Babasa Vs. Ca.docx

BABASA vs. COURT OF APPEALS G.R. No. 124045, May 21, 1998 Facts: On April 11, 1981 a contract of “Conditional Sale of Registered Lands” was executed over 3 parcels of land between spouses Vivencio and Elena Babasa (vendors) and Tabangao Realty, Inc. (vendee). It was expressly stipulated that Tabangao would have the absolute and unconditional right to take immediate possession of the lots as well as introduce any improvement thereon. Since the certificate of title over the lots were still in the name of a third party person, P300,000 of the purchase price would be paid upon signing of the contract and P1,821,920 upon presentation by the Babasas of transfer certificates of titles and delivery of registerable documents of sale in favor of Tabangao within 20 months from the signing of the contract, with 17% per annum interest payable until December 31, 1982. However, 2 days prior to the expiration of the 20-month period Babasas asked Tabangao for an indefinite extension within which to deliver clean titles over the lots and asked Tabangao to continue paying the monthly interest starting January 1983 because the Civil Case No. 519 and Petition No. 373 that they filed for the transfer of titles of the lots in their name had not yet been resolved with finality in their favor. Tabangao refused the request. In retaliation the Babasas executed a notarized unilateral rescission. Tabangao instituted an action for specific performance with damages in the RTC of Batangas City to compel the spouses to comply with their obligation to deliver clean titles over the properties. Babasas moved to dismiss the complaint on the ground that their contract with Tabangao became null and void with the expiration of 20-month period given them and so there was no transfer ownership. Judgement was rendered in favor of Tabangao. It ruled that the expiration of the 20-month period merely gave rise to the right of Tabangao to either rescind the contract or to demand that the Babasas comply with their contractual obligation to deliver to it clean titles and registerable documents of sale. The notarial rescission executed by Babasas was declared void and of no legal effect. The CA affirmed the decision of the trial court rejecting the contention of the Babasas that the contract of April 11, 1981 was in reality a contract of lease, not of sale. Babasa appealed to the SC. Issues: Whether or not there was perfected contract of absolute sale. Whether or not there was a valid unilateral rescission of the contract. Whether or not there was a transfer of ownership over the 3 parcels of land. Whether or not the contract of April 11, 1981 lost its efficacy when the 20-month period stipulated therein expired. Ruling: The Supreme Court, speaking through Justice Bellosillo, affirmed the appealed decision of Court of Appeals affirming that of the RTC. The contract is replete with terms and stipulations mutually agreed by the parties during its execution and clearly indicative of a perfected contract of absolute sale. There is also no proviso reserving title in the Babasas until full payment of the purchase price nor any stipulation giving them the right to unilaterally rescind the contract in case of non-payment. In such cases, ownership of the thing sold passes to the vendee upon the constructive and actual delivery thereof. The

contract of April 11, 1981 has not lost its efficacy when the 20-month period stipulated expired. In consonance with Art. 1545 of the New Civil Code, the failure of petitioners to deliver clean titles within 20 months from the signing of the contract merely gives Tabangao the option to either refuse to proceed with the sale or to waive the condition.