Slept like a baby

In 1966, Marc, husband of Valen, asked Desa’s permission to occupy her house on said land, promised to buy the house and lot upon receipt of his money from Manila and gave her P600 for the occupation of the house. In 1978, Marc died without having paid the full consideration for the house and lot. After his death, Valen refused to vacate the house and lot despite demands and even destroyed the old house and constructed a new one.

In 1982, Desa filed a complaint for recovery of ownership, possession and damages against Valen, alleging that she is the owner of a parcel of an agricultural land.

Valen, in riposte, said that the house and lot were sold to her deceased husband by the late husband of Desa on installment basis. Valen further said that no demands were made on her to vacate the property prior to the filing of the original complaint; and that she has been in continuous, public and uninterrupted possession of the property for 17 years so that Desa’s claim of ownership has already prescribed.

Q: Is Desa correct in arguing that the oral contract of sale between the parties was invalid, because Marc and Valen had failed to comply with their obligation to pay in full the purchase price of the house and lot?

A: Under Article 1318 of the Civil Code, the following are the essential requisites of a valid contract: 1) the consent of the contracting parties, 2) the object certain which is the subject matter of the contract, and 3) the cause of the obligation which is established. When all the essential requisites are present, a contract is obligatory in whatever form it may have been entered into, save in cases where the law requires that it be in a specific form to be valid and enforceable.

With respect to real property, Article 1358 (1) of the Civil Code specifically requires that a contract of sale be in a public document. However, an otherwise unenforceable oral contract of sale of realty under Article 1403 (2) of the Civil Code may be ratified by the failure to object to the presentation of oral evidence to prove it or by the acceptance of benefits granted by it.

All the essential elements of a valid contract are present in this case. Moreover, while the contract between the parties might have been unenforceable under Article 1403 (2) of the Civil Code, the fact that Desa had accepted payments under the oral contract of sale took the case out of the scope of the Statute of Frauds. The ratification of the contract rendered it valid and enforceable.

It is best to remember that the nonpayment of the full consideration did not invalidate the contract of sale. Under settled doctrine, nonpayment is a resolutory condition that extinguishes the transaction existing for a time and discharges the obligations created thereunder.

Q: What are the remedies of an unpaid seller?

A: The remedy of the unpaid seller is to sue for collection or, in case of a substantial breach, to rescind the contract. These alternative remedies of specific performance and rescission are provided under Article 1191. Here, Desa did not exercise her right either to seek specific performance or to rescind the verbal contract of sale until May 1982, when she filed her complaint for recovery of ownership and possession of the property. This brings to the fore the question of whether by 1982, she was already barred from recovering the property due to laches and prescription.

Q: Is her complaint complaint for recovery of ownership, possession and damages already barred by laches?

A: Yes. In general, laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which —by the exercise of due diligence—could or should have been done earlier. It is the negligence or omission to assert a right within a reasonable period, warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it.

Under this time-honored doctrine, relief has been denied to litigants who, by sleeping on their rights for an unreasonable length of time—either by negligence, folly or inattention—have allowed their claims to become stale. The laws aid the vigilant, not those who slumber on their rights.

Desa complied with her obligation to deliver the property in 1966. However, Valen’s husband failed to comply with his reciprocal obligation to pay, when the money he had been expecting from Manila never materialized. He also failed to make further installments after May 1966. As early as 1966, therefore, Desa as a petitioner already had the right to compel payment or to ask for rescission, pursuant to Article 1169 of the Civil Code.

Nonetheless, Desa failed to sue for collection or rescission. Hence, Desa’s claim was already barred by laches. It has been consistently held that laches does not concern itself with the character of the defendant’s title, but only with the issue of whether or not the plaintiff—by reason of long inaction or inexcusable neglect—should be barred entirely from asserting the claim, because to allow such action would be inequitable and unjust to the defendant.

Q: Can Desa still recover the balance of the total purchase price?

A: Yes. Given Valen’s admission that there was a remaining unpaid balance, reason and fairness suggest that Desa be allowed to collect this sum. It is a basic rule in law that no one shall unjustly enrich oneself at the expense of another. For indeed, to allow respondent to keep the property without paying fully for it amounts to unjust enrichment on her part.

(Source: Soliva vs. Intestate Estate of M.Villalba, G.R. No. 154017, Dec. 8, 2003)

Ma. Soledad Deriquito-Mawis is Dean, Lyceum of the Philippines University; Board of Trustee for Philippine Association of Law Schools; and founder of Mawis Law Office