Concept of Delivery or tradition, Sales and Lease, Part VI.

ALCANTARA-DAUS v. SPOUSES DE LEON

G.R. No. 149750 June 16, 2003

FACTS:
Spouses De Leon are the owners of a parcel of land situated in the Municipality of
San Manuel, Pangasinan with an area of Four Thousand Two Hundred Twelve square
meters more or less. Respondent Hermoso De Leon inherited the said lot from his father
Marcelino De Leon by virtue of a Deed of Extra-Judicial Partition. Said lot is covered by
Original Certificate of Title No. 22134 of the Land Records of Pangasinan.

Sometime 1960s, Spouses De Leon engaged the services of the late Atty. Florencio Juan to
take care of the documents of their properties. They were asked to sign voluminous
documents by the latter. After the death of Atty. Juan, some documents surfaced and most
revealed that their properties had been conveyed by sale or quitclaim to Hermoso’s brothers
and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances
were ever intended by them. Furthermore, respondent found out that his signature in the
Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was forged.
They discovered that the land in question was sold by Rodolfo de Leon to Aurora Alcantara

Spouses De Leon demanded the annulment of the document and re-conveyance but
defendants refused. Petitioner, Aurora Alcantara-Daus averred that she bought the land in
question in good faith and for value on December 1975 and that she has been in
continuous, public, peaceful, open possession over the same and has been appropriating
the produce thereof without objection from anyone.

The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein petitioner. It
ruled that respondents’ claim was barred by laches, because more than 18 years had
passed since the land was sold. It further ruled that since it was a notarial document, the
Deed of Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

ISSUES:

Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land in
question in favor of petitioner was perfected and binding upon the parties therein?

Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim,
executed by respondent Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of
Rodolfo de Leon was overcome by more than a preponderance of evidence of
respondents?

HELD:

First Issue:
NO. It is during the delivery that the law requires the seller to have the right to transfer
ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on
the ground of the seller’s non-ownership of the thing sold at the time of the perfection of the
contract.
Further, even after the contract of sale has been perfected between the parties, its
consummation by delivery is yet another matter. It is through tradition or delivery that the
buyer acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of the
land he delivered to petitioner. Thus, the consummation of the contract and the consequent
transfer of ownership would depend on whether he subsequently acquired ownership of the
land in accordance with Article 1434 of the Civil Code. Therefore, we need to resolve the
issue of the authenticity and the due execution of the Extrajudicial Partition and Quitclaim in
his favor.

Second Issue:
NO. As a general rule, the due execution and authenticity of a document must be
reasonably established before it may be admitted in evidence. Notarial documents,
however, may be presented in evidence without further proof of their authenticity, since the
certificate of acknowledgment is prima facie evidence of the execution of the instrument or
document involved. To contradict facts in a notarial document and the presumption of
regularity in its favor, the evidence must be clear, convincing and more than merely
preponderant.

The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and
Quitclaim was forged. However, this factual finding is in conflict with that of the RTC. While
normally this Court does not review factual issues, this rule does not apply when there is a
conflict between the holdings of the CA and those of the trial court, as in the present case.

After poring over the records, the SC finds no reason to reverse the factual finding of the
appellate court. A comparison of the genuine signatures of Hermoso De Leon with his
purported signature on the Deed of Extrajudicial Partition with Quitclaim will readily reveal
that the latter is a forgery. As aptly held by the CA, such variance cannot be attributed to
the age or the mechanical acts of the person signing.

Sampaguita Pictures Inc. v. Jalwindor Manufacturers, Inc.

G.R. No. L-43059, October 11, 1979; De Castro, J.

Facts: Plaintiff-appellant Sampaguita Pictures, Inc. leased the roofdeck of their Sampaguita
Pictures Building to Capitol 300 Inc. and agreed that the premises shall be used for social
purposes exclusively for the club’s members and guests; that all permanent improvements
made by lessee on the premises shall belong to the lessor without any obligation to
reimburse; that these be considered as part of the consideration of the monthly rental; and
any remodeling, alteration and or addition be at the expense of lessee. Glass and wooden
jalousies were then purchased by Capitol from defendant-appellee Jalwindor Manufacturers
Inc. which were delivered and installed in the premises. Capitol failed to pay the purchases
prompting defendant-appellee to file an action for the collection of a sum of money with
petition for preliminary attachment. The parties submitted a Compromise Agreement to the
trial court wherein Capitol acknowledged its indebtedness and pending liquidation, the
materials purchased will be considered as security. Thereafter, Capitol not only failed to
comply with the Compromise Agreement but also failed to pay rentals to plaintiff-appellant,
causing their ejectment with damages paid to the latter. When the Sheriff of Quezon City
levied upon the materials, plaintiff-appelant filed a third-party claim alleging that it is the
owner of the same however, defendant-appellee filed an indemnity bond in favor of the
Sheriff and the public auction pushed through with the latter as the highest bidder. Plaintiff-
appellant sought to nullify the sale in an action filed with the Court of First Instance and for
the issuance of a writ of preliminary injuction against defendant-appellee from detaching the
materials. Based on the Stipulation of Facts submitted, the lower court dismissed the
complaint. The subsequent motion for reconsideration was likewise denied hence the
instant petition.

Issue: WON the lower court erred in holding that there was no legal transfer of ownership of
the glass and wooden jalousies from Capitol 300 Inc. to plaintiff-appellant?

Held: Court held in the affirmative. When the glass and wooden jalousies in question were
delivered and installed in the leased premises, Capitol became the owner thereof.
Ownership is not transferred by perfection of the contract but by delivery, either actual or
constructive. This is true even if the purchase has been made on credit, as in the case at
bar. Payment of the purchase price is not essential to the transfer of ownership as long as
the property sold has been delivered. Ownership is acquired from the moment the thing sold
was delivered to vendee, as when it is placed in his control and possession.

Capitol entered into a lease contract with Sampaguita in 1964, and the latter became the
owner of the items in question by virtue of the agreement in said contract. When levy or said
items was made on July 31, 1965, Capitol, the judgment debtor, was no longer the owner
thereof.

The items in question were illegally levied upon since they do not belong to the judgment
debtor. The power of the Court in execution of judgment extends only to properties
unquestionably belonging to the judgment debtor. Execution sales affect the rights of
judgment debtor only, and the purchaser in the auction sale acquires only the right as the
debtor has at the time of sale. Since the items already belong to Sampaguita and not to
Capitol, the judgment debtor, the levy and auction sale are, accordingly, null and void.
Decision reversed.

DIGEST #2:

Sampaguita Pictures, Inc. vs. Jalwindor Manufacturers, Inc.

93 SCRA 420
October 1979

FACTS:

Both the plaintiff-appellant Sampaguita Pictures Inc. (Sampaguita) and defendant-appellee

Jalwindor Manufacturers Inc. (Jalwindor) were domestic corporations duly organized under
the Philippine laws. Sampaguita leased to Capitol “300” Inc. (Capitol) the roof deck of its
building with the agreement that all permanent improvements Capitol will make on said
property shall belong to Sampaguita without any part on the latter to reimburse Capitol for
the expenses of said improvements. Shortly, Capitol purchased on credit from Jalwindor
glass and wooden jalousies, which the latter itself delivered and installed in the leased
premises, replacing the existing windows.
On June 1, 1964, Jalwindor filed with the CFI of Rizal, Quezon City an action for collection
of a sum of money with a petition for preliminary attachment against Capitol for its failure to
pay its purchases. Later, Jalwindor and Capitol submitted to the trial court a Compromised
Agreement wherein Capitol acknowledged its indebtedness of P9,531.09, payable in
monthly installments of at least P300.00 a month beginning December 15,1964 and that all
the materials that Capitol purchased will be considered as security for such undertaking.
Meanwhile, Sampaguita filed a complaint for ejectment and for collection of a sum of money
against Capitol for the latter’s failure to pay rentals from March 1964 to April 1965, and the
City Court of Quezon City ordered Capitol on June 8, 1965 to vacate the premises and to
pay Sampaguita.

On the other hand, Capitol likewise failed to comply with the terms of the Compromise
Agreement, and on July 31, 1966, the Sheriff of Quezon City made levy on the glass and
wooden jalousies. Sampaguita filed a third-party claim alleging that it is the owner of said
materials and not Capitol, but Jalwindor filed an idemnity bond in favor of the Sheriff and the
items were sold at public auction on August 30, 1966, with Jalwindor as the highest bidder
for P6,000.00. Sampaguita filed with the CFI of Rizal, Quezon City an action to nullify the
Sheriff's sale and for an injunction to prevent Jalwindor from detaching the glass and
wooden jalousies. Jalwindor was ordered to maintain the status quo pending final
determination of the case, and on October 20, 1967, the lower court dismissed the
complaint and ordered Sampaguita to pay Jalwindor the amount of P500.00 as attorney's
fees.

ISSUE:

Was there a delivery made and, therefore, a transfer of ownership of the thing sold?

COURT RULING:

The Supreme Court reversed the decision of the lower court declaring Sampaguita as
declared the lawful owner of the disputed glass and wooden jalousies, permanently
enjoining Jalwindor from detaching said items from the roof deck of the Sampaguita
Pictures Building, and ordered Jalwindor to pay Sampaguita the sum of P1,000.00 for and
as attorney's fees.
When a property levied upon by the sheriff pursuant to a writ of execution is claimed by a
third person in a sworn statement of ownership thereof, as prescribed by the rules, an
entirely different matter calling for a new adjudication arises. The items in question were
illegally levied upon since they do not belong to the judgment debtor. The power of the
Court in execution of judgment extends only to properties unquestionably belonging to the
judgment debtor. The fact that Capitol failed to pay Jalwindor the purchase price of the
items levied upon did not prevent the transfer of ownership to Capitol and, later, to
Sampaguita by virtue of the agreement in their lease contract. Therefore, the complaint of
Sampaguita to nullify the Sheriff's sale is well founded, and should prosper.

#3

NORKIS DISTRIBUTORS, INC. vs. COURT OF APPEALS193

SCRA 694, G.R. No. 91029 February 7,1991

FACTS:

Petitioner Norkis Distributors, Inc. is the distributor of Yamaha motorcycles in Negros

Occidental. OnSeptember 20, 1979, private respondent Alberto Nepales bought trom the
Norkis Bacolod branch abrand new Yamaha Wonderbike motorcycle Model YL2DX. The
price of P7,500.00 was payable bymeans of a Letter of Guaranty from the DBP, which
Norkis agreed to accept. Credit was extended toNepales for the price of the motorcycle
payable by DBP upon release of his motorcycle loan. As securityfor the loan, Nepales would
execute a chattel mortgage on the motorcycle in favor of DBP. Petitionerissued a sales
invoice which Nepales signed in conformity with the terms of the sale. In themeantime,
however, the motorcycle remained in Norkis' possession. On January 22, 1980,
themotorcycle was delivered to a certain Julian Nepales, allegedly the agent of Alberto
Nepales. Themotorcycle met an accident on February 3, 1980 at Binalbagan, Negros
Occidental. An investigationconducted by the DBP revealed that the unit was being driven
by a certain ZacariasPayba at the timeof the accident. The unit was a total wreck was
returned.On March 20, 1980, DBP released the proceeds of private respondent's
motorcycle loan to Norkis in thetotal sum of P7,500. As the price of the motorcycle later
increased to P7,828 in March, 1980, Nepalespaid the difference of P328 and demanded the
delivery of the motorcycle. When Norkis could not deliver,he filed an action for specific
performance with damages against Norkis in the RTC of Negros Occidental.He alleged that
Norkis failed to deliver the motorcycle which he purchased, thereby causing himdamages.
Norkis answered that the motorcycle had already been delivered to private respondent
beforethe accident, hence, the risk of loss or damage had to be borne by him as owner of
the unit.

ISSUE:

Whether or not there has been a transfer of ownership of the motorcycle to Alberto Nepales.

HELD:

No.The issuance of a sales invoice does not prove transfer of ownership of the thing sold to
the buyer. Aninvoice is nothing more than a detailed statement of the nature, quantity and
cost of the thing sold andhas been considered not a bill of sale. In all forms of delivery, it is
necessary that the act of deliverywhether constructive or actual, be coupled with the
intention of delivering the thing. The act, without theintention, is insufficient.When the
motorcycle was registered by Norkis in the name of private respondent,Norkis did not intend
yet to transfer the title or ownership to Nepales, but only to facilitate the executionof a
chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. The
Letter of Guarantee issued by the DBP reveals that the execution in its favor of a chattel
mortgage over thepurchased vehicle is a pre-requisite for the approval of the buyer's loan. If
Norkis would not accede tothat arrangement, DBP would not approve private respondent's
loan application and, consequently, therewould be no sale.Article 1496 of the Civil Code
which provides that "in the absence of an express assumption of risk by thebuyer, the things
sold remain at seller's risk until the ownership thereof is transferred to the buyer,"
isapplicable to this case, for there was neither an actual nor constructive delivery of the
thing sold, hence,the risk of loss should be borne by the seller, Norkis, which was still the
owner and possessor of themotorcycle when it was wrecked. This is in accordance with the
well-known doctrine of res perit domino.
DIGEST #2:

G.R. No. 91029 February 7, 1991

NORKIS DISTRIBUTORS, INC.,

vs.

THE COURT OF APPEALS & ALBERTO NEPALES

FACTS:

Alberto Nepales bought from the Norkis Distributors, Inc. brand new Yamaha
motorcycle.The Branch Manager AvelinoLabajo agreed to accept the P7,500.00 price
payable by means of a Letter of Guaranty from the Development Bank of the Philippines
(DBP), Kabankalan. Hence, credit was extended to Nepales, and as security for the loan, he
executed a chattel mortgage on the motorcycle in favor of DBP. Labajo issued the Norkis
Sales Invoice perfecting the contract of sale, and Nepales signed the same to conform to
the terms of the sale, while the unit remained in Norkis' possession. On November 6, 1979,
it was registered under Alberto Nepales’ name in the Land Transportation Commission.

The motorcycle was delivered to a certain Julian Nepales on January 22, 1980, who was
allegedly the agent of Alberto Nepales but the latter denies it.

On February 3, 1980, the motorcycle met an accident while being driven by a certain
ZacariasPayba. The unit was a total wreck, was returned, and stored inside Norkis'
warehouse.

On March 20, 1980, DBP released the proceeds of respondent's motorcycle loan to Norkis
in the total sum of P7,500. As the price of the motorcycle later increased to P7,828, Nepales
paid the difference of P328 and demanded the delivery of the motorcycle. Norkis failed to
deliver the unit, and Nepales filed an action for specific performance with damages. Norkis
answered that the motorcycle had already been delivered to private respondent before the
accident, hence, he should bear the risk of loss or damage as owner of the unit.

ISSUE:
Who should bear the risk of loss?

COURT RULING:

The Supreme Court ruled that Article 1496 of the Civil Code which provides that "in the
absence of an express assumption of risk by the buyer, the things sold remain at
seller's risk until the ownership thereof is transferred to the buyer," is applicable in the
case at bar for there was neither an actual nor constructive delivery of the thing sold.

In this case, the purpose of the execution of the sales invoice and the registration of the
vehicle in the name of Alberto Nepales with the Land Registration Commission was not to
transfer the ownership and dominion over the motorcycle to him, but only to comply with the
requirements of the DBP for processing private respondent's motorcycle loan. On March 20,
1980, before private respondent's loan was released and before he even paid Norkis, the
motorcycle had already figured in an accident while driven by one ZacariasPayba. Payba
was not shown by Norkis to be a representative or relative of private respondent. The
circumstances in the case itself more than amply rebut the disputable presumption of
delivery upon which Norkis anchors its defense to Nepales' action.

i. DELIVERY:

CASE #1

Addison vs. Felix

38 Phil 404
August 1918

FACTS:

The defendants-appellees spouses Maciana Felix and Balbino Tioco purchased from
plaintiff-appellant A.A. Addison four parcels of land to which Felix paid, at the time of the
execution of the deed, the sum of P3,000 on account of the purchase price. She likewise
bound herself to the remainder in installments, the first of P,2000 on July 15, 1914, the
second of P5,000 thirty days after the issuance to her of a certificate of title under the Land
Registration Act, and further, within ten years from the date of such title, P10 for each
cocoanut tree in bearing and P5 for each such tree not in bearing that might be growing on
said parcels of land on the date of the issuance of title to her, with the condition that the total
price should not exceed P85,000. It was further stipulated that Felix was to deliver to the
Addison 25% of the value of the products that she might obtain from the four parcels "from
the moment she takes possession of them until the Torrens certificate of title be issued in
her favor," and that within 1 year from the date of the certificate of title in her favor,
Marciana Felix may rescind the contract of purchase and sale.

In January 1915, Addison , filed suit in the CFI of Manila to compel Felix to pay the first
installment of P2,000, demandable, in accordance with the terms of the contract of sale.
The defendants Felix and her husband Tioco contended that Addison had absolutely failed
to deliver the lands that were the subject matter of the sale, notwithstanding the demands
they made upon him for this purpose. The evidence adduced shows Addison was able to
designate only two of the four parcels, and more than two-thirds of these two were found to
be in the possession of one Juan Villafuerte, who claimed to be the owner of the parts he so
occupied. The trial court held the contract of sale to be rescinded and ordered Addison to
return to Felix the P3,000 paid on account of the price, together with interest thereon at the
rate of 10% per annum.

ISSUE:

Was there a delivery made and, therefore, a transfer of ownership of the thing sold?

COURT RULING:

The Supreme Court affirmed the decision of the lower court, with modification that the
interest thereon will be at the rate of 6% (instead of 10%) per annum from the date of the
filing of the complaint until payment.

The thing is considered to be delivered when it is placed "in the hands and possession of
the vendee." It is true that the same article declares that the execution of a public instrument
is equivalent to the delivery of the thing which is the object of the contract, but, in order that
this symbolic delivery may produce the effect of tradition, it is necessary that the vendor
shall have had such control over the thing sold that, at the moment of the sale, its material
delivery could have been made. Symbolic delivery through the execution of a public
instrument is sufficient when there is no impediment whatever to prevent the thing sold
passing into the tenancy of the purchaser by the sole will of the vendor. But if,
notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment
and material tenancy of the thing and make use of it himself or through another in his name,
because such are opposed by a third person’s will, then the delivery has not been effected.
In the case at bar, therefore, it is evident, that the mere execution of the instrument was not
a fulfillment of the vendor's obligation to deliver the thing sold, and that from such non-
fulfillment arises the purchaser's right to demand, as she has demanded, the rescission of
the sale and the return of the price.

DIGEST 2

ADDISON V. FELIX (August 03, 1918)

FACTS:

Petitioner Addison sold four parcels of land to Defendant spouses Felix and Tioco located
in LucenaCity. Respondents paid 3K for the purchase price and promised to pay the
remaining by installment. The contract provides that the purchasers may rescind the
contract within one year after the issuance of title on their name.

The petitioner went to Lucena for the survey designaton and delivery of the land but only 2
parcels were designated and 2/3 of it was in possession of a Juan Villafuerte.

The other parcels were not surveyed and designated by Addison.

Addison demanded from petitioner the payment of the first installment but the latter
contends that there was no delivery and as such, they are entitled to get back the 3K
purchase price they gave upon the execution of the contract.

ISSUE:

WON there was a valid delivery.

HELD:

The record shows that the plaintiff did not deliver the thing sold. With respect to two of the
parcels of land, he was not even able to show them to the purchaser; and as regards the
other two, more than two-thirds of their area was in the hostile and adverse possession of a
third person.

It is true that the same article declares that the execution of a public instruments is
equivalent to the delivery of the thing which is the object of the contract, but, in order that
this symbolic delivery may produce the effect of tradition, it is necessary that the vendor
shall have had such control over the thing sold that, at the moment of the sale, its material
delivery could have been made. It is not enough to confer upon the purchaser the
ownership and the right of possession. The thing sold must be placed in his control. When
there is no impediment whatever to prevent the thing sold passing into the tenancy of the
purchaser by the sole will of the vendor, symbolic delivery through the execution of a public
instrument is sufficient. But if there is an impediment, delivery cannot be deemed effected.

#2:

TEN FORTY REALTY V. CRUZ| PanganibanG.R. No. 151212 | September 10, 2003

Jun28

FACTS:

• Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the MTC.
Petitioner alleges that the land indispute was purchased from Barbara Galino on December
1996, andthat said land was again sold to respondent on April 1998;

• On the other hand, respondent answer with counterclaim that never was there an occasion
when petitioner occupied a portion of the premises. In addition, respondent alleges that said
land was a public land (respondent filed a miscellaneous sales application with the
Community Environment and Natural Resources Office) and the action for ejectment cannot
succeed where it appears that respondent had been in possession of the property prior to
the petitioner;

• On October 2000, MTC ordered respondent to vacate the land and surrender to petitioner
possession thereof. On appeal, the RTC reversed the decision. CA sustained the trial
court’s decision.

ISSUE/S:

Whether or not petitioner should be declared the rightful owner of the property.

HELD:

No. Respondent is the true owner of the land.1) The action filed by the petitioner, which was
an action for “unlawful detainer”, is improper. As the bare allegation of petitioner’s tolerance
of respondent’s occupation of the premises has not been proven, the possession should be
deemed illegal from the beginning. Thus, the CA correctly ruled that the ejectment case
should have been for forcible entry. However, the action had already prescribed because
the complaint was filed on May 12, 1999 – a month after the last day forfiling;2) The subject
property had not been delivered to petitioner; hence, it did not acquire possession either
materially or symbolically. As between the two buyers, therefore, respondent was first in
actual possession of the property.

As regards the question of whether there was good faith in the second buyer. Petitioner has
not proven that respondent was aware that her mode of acquiring the property was
defective at the time she acquired it from Galino. At the time, the property — which was
public land –had not been registered in the name of Galino; thus, respondent relied on the
tax declarations thereon. As shown, the former’s name appeared on the tax declarations for
the property until its sale to the latter in 1998. Galino was in fact occupying the realty when
respondent took over possession. Thus, there was no circumstance that could have placed
the latter upon inquiry or required her to further investigate petitioner’s right of ownership.

DOCTRINE/S:

Execution of Deed of Sale; Not sufficient as delivery. Ownership is transferred not by

contract but by tradition or delivery. Nowhere in the Civil Code is it provided that the
execution of a Deed of Sale is a conclusive presumption of delivery of possession of a
piece of real estate. The execution of a public instrument gives rise only to a prima facie
presumption of delivery. Such presumption is destroyed when the delivery is not effected,
because of a legal impediment. Such constructive or symbolic delivery, being merely
presumptive, was deemed negated by the failure of the vendee to take actual possession of
the land sold. Disqualification from Ownership of Alienable Public Land.

Private corporations are disqualified from acquiring lands of the public domain, as provided
under Section 3 of Article XII of the Constitution. While corporations cannot acquire land of
the public domain, they can however acquire private land. However, petitioner has not
presented proof that, at the time it purchased the property from Galino, the property had
ceased to be of the public domain and was already private land. The established rule is that
alienable and disposable land of the public domain held and occupied by a possessor —
personally or through predecessors-in-interest, openly, continuously, and exclusively for 30
years — is ipso jure converted to private property by the mere lapse of time.

RULING:

The Supreme Court DENIED the petition.

#3,

RUDOLF LIETZ INC v CA

FACTS:
Buriol previously owned a parcel of unregistered land in Palawan. In 1986, he entered into
a lease agreement with Flaviano and Tiziana Turatello and Sani (Italians) involving a
hectare of his property. This agreement was for a period of 25 years, renewable for another
25 years. After the paying P10,000 downpayment, Turatello and Sani took possession of
the land. However, this agreement was only reduced into writing in 1987.
After 11 months, Buriol sold the same parcel of land (5 hec) to Rudolf Lietz Inc for
P30,000. Later on, Rudolf Lietz Inc discovered that Buriol owned only 4 hectares with one
hectare covered by the lease; thus, only 3 hectares were delivered to it. Rudolf Lietz Inc
instituted a complaint for the annulment of the lease against Buriol, Sani and the Turatellos
before the RTC. RTC and CA ruled in favor of Buriol, Sani and Turatellos.

ISSUE:
Whether the sale between Buriol and Rudolf Lietz Inc is a lump sum or unit price sale
HELD:
LUMP SUM SALE. The Deed of Absolute Sale shows that the parties agreed on the
purchase price on a predetermined area of 5 hectares within the specified boundaries and
not based on a particular rate per area. In accordance with Art. 1542, there shall be no
reduction in the purchase price even if the area delivered to Rudolf Lietz Inc is less than that
states in the contract. In the instant case, the area within the boundaries as stated in the
contract shall control over the area agreed upon in the contract.

G.R. No. 170405 February 2, 2010

RAYMUNDO S. DE LEON, Petitioner,
vs.
BENITA T. ONG. Respondent.

Facts:
On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T.
Ong(respondent). The said properties were mortgaged to a financial institution; Real
Savings & Loan Association Inc. (RSLAI). The parties then executed a notarized deed of
absolute sale with assumption of mortgage. As indicated in the deed of mortgage, the
parties stipulated that the petitioner (de Leon) shall execute a deed of assumption of
mortgage in favor of Ong (respondent)after full payment of the P415,000. They also agreed
that the respondent (Ong) shall assume the mortgage. The respondent then subsequently
gave petitioner P415,000 as partial payment. On the other hand, de Leon handed the keys
to Ong and de Leon wrote a letter to inform RSLAI that the mortgage will be assumed by
Ong. Thereafter, the respondent took repairs and made improvements in the properties.
Subsequently, respondent learned that the same properties were sold to a certain
Viloria after March 10, 1993 and changed the locks, rendering the keys given to her
useless. Respondent proceeded to RSLAI but she was informed that the mortgage
has been fully paid and that the titles have been given to the said person. Respondent then
filed a complaint for specific performance and declaration of nullity of the second sale and
damages. The petitioner contended that respondent does not have a cause of action
against him because the sale was subject to a condition which requires the approval
of RSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell.
The RTC dismissed the case. On appeal, the CA upheld the sale to respondent and nullified
the sale to Viloria. Petitioner moved for reconsideration to the SC.

Issue:
Whether the parties entered into a contract of sale or a contract to sell?
Held:
In a contract of sale, the seller conveys ownership of the property to the buyer upon the
perfection of the contract. The non-payment of the price is a negative resolutory condition.
Contract to sell is subject to a positive suspensive condition. The buyer does not acquire
ownership of the property until he fully pays the purchase price.In the present case, the
deed executed by the parties did not show that the owner intends to reserve ownership of
the properties. The terms and conditions affected only the manner of payment and not the
immediate transfer of ownership. It was clear that the owner intended a sale because he
unqualifiedly delivered and transferred ownership of the properties to the respondent

De Leon vs Ong

GR No. 170405 February 2, 2010

Facts:

De Leon sold 3 parcels of land to Ong. The properties were mortgaged to Real Savings and
Loan Association. The parties executed a notarized deed of absolute sale with assumption
of mortgage. The deed of Assumption of mortgage shall be executed in favor of Ong after
the payment of 415K. Ong complied with it. De Leon handed the keys of to Ong and
informed the loan company that the mortgage has been assumed by Ong. Ong made some
improvements in the property. After sometime, Ong learned that the properties were sold to
Viloria and changed the locks to it. Ong went to the mortgage company and learned that the
mortgage was already paid and the titles were given to Viloria. Ong filed a complaint for the
nullity of second sale and damages. De Leon contended that Ong does not have a cause of
action against him because the sale was subject to a condition which requires the approval
of the loan company and that he and Ong only entered a contract to sell.

Issue:
Whether or not the parties entered into a contract of sale

Ruling:

Yes, the parties entered into a contract of sale. In a contract of sale, the seller conveys
ownership of the property to the buyer upon the perfection of the contract. The non-payment
of the price is a negative resolutory condition. Contract to sell is subject to a positive
suspensive condition. The buyer does not acquire ownership of the property until he fully
pays the purchase price. In the present case, the deed executed by the parties did not show
that the owner intends to reserve ownership of the properties. The terms and conditions
affected only the manner of payment and not the immediate transfer of ownership. It was
clear that the owner intended a sale because he unqualifiedly delivered and transferred
ownership of the properties to the respondent

#4,
#6

G.R. NO. 124242, January 21, 2005

SAN LORENZO DEVELOPMENT CORPORATION VS. CA

FACTS:

On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent
Pablo Babasanta. The latter made a downpayment of fifty thousand pesos (P50,000.00) as
evidenced by a memorandum receipt issued by Pacita Lu of the same date. Several other
payments totaling two hundred thousand pesos (P200,000.00) were made by
Babasanta. He demanded the execution of a Final Deed of Sale in his favor so he may
effect full payment of the purchase price; however, the spouses declined to push through
with the sale. They claimed that when he requested for a discount and they refused, he
rescinded the agreement. Thus, Babasanta filed a case for Specific Performance.

On the other hand, San Lorenzo Development Corporation (SLDC) alleged that on 3 May
1989, the two parcels of land involved, namely Lot 1764-A and 1764-B, had been sold to it
in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and for
value and therefore it had a better right over the property in litigation.

ISSUE:

Who between SLDC and Babasanta has a better right over the two parcels of land?

RULING:

An analysis of the facts obtaining in this case, as well as the evidence presented by the
parties, irresistibly leads to the conclusion that the agreement between Babasanta and the
Spouses Lu is a contract to sell and not a contract of sale.

The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand
pesos (P50,000.00) from Babasanta as partial payment of 3.6 hectares of farm lot. 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 convince us that the Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price.
Babasanta’s letter dated 22 May 1989 was quite telling. He stated therein that despite his
repeated requests for the execution of the final deed of sale in his favor so that he could
effect full payment of the price, Pacita Lu allegedly refused to do so. In effect, Babasanta
himself recognized that ownership of the property would not be transferred to him until such
time as he shall have effected full payment of the price. Doubtlessly, the receipt signed by
Pacita Lu should legally be considered as a perfected contract to sell.

The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of
the purchase price. There being an obligation to pay the price, Babasanta should have
made the proper tender of payment and consignation of the price in court as required by
law. Glaringly absent from the records is any indication that Babasanta even attempted to
make the proper consignation of the amounts due, thus, the obligation on the part of the
sellers to convey title never acquired obligatory force.

There was no double sale in this case because the contract in favor of Babasanta was a
mere contract to sell; hence, Art. 1544 is not applicable. There was neither actual nor
constructive delivery as his title is based on a mere receipt. Based on this alone, the right of
SLDC must be preferred.

#7 Abuan v. Garcia, 1965

#8

PERFECTO DY, JR. petitioner, vs. COURT OF APPEALS, GELAC TRADING INC., and
ANTONIO V. GONZALES, Respondents.

G.R. No. 92989 July 8, 1991

FACTS:

Wilfredo Dy purchased a truck and a farm tractor through LIBRA which was also mortgaged
with the latter, as a security to the loan.

Petitioner, expresses his desire to purchased his brother’s tractor in a letter to LIBRA which
also includes his intention to shoulder its mortgaged. LIBRA approved the request. At the
time that Wilfredo Dy executed a deed of absolute sale in favor of petitioner, the tractor and
truck were in the possession of LIBRA for his failure to pay the amortization.
When petitioner finally fulfilled its obligation to pay the tractor, LIBRA would only release the
same only if he would also pay for the truck. In order to fulfill LIBRA’s condition, petitioner
convinced his sister to pay for the remaining truck, to which she released a check
amounting to P22,000. LIBRA however, insisted that the check must be first cleared before
it delivers the truck and tractor.

Meanwhile, another case penned “Gelac Trading Inc vs. Wilfredo Dy” was pending in Cebu
as a case to recover for a sum of money (P12,269.80). By a writ of execution the court in
Cebu ordered to seize and levy the tractor which was in the premise of LIBRA, it was sold in
a public auction to which it was purchased by GELAC. The latter then sold the tractor to
Antonio Gonzales.

RTC rendered in favor of petitioner.

CA dismissed the case, alleging that it still belongs to Wilfredo Dy.

ISSUE:

Whether or not there was a consummated sale between Petitioner and LIBRA?

HELD:

NO.

The payment of the check was actually intended to extinguish the mortgage obligation so
that the tractor could be released to the petitioner. It was never intended nor could it be
considered as payment of the purchase price because the relationship between Libra and
the petitioner is not one of sale but still a mortgage. The clearing or encashment of the
check which produced the effect of payment determined the full payment of the money
obligation and the release of the chattel mortgage. It was not determinative of the
consummation of the sale. The transaction between the brothers is distinct and apart from
the transaction between Libra and the petitioner. The contention, therefore, that the
consummation of the sale depended upon the encashment of the check is untenable.