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THELMA RODRIGUEZ v. SPOUSES JAIME SIOSON & ARMI SIOSON

FACTS:

The case revolves around the sales transactions involving a portion of Lot 398. The Municipality of Orani, Bataan purchased a portion of Lot 398 for the extension of the public market. The property was later subdivided into 5 lots, and the Municipality acquired Lots 398-C and 398-D. Meanwhile, Lots 398-A and 398-B remained under the ownership of Neri delos Reyes. Thelma Rodriguez purchased Lot 398-A from Neri but failed to fully pay the purchase price. A dispute ensued regarding the possession and ownership of Lot 398-A, prompting Thelma to file an adverse claim and a complaint for injunction. Neri, in response, cancelled Thelma's adverse claim and sold Lot 398-A to the respondents. Dissatisfied, Thelma initiated a complaint to declare the second sale and the corresponding certificate of title as null and void. The Regional Trial Court ruled in favor of Thelma, declaring the second sale and the new certificate of title void, and ordering the cancellation of the new certificate of title. Aggrieved, the respondents appealed the decision to the Court of Appeals.

ISSUES:

  1. Whether the transaction between Neri and Thelma is a contract of sale or a contract to sell.

  2. Whether the deed of sale in favor of Thelma is null and void due to lack of Violeta's consent or conformity.

  3. Whether the respondents can be considered as buyers in good faith.

  4. Whether the agreement between the parties is a contract of sale or a contract to sell.

  5. Whether Thelma acquired ownership over the subject property.

  6. Whether the absence of Violeta's consent affects the validity of the contract of sale.

  7. Whether or not petitioner is entitled to the right of first refusal on the property subject of the sale.

  8. Whether or not the contract of sale is valid and binding.

RULING:

  1. The Court agrees with the CA that the transaction between Neri and Thelma is a contract to sell and not a contract of sale. The transfer of ownership over the property is conditioned on Thelma's full payment of the purchase price.

  2. The Court affirms the CA's ruling that the deed of sale in favor of Thelma is null and void due to lack of Violeta's consent or conformity. The object of the transaction is a conjugal property, and the consent of both spouses is necessary for its validity.

  3. The Court agrees with the CA that the concept of a "buyer in good faith" is irrelevant in this case since there was no double sale. Thelma's prior registration of her notice of adverse claim and her actual possession of the property do not make the respondents buyers in bad faith.

  4. The agreement between the parties is a contract to sell. This means that the transfer of ownership is conditioned upon full payment of the purchase price.

  5. Thelma did not acquire ownership over the subject property because she was not able to pay the full purchase price.

  6. The absence of Violeta's consent does not affect the validity of the contract of sale because the subject property is considered paraphemal, as it is registered solely in Neri's name and there is no evidence that it was acquired during Neri and Violeta's marriage.

  7. No, petitioner is not entitled to the right of first refusal on the property subject of the sale. The right of first refusal may only be valid if it is specifically provided for in the contract or agreement between the parties. In this case, there is no evidence to show that the right of first refusal was agreed upon by the parties.

  8. Yes, the contract of sale is valid and binding. The Court ruled that a contract of sale exists between the buyer and the seller, which was duly executed and notarized. The terms and conditions of the contract were clear, and the parties freely entered into the agreement. As such, the contract must be enforced.

PRINCIPLES:

  • The real character of a contract is determined by the intention of the parties, not the title given. (Case law)

  • The consent of both spouses is necessary for the validity of a transaction involving conjugal property. (Civil Code)

  • A contract to sell is a bilateral contract whereby the seller reserves ownership of the property until full payment of the purchase price.

  • Ownership of the property in a contract to sell is retained by the registered owner despite partial payment of the purchase price and delivery of possession.

  • Tax declarations are not conclusive evidence of ownership.

  • Registration solely in the name of one spouse and the absence of evidence that the property was acquired during the marriage indicate that the property is paraphemal.

  • The absence of consent from the non-acquiring spouse does not affect the validity of the contract of sale for paraphemal property.

  • The right of first refusal must be specifically provided for in the contract or agreement between the parties to be valid.

  • A contract of sale, which is duly executed and notarized, is valid and binding between the parties.