24 - Digest

G.R. No.
124242 January 21, 2005

SAN LORENZO DEVELOPMENT CORPORATION, petitioner,
vs. COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA LU, respondents.
Facts:
- Private Respondent Spouses Lu purportedly sold the two parcels of land to respondent
Babasanta, wherein he made a downpayment as evidenced by a memorandum receipt issued
by Pacita Lu.
- Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor
so that he could effect full payment of the purchase price. He also notified the spouses about
having received information that the spouses sold the same property to another without his
knowledge and consent, and demanded that the second sale be cancelled and that a final deed
of sale be issued in his favor.
- In response, Pacita Lu acknowledged having agreed to sell the property, however, she
reminded that when the balance of the purchase price became due, Babasanta requested for
a reduction of the price and when she refused, he backed out of the sale.
- Respondent Babasanta, filed before the (RTC), a Complaint for Specific Performance and
Damages against his co-respondents. He later filed an Amended Complaint for the issuance of
a preliminary injunction which was necessary to restrain the transfer or conveyance by the
Spouses Lu of the subject property to other persons.
- Herein petitioner (SLDC) filed a Motion for Intervention alleging that it had legal interest in the
subject matter under litigation because the two parcels of land involved, had been sold to it in
a Deed of Absolute Sale with Mortgage. It alleged that the certificates of title over the property
were delivered to it by the spouses clean and free from any adverse claims and/or notice of lis
pendens. Claiming that it was a buyer in good faith, SLDC argued that it had no obligation to
look beyond the titles submitted to it by the Spouses Lu particularly because Babasanta’s
claims were not annotated on the certificates of title at the time the lands were sold to it.
- RTC rendered its Decision upholding the sale of the property to SLDC. It ruled that ownership
of the property should pertain to the buyer who first acquired possession of the property. The
trial court equated the execution of a public instrument in favor of SLDC as sufficient delivery of
the property to the latter. It concluded that symbolic possession could be considered to have
been first transferred to SLDC and consequently ownership of the property pertained to SLDC
who purchased the property in good faith.
- Court of Appeals rendered its Decision which set aside the judgment of the trial court. It
declared that the sale between Babasanta and the Spouses Lu was valid and ruled that the
Absolute Deed of Sale with Mortgage in favor of SLDC was null and void on the ground that SLDC
was a purchaser in bad faith.
- Hence, this petition.
ISSUE: WON Babasanta has a better right over the two parcels of land subject of the instant case in
view of the successive transactions executed by the Spouses Lu.
HELD: NO, because the agreement between Babasanta and the Spouses Lu is a contract to sell and not
a contract of sale. While there is no stipulation that the seller reserves the ownership of the property
until full payment of the price which is a distinguishing feature of a contract to sell, the subsequent
acts of the parties never intended to transfer ownership to Babasanta except upon full payment of the
purchase price. Moreover, had the sellers intended to transfer title, they could have easily executed the
document of sale in its required form simultaneously with their acceptance of the partial payment, but
they did not. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a perfected
contract to sell.
The law provides that: In a contract of sale, title passes to the vendee upon the delivery of the thing sold;
whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass
until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover
ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is
retained by the vendor until the full payment of the price, such payment being a positive suspensive
condition and failure of which is not a breach but an event that prevents the obligation of the vendor
to convey title from becoming effective.
In relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but
merely a title. It is tradition or delivery, as a consequence of sale, that actually transfers ownership.
Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from the
moment it is delivered to him in any of the ways specified in Article 1497 to 1501. The word "delivered"
should not be taken restrictively to mean transfer of actual physical possession of the property. The law
recognizes two principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive
delivery.
Actual delivery consists in placing the thing sold in the control and possession of the vendee. Legal or
constructive delivery, on the other hand, may be had through any of the following ways: the execution
of a public instrument evidencing the sale; symbolical tradition such as the delivery of the keys of the
place where the movable sold is being kept; traditio longa manu or by mere consent or agreement if the
movable sold cannot yet be transferred to the possession of the buyer at the time of the sale; traditio
brevi manu if the buyer already had possession of the object even before the sale; and traditio
constitutum possessorium, where the seller remains in possession of the property in a different
capacity.
Following the above disquisition, respondent Babasanta did not acquire ownership by the mere
execution of the acknowledgment receipt. For one, the agreement between Babasanta and the Spouses
Lu, though valid, was not embodied in a public instrument. Hence, no constructive delivery of the
lands could have been effected. For another, Babasanta had not taken possession of the property at
any time after the perfection of the sale in his favor or exercised acts of dominion over it despite his
assertions that he was the rightful owner of the lands. Simply stated, there was no delivery to
Babasanta, whether actual or constructive, which is essential to transfer ownership of the property.
Thus, even on the assumption that the perfected contract between the parties was a sale, ownership
could not have passed to Babasanta in the absence of delivery, since in a contract of sale ownership is
transferred to the vendee only upon the delivery of the thing sold.
SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had
knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to
SLDC, the vendors were still the registered owners of the property and were in fact in possession of
the lands. Time and again, this Court has ruled that a person dealing with the owner of registered
land is not bound to go beyond the certificate of title as he is charged with notice of burdens on the
property which are noted on the face of the register or on the certificate of title. And since SLDC
acquired possession of the property in good faith in contrast to Babasanta, who neither registered nor
possessed the property at any time, SLDC’s right is definitely superior to that of Babasanta’s.

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G.R. No.

124242 January 21, 2005

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