Nap was the owner of a parcel of land. Mar and his wife expressed their interest to buy a portion of said lot from Nap.
Subsequently, Nap and Mar entered into a contract of Purchase. Under this contract, Nap in consideration of a specified amount to be paid to him in installment by the spouses, bound himself to sell the aforementioned portion; Nap likewise obliged himself to deliver to Mar and his wife the title to this portion of land “free from all liens and encumbrances” upon full payment by the said vendees of the purchase price.
In their said contract of purchase and sale, it was, however, expressly stipulated therein that before the completion of the installment payments by the vendees, the ownership of the property would remain with Nap.
In a strange twist of events, Nap, without the knowledge or consent of Mar, mortgaged the entire lot, including the portion he conditionally sold to Mar.
Meanwhile, Mar and his wife completed their payment of the installments of the portion they bought. Thereupon they demanded from Nap, the delivery of the title for the portion and the execution of the corresponding absolute Deed of Sale for said property.
Nap brazenly executed a deed of absolute sale for the lot in question with a statement in his Deed of Conveyance that the subject land sold is “free from all liens and encumbrances.” At that point of time, there was, however, still an existing mortgage thereon in favor of Mayaman Bank.
Expectedly, despite several demands by the vendees, Nap failed to deliver to them a separate title for the subject portion. Sensing sometime amiss, Mar and his wife went to the Register of Deeds of Rizal to investigate the title of the land sold to them by Nap. Much to their chagrin, they discovered that there was a mortgage lien on said land in favor of Mayaman Bank. Worse, aside from this encumbrance, there was also a levy on execution upon the same land by virtue of court decision involving Nap and another mortgagee bank.
Q: What is fraud?
A: Fraud involves acts or spoken or written words by a party to mislead another into believing a fact-to be true.
Q: What exactly was the fraudulent act that Nap committed?
A: It is when he expressly warranted in the Deed of Absolute Sale covering the lot in question that said land is “free from all liens and encumbrances.” That constituted the false representation or deceit and one of the elements giving rise to the crime of estafa.
Q: Would the principle that registration of the mortgage in the Register of Deeds is notice to the whole world negate any inference of deceit for which Nap could be held criminally liable for?
A: No, Our laws do not compel a vendee to make an inquiry or to undertake an investigation in the Office of the Register of Deeds, to ascertain the status of the property involved.
The vendee can rely on the manifestations made to him by his vendor whom he can presume to be trustworthy. What is important is that the vendee must be dealt with in good faith by his vendor and the conduct of the petitioner herein in connection with the sale of the subject lot manifestly disclose the contrary.
The suppression of material information and the false representations by Nap that the property which complainant paid for is free from liens and encumbrances are clearly a deception to put off or forestall the petitioner’s appellants’ concomitant obligation to deliver a clear title to the land sold.
Q: Can Nap be held criminally liabe for estafa under Article 316, paragraph 2 of the Revised Penal Code?
A: Yes. It must be noted that there are two stages in the sales transaction involved in this case, namely:
i. The first stage was when Mar entered into a contract of Purchase and Sale with Nap, where both of them agreed that (a) for the purchase of the lot in question; (b) a sum of money was to be paid in advance by Mar; (c) that the Contract of Purchase and Sale is merely a contract to sell for it is expressly stated therein that ownership of the property would be retained by Nap until the full payment of the price has been made by Mar and his wife.
ii. The second stage is when Nap mortgaged the property to the bank presumably with the intention of redeeming it prior to the completion of the installment payments by complainant. When Mar paid the last installment on the purchase price, and then demanded the execution of an absolute deed of sale covering the purchased property and the delivery of the title of said land to him, Nap prepared and executed the Deed of Absolute Sale containing the express warranty that the lot in question is free from all liens and encumbrances when it was not in fact so at that time. It was then still mortgaged in favor of the Bank and there was also a levy on execution on the same land on account of a prior court decision, duly inscribed on the title of said property, then it cannot be said that there was no money or consideration paid for when the deed of Absolute Sale was executed.
It would be at this second stage of the transaction when deceit was exercised by Nap. He placed an express warranty in the Deed of Absolute Sale that the lot in question is free from all liens and encumbrances, when it was not so in fact.
(Source: Antazo vs. People of the Philippines, G.R. No. L-45278 Aug. 28, 1985)
Ma. Soledad Deriquito-Mawis is Dean, College of Law, Lyceum of the Philippines University; Member of the Board of Trustees, Philippine Association of Law Schools; Mawis Law Office
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