FACTS:

In this case, Rufina Lim filed an action to quiet title to real property against Ignacio Rubio. She alleged that she bought the hereditary shares of Ignacio Rubio and the heirs of Luz Baloloy through a contract of sale. Ignacio Rubio refused to receive the remaining payment and deliver the certificates of title, causing doubts on the validity of the sale. Corazon Escueta was alleged to have been involved in a simulated deed of sale with Ignacio Rubio. The petitioners, in their amended answers, denied the allegations and raised various defenses.

The trial court rendered a partial decision ordering the heirs of Luz Baloloy to execute an Absolute Deed of Sale and pay damages. The Baloloys filed a petition for relief from judgment, but it was denied. On the other hand, the trial on the merits between Rufina Lim, Ignacio Rubio, and Corazon Escueta resulted in the dismissal of the complaint against the latter two. However, Ignacio Rubio was ordered to return a certain amount to Rufina Lim.

Rufina Lim filed a complaint for specific performance and damages against Ignacio Rubio and Corazon Escueta, alleging that she entered into a Contract to Sell with Ignacio Rubio's attorney-in-fact, Virginia Laygo-Lim. The trial court dismissed the complaint, ruling that the contract was a mere contract to sell and not a contract of sale. On appeal, the Court of Appeals reversed the trial court's decision and ordered the petitioners to execute a Deed of Absolute Sale upon payment of the balance. The Court of Appeals also declared the contracts of sale between Rubio and Escueta as null and void and ordered them to pay damages and attorney's fees to Rufina Lim.

The petitioners filed a motion for reconsideration, which was denied. They then filed a petition before the Supreme Court, raising various issues including the denial of their petition for relief from judgment, the validity of the contract of sale between Rubio and Escueta, and the dismissal of their counterclaims.

ISSUES:

1. Whether petitioner Alejandrino Baloloy was authorized to appear on behalf of Bayani Baloloy at the pre-trial conference.

2. Whether the sale by Virginia to respondent is binding.

3. Whether the contract between respondent and Virginia is a contract to sell or a contract of sale.

4. Whether respondent faithfully fulfilled her part of the obligation.

5. Whether the Baloloys were properly declared in default.

6. Whether the orders denying the motion to fix the period for payment of the balance of the purchase price and granting partial execution can be considered in determining the reglementary period to file a petition for relief.

7. Whether the petition for relief should be granted based on fraud, accident, mistake, or excusable negligence.

8. Whether the contract of sale executed by Virginia Lim in favor of the respondent is enforceable.

9. Whether the contract of sale can be ratified by the actions of the parties.

10. Whether the respondent, as a second buyer, can defeat the first buyer's title.

11. Whether the ownership of the subject properties was transferred to the respondent upon the execution of the contract of sale.

12. Whether the petitioner can sell the subject properties to another buyer after already selling them to the respondent.

RULING:

1. The court ruled that petitioner Alejandrino Baloloy was not authorized to appear on behalf of Bayani Baloloy at the pre-trial conference. Therefore, any proceedings, orders, or decisions taken thereafter are void.

2. The court ruled that the sale by Virginia to respondent is not binding as petitioner Rubio did not authorize Virginia to transact business on his behalf pertaining to the property. The Special Power of Attorney was constituted in favor of Llamas, and Llamas was not empowered to designate a substitute attorney-in-fact. Virginia also exceeded her authority by failing to comply with her obligations under the "Joint Special Power of Attorney."

3. The court ruled that the contract between respondent and Virginia is a contract to sell, not a contract of sale. The intention of the parties was to reserve ownership of the property to petitioners pending full payment of the purchase price.

4. The court ruled that respondent failed to faithfully fulfill her part of the obligation. Therefore, petitioner Rubio had the right to sell his properties to another buyer who exercised due diligence in ascertaining ownership.

5. The court ruled that the Baloloys were properly declared in default as they were served with notice of the pre-trial conference, and their former counsel of record was duty-bound to notify them of the scheduled pre-trial. The ground of lack of a special power of attorney was not raised in their motion to lift the order of default, therefore it was deemed waived.

6. The orders denying the motion to fix the period for payment and granting partial execution cannot be considered in determining the reglementary period to file a petition for relief.

7. The petition for relief cannot be granted as there is no proof of fraud, accident, mistake, or excusable negligence.

8. Even if Virginia Lim had no authority to sell the subject properties, the contract of sale is not void but unenforceable. However, the contract has been ratified by the actions of the parties.

9. The actions of the parties, such as the acceptance and enjoyment of the benefits of the contract, constitute ratification.

10. The second buyer, as one who may have had knowledge of the defect in the seller's title or was charged with the obligation to discover the defect, cannot defeat the first buyer's title.

11. The ownership of the subject properties was transferred to the respondent upon the execution of the contract of sale. This is supported by Article 1477 of the Civil Code which states that the ownership of the thing sold shall be transferred to the buyer upon actual or constructive delivery. In this case, there was actual delivery as evidenced by the respondent taking possession of the properties and allowing their use as a parking terminal.

12. The petitioner cannot sell the subject properties to another buyer after already selling them to the respondent. In a contract of sale, the vendor loses ownership of the property and cannot recover it unless the contract is resolved or rescinded. The petitioner did not ask for rescission of the contract but instead attempted to revoke a power of attorney. Furthermore, even if it was stipulated that the contract will be rescinded upon failure to pay the price at the agreed time, the buyer may still pay even after the expiration of the period as long as no demand for rescission has been made upon the buyer.

PRINCIPLES:

• The factual admissions in the pleadings of a party are conclusive and cannot be controverted.

• Pre-trial is mandatory and parties must be notified of the scheduled pre-trial.

• A petition to set aside a judgment or proceeding must be filed within 60 days from when the party acquired knowledge of the judgment or proceeding.

• An agent may appoint a substitute if the principal has not prohibited him from doing so, and the agent shall be responsible for the acts of the substitute if he was not given the power to appoint one.

• A contract entered into in the name of another by one who has no authority or legal representation shall be unenforceable unless it is ratified by the person on whose behalf it has been executed.

• Acceptance and encashment of a check can constitute ratification of a contract of sale.

• The doctrine of estoppel applies to a party who repudiates an obligation voluntarily assumed after accepting benefits therefrom.

• A second buyer who had knowledge of a defect in the seller's title cannot be a registrant in good faith and cannot defeat the first buyer's title.

• Earnest money given by the buyer can be considered as part of the price and proof of the perfection of the contract.

• The elements of a valid contract of sale include consent or meeting of the minds, determinate subject matter, and price certain in money or its equivalent.

• The ownership of the thing sold is transferred to the buyer upon actual or constructive delivery.

• In a contract of sale, the vendor loses ownership of the property and cannot recover it until and unless the contract is resolved or rescinded.

• In the sale of immovable property, the buyer may still pay the price even after the expiration of the period, as long as no demand for rescission of the contract has been made upon the buyer.