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FIL-ESTATE PROPERTIES v. HERMANA REALTY

FACTS:

Jose C. Alvarez, the chairperson of respondent Hermana Realty, Inc. (HRI), placed an option to purchase a condominium unit in Fil-Estate Properties, Inc.'s (FEPI) West Tower Condominium Corporation. On March 20, 2000, FEPI and HRI executed a contract to sell the unit. HRI made full payment and FEPI executed an undated and unnotarized Deed of Absolute Sale in favor of HRI pending the payment of documentary stamp tax (DST) and other taxes, as well as a final agreement with the Makati City Assessor's Office. HRI claimed that it was entitled to the execution of an absolute deed of sale and the delivery of the owner's duplicate copy of the Condominium Certificate of Title (CCT) upon full payment. FEPI's refusal to perform its obligation caused Century Properties, Inc. (CPI) to withdraw its offer to buy the unit. HRI filed a complaint with the HLURB for specific performance with damages and attorney's fees. The HLURB ruled in favor of HRI, ordering FEPI to execute the Deed of Absolute Sale, pay damages and attorney's fees, and pay an administrative fine. FEPI appealed to the HLURB Board of Commissioners, the Office of the President, and the Court of Appeals, but all affirmed the HLURB's ruling with modifications. FEPI argues that HRI's payment of taxes is a condition precedent to the delivery of the owner's duplicate copy of the CCT. HRI counters that the Contract to Sell does not require tax payments as a condition precedent to the execution of the Deed of Absolute Sale and delivery of the CCT.

ISSUES:

  1. Whether HRI is entitled to the execution of a Deed of Absolute Sale in its favor upon full payment of the contract price.

  2. Whether FEPI's refusal to deliver the owner's duplicate copy of the Certificate of Title (CCT) is justified until HRI presents proof of payment of taxes and fees.

  3. Whether the owner's duplicate copy of the condominium certificate of title (CCT) must be surrendered to the Register of Deeds for the registration of voluntary transactions.

  4. Whether the developer is obligated to register the final deed of sale and deliver the owner's duplicate copy of the CCT under Sections 17 and 25 of PD 957.

RULING:

  1. Upon full payment of the contract price, HRI became rightfully entitled to the execution of a Deed of Absolute Sale in its favor. A contract to sell, once the buyer has paid the purchase price in full, is converted to an absolute sale and the buyer has the right to demand the execution of a Deed of Absolute Sale in its favor.

  2. FEPI's refusal to deliver the owner's duplicate copy of the CCT until HRI presents proof of payment of taxes and fees is not justified. Section 41 of Presidential Decree No. 1529 (Property Registration Decree) provides that the owner's duplicate certificate of title shall be delivered to the registered owner or his duly authorized representative. FEPI's justification for withholding the owner's duplicate copy is invalid as it is not a requirement under the law.

  3. Yes, the owner's duplicate copy of the CCT must be surrendered to the Register of Deeds for the registration of voluntary transactions.

  4. Yes, the developer is obligated to register the final deed of sale and deliver the owner's duplicate copy of the CCT under Sections 17 and 25 of PD 957.

PRINCIPLES:

  • A contract to sell is a bilateral contract whereby the prospective seller reserves ownership of the property until full payment of the purchase price. Once the buyer has paid the purchase price in full, the contract to sell is converted to an absolute sale. (Article 1358, Civil Code)

  • A private document, though unnotarized, remains valid and is merely unenforceable. If the existence of the contract has been admitted, a party to the sale has the right to compel the other party to execute the proper document. (Article 1357, Civil Code; Cenido v. Spouses Apacionado)

  • The owner's duplicate certificate of title shall be delivered to the registered owner or his duly authorized representative. The delivery of the owner's duplicate copy is not dependent on the presentation of proof of payment of taxes and fees. (Section 41, Presidential Decree No. 1529)

  • The owner's duplicate copy of the certificate of title must be surrendered to the Register of Deeds for the registration of voluntary transactions and the subsequent issuance of a new certificate of title.

  • The developer is obligated to register the final deed of sale and deliver the owner's duplicate copy of the CCT upon full payment of the lot or unit, in accordance with Sections 17 and 25 of PD 957.