sell and a contract of sale, holding that in a contract to sell, ownership is retained by the seller until full payment, which is a positive suspensive condition.
• Ybiernas vs. Tanco-Gabaldon, 665 Phil. 297 (2011) — Cited for the four requisites of newly discovered evidence, which the Court applied to reject the Agreements as newly discovered.
• Uy vs. First Metro Integrated Steel Corporation, 534 Phil. 839 (2006) — Cited in relation to the requirements for a motion for new trial based on newly discovered evidence under Section 1, Rule 37.

• Section 1, Rule 45, Rules of Court — Provides that a petition for review on certiorari shall raise only questions of law. Applied to bar petitioner's novation theory, which required factual review.
• Section 3, Rule 9, Rules of Court — Governs default proceedings, providing that upon declaration of default, the court shall render judgment granting the claimant such relief as his pleading may warrant. Petitioner invoked this provision to argue the RTC should have granted her relief, but the Court found the issue superfluous.
• Section 1, Rule 37, Rules of Court — Enumerates the grounds for a motion for new trial, including newly discovered evidence that could not with reasonable diligence have been discovered and produced at trial. Applied to evaluate and reject the Agreements as newly discovered evidence.
• Section 15, Rule 44, Rules of Court — Prohibits the raising of new issues on appeal not raised during trial. Respondents invoked this to oppose the introduction of the Affidavit of Merit and Agreements.
• Article 1291, Civil Code — Provides that obligations may be modified by changing their principal conditions. Petitioner invoked this to support her novation theory, but the Court declined to apply it because the theory was raised for the first time on appeal and required factual determination.
• Sections 113 and 51, Presidential Decree No. 1529 (Property Registration Decree) — Cited by the CA for the rule that an unregistered document is valid only between the parties and does not bind third persons, the act of registration being the operative act to convey or affect land.

Carpio (Chairperson), J. Reyes, Jr., Lazaro-Javier, and Zalameda, JJ., concurred.