Fil-Estate Properties v. Hermana Realty, G.R. No. 231936, November 25, 2020

FACTS:

Respondent Hermana Realty placed an option to purchase one condominium unit in Fil-Estate Properties’ West Tower Condominium Corporation.

FEPI and HRI then executed a contract to sell the unit for ₱20,998,400. Following HRI's full payment, FEPI executed an undated and unnotarized Deed of Absolute Sale in favor of HRI pending the latter's transmittal to the former of the amount for payment of the Documentary Stamp Tax and other taxes on the sale and a final agreement with the Makati City Assessor's Office on the valuation cost of the common areas and individual units of the condominium building for real estate taxation purposes.

HRI asserted though that upon full payment of the purchase price, it became rightfully entitled to the execution of an absolute deed of sale in its favor and delivery of the owner's duplicate copy of the Condominium Certificate of Title.

 

ISSUE:

Is payment of the DST and other local taxes a condition precedent to FEPI's execution of a notarized Deed of Absolute Sale and the subsequent delivery to HRI of the owner's duplicate copy of the CCT?

 

RULING:

NO. 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 has been defined as "a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds itself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price." In a contract to sell, "ownership is retained by the seller and is not to pass until the full payment of the price."20 Consequently, once the buyer has paid the purchase price in full, the contract to sell 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.

Here, there is no question that HRI has paid in full the contract price in the amount of ₱20,998,400. There is no question either that by operation of law, HRI as the buyer has become rightfully entitled to the execution of a Deed of Absolute Sale in its favor.

 

HRI may demand as a matter of right a notarized Deed of Absolute Sale in its favor.

While FEPI did execute a Deed of Absolute Sale upon HRI's full payment of the purchase price, the same was undated and unnotarized. FEPI asserts that the document will stay that way until HRI remits the corresponding payment for the DST and other taxes on the sale.

Article 1358 of the Civil Code reads:

The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by articles 1403, No. 2, and 1405;

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