G.R. No. 103577 October 7, 1996 Coronel v.

CA Facts: On January 19, 1985, petitioners received a down payment from respondent wherein petitioners agreed to transfer title of a parcel of land in Quezon City to respondent Ramona Alcaraz upon completion of payment of the purchase price of P1,240,000. The payment was subject to a condition that the title of the property be successfully transferred to petitioners name from the name the petitioners father. Clearly, the conditions appurtenant to the sale are the following: 1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos upon execution of the document aforestated; 2. The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment; 3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos. On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos. On February 18, 1985, the Coronels sold the property to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos. For this reason, Coronels canceled and rescinded the contract with Ramona by depositing the down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz. On February 22, 1985, respondent filed a complaint for specific performance against petitioners and caused the annotation of a notice of lis pendens at the back of the title. On April 2, 1985, Mabanag caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds. On April 25, 1985, petitioners executed a Deed of Absolute Sale over the subject property in favor of Mabanag and a new title was issued in her name. The lower court ordered the petitioners to execute the deed of absolute sale of the said property with the respondent Ramona and upon receipt thereof, Ramona is ordered to pay petitioners the whole balance of the purchase price amounting to P 1,190,000 in cash. The new title issued to Mabanag was canceled and declared to be without force and effect. Appellate court agreed with the lower courts decision. Issue: Whether or not the contract the parties entered into is a contract to sell or a conditional contract of sale Held: (MELO)

The parties have entered into a conditional contract of sale. In a conditional contract of sale, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller's title thereto. The consummation of the contract is subject only to the successful transfer of the certificate of title from the name of petitioners' father, to their names. A second buyer of the property who may have had actual or constructive knowledge of such defect in the seller's title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer's title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale.