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Adjudged a conman

Nap was the owner of a parcel of land known with an area of 1,452 square meters. His friend, Mar, expressed his interest to buy a portion of said lot from Nap. They then entered into a contract of Purchase and Sale. Under this contract, Nap agreed to sell 295 square meters to Mar and his wife in installment basis and obliged himself to deliver to the said spouses 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 that before the completion of the installment payments by the vendees, the ownership of the property would remain with Nap.

Nap, without the knowledge or consent of Mar and his wife, mortgaged to a bank the entire lot, including the portion subject of their agreement. When the spouses completed their payment of the installments, they demanded from Nap the delivery of the title for the portion they bought and the execution of the corresponding absolute Deed of Sale for said property.

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Nap 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” despite the fact that there was still an existing mortgage thereon in favor of the bank.

Soon they discovered from the records with Register of Deeds that the property was mortgaged, and worse, there was also a levy on execution upon the same.

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The spouses filed a criminal complaint for estafa against Nap. Nap counters that he cannot be held liable for estafa because at the time he executed the Purchase and Sale agreement, they agreed that the ownership of the property will remain with him until the consideration has been fully paid.

Q: Is Nap guilty of estafa?

A: Yes. There are two stages in the sales transaction involved in this case, namely: the first stage was when Mar and his wife entered into a contract of Purchase and Sale with Nap for the purchase of the lot; that this 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. Until the full price is paid, the obligation of the seller to transfer ownership and deliver a clear title to the property would not yet arise.

The second stage would be 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 the spouses 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 court decision.

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.

Q: Can Mar and his wife be considered to be fully aware of the encumbrances of title of the property in question as such facts are recorded in the Register of Property and thus is a notice to the whole world of its existence?

A: Nap is wrong. His false representations served as the ingredients of deceit foisted on the vendees. The vendees 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 the spouses paid for is free from liens and encumbrances is clearly a deception to put off or forestall his concommittant obligation to deliver a clear title to the land sold.

(Antazo vs People of the Philippines, G.R. No. L-45278 Aug. 28, 1985)

Ma. Soledad Deriquito-Mawis
Dean, College of Law, Lyceum of the Philippines University;
Chairman, Philippine
Association of Law Schools;
Mawis Law Office
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TAGS: Business, conman, property
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