4/7/2017 G.R.No.

170405

THIRDDIVISION

RAYMUNDOS.DELEON,G.R.No.170405
Petitioner,
Present:

CORONA,J.,Chairperson,
CARPIO,*
versusVELASCO,JR.,
NACHURAand
PERALTA,JJ.
[1]
BENITAT.ONG. ,
Respondent.Promulgated:
February2,2010

xx

DECISION
CORONA,J.:


[2]
On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of land with improvements
situated in Antipolo, Rizal to respondent Benita T. Ong. As these properties were mortgaged to Real
SavingsandLoanAssociation,Incorporated(RSLAI),petitionerandrespondentexecutedanotarizeddeed
[3]
ofabsolutesalewithassumptionofmortgage stating:
xxxxxxxxx

ThatforandinconsiderationofthesumofONEMILLIONONEHUNDREDTHOUSANDPESOS(P1.1
million), Philippine currency, the receipt whereof is hereby acknowledged from [RESPONDENT] to the
entire satisfaction of [PETITIONER], said [PETITIONER] does hereby sell, transfer and convey in a
mannerabsoluteandirrevocable,untosaid[RESPONDENT],hisheirsandassignsthatcertainrealestate
togetherwiththebuildingsandotherimprovementsexistingthereon,situatedin[Barrio]Mayamot,Antipolo,
Rizalunderthefollowingtermsandconditions:


1. That upon full payment of [respondent] of the amount of FOUR HUNDRED FIFTEEN
THOUSAND FIVE HUNDRED (P415,000), [petitioner] shall execute and sign a deed of
assumptionofmortgageinfavorof[respondent]withoutanyfurthercostwhatsoever

2. That[respondent]shallassumepaymentoftheoutstandingloanofSIXHUNDREDEIGHTY
FOURTHOUSANDFIVEHUNDREDPESOS(P684,500)withREALSAVINGSANDLOAN,
[4]
Cainta,Rizal(emphasissupplied)

xxxxxxxxx

Pursuant to this deed, respondent gave petitioner P415,500 as partial payment. Petitioner, on the
other hand, handed the keys to the properties and wrote a letter informing RSLAI of the sale and
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other hand, handed the keys to the properties and wrote a letter informing RSLAI of the sale and
authorizingittoacceptpaymentfromrespondentandreleasethecertificatesoftitle.

[5]
Thereafter,respondentundertookrepairsandmadeimprovementsontheproperties. Respondent
likewiseinformedRSLAIofheragreementwithpetitionerforhertoassumepetitionersoutstandingloan.
RSLAIrequiredhertoundergocreditinvestigation.

Subsequently,respondentlearnedthatpetitioneragainsoldthesamepropertiestooneLeonaViloria
after March 10, 1993 and changed the locks, rendering the keys he gave her useless. Respondent thus
proceededtoRSLAItoinquireaboutthecreditinvestigation.However,shewasinformedthatpetitioner
hadalreadypaidtheamountdueandhadtakenbackthecertificatesoftitle.

Respondentpersistentlycontactedpetitionerbuthereffortsprovedfutile.

OnJune18,1993,respondentfiledacomplaintforspecificperformance,declarationofnullityof
[6]
the second sale and damages against petitioner and Viloria in the Regional Trial Court (RTC) of
Antipolo,Rizal,Branch74.Sheclaimedthatsincepetitionerhadpreviouslysoldthepropertiestoheron
March 10, 1993, he no longer had the right to sell the same to Viloria. Thus, petitioner fraudulently
deprivedheroftheproperties.
Petitioner,ontheotherhand,insistedthatrespondentdidnothaveacauseofactionagainsthimand
consequentlyprayedforthedismissalofthecomplaint.Heclaimedthatsincethetransactionwassubject
toacondition(i.e.,thatRSLAIapprovetheassumptionofmortgage),theyonlyenteredintoacontractto
sell.InasmuchasrespondentdidapplyforaloanfromRSLAI,theconditiondidnotarise.Consequently,
thesalewasnotperfectedandhecouldfreelydisposeoftheproperties.Furthermore,hemadeacounter
claimfordamagesasrespondentfiledthecomplaintallegedlywithgrossandevidentbadfaith.

Because respondent was a licensed real estate broker, the RTC concluded that she knew that the
validityofthesalewassubjecttoacondition.TheperfectionofacontractofsaledependedonRSLAIs

approval of the assumption of mortgage. Since RSLAI did not allow respondent to assume petitioners
obligation,theRTCheldthatthesalewasneverperfected.

[7]
InadecisiondatedAugust27,1999, theRTCdismissedthecomplaintforlackofcauseofaction
andorderedrespondenttopaypetitionerP100,000moraldamages,P20,000attorneysfeesandthecostof
suit.
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suit.

[8]
Aggrieved, respondent appealed to the Court of Appeals (CA), asserting that the court a quo
erredindismissingthecomplaint.

The CA found that the March 10, 2003 contract executed by the parties did not impose any
condition on the sale and held that the parties entered into a contract of sale. Consequently, because
petitionernolongerownedthepropertieswhenhesoldthemtoViloria,itdeclaredthesecondsalevoid.
Moreover, it found petitioner liable for moral and exemplary damages for fraudulently depriving
respondentoftheproperties.

[9]
InadecisiondatedJuly22,2005, theCAupheldthesaletorespondentandnullifiedthesaleto
Viloria. It likewise ordered respondent to reimburse petitioner P715,250 (or the amount he paid to
RSLAI). Petitioner, on the other hand, was ordered to deliver the certificates of titles to respondent and
payherP50,000moraldamagesandP15,000exemplarydamages.
[10]
Petitioner moved for reconsideration but it was denied in a resolution dated November 11, 2005.
[11]
Hence,thispetition, withthesoleissuebeingwhetherthepartiesenteredintoacontractofsaleora
contracttosell.

Petitionerinsiststhatheenteredintoacontracttosellsincethevalidityofthetransactionwassubjecttoa
suspensive condition, that is, the approval by RSLAI of respondents assumption of mortgage. Because
RSLAIdidnotallowrespondenttoassumehis(petitioners)obligation,theconditionnevermaterialized.
Consequently,therewasnosale.

Respondent, on the other hand, asserts that they entered into a contract of sale as petitioner already
conveyedfullownershipofthesubjectpropertiesupontheexecutionofthedeed.

WemodifythedecisionoftheCA.


CONTRACTOFSALEORCONTRACTTOSELL?


TheRTCandtheCAhadconflictinginterpretationsoftheMarch10,1993deed.TheRTCruledthatit
wasacontracttosellwhiletheCAheldthatitwasacontractofsale.
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wasacontracttosellwhiletheCAheldthatitwasacontractofsale.

Inacontractofsale,thesellerconveysownershipofthepropertytothebuyerupontheperfection
ofthecontract.Shouldthebuyerdefaultinthepaymentofthepurchaseprice,thesellermayeithersuefor
thecollectionthereoforhavethecontractjudiciallyresolvedandsetaside.Thenonpaymentoftheprice
[12]
isthereforeanegativeresolutorycondition.

On the other hand, a 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. For this reason, if the buyer
[13]
defaultsinthepaymentthereof,thesellercanonlysuefordamages.

The deed executed by the parties (as previously quoted) stated that petitioner sold the properties to
[14]
respondentinamannerabsoluteandirrevocableforasumofP1.1million. Withregardtothemanner
ofpayment,itrequiredrespondenttopayP415,500incashtopetitionerupontheexecutionofthedeed,
[15] [16]
with the balance payable directly to RSLAI (on behalf of petitioner) within a reasonable time.
Nothing in said instrument implied that petitioner reserved ownership of the properties until the full
[17]
paymentofthepurchaseprice. Onthecontrary,thetermsandconditionsofthedeedonlyaffectedthe
mannerofpayment,nottheimmediatetransferofownership(upontheexecutionofthenotarizedcontract)
frompetitionerassellertorespondentasbuyer.Otherwisestated,thesaidtermsandconditionspertained
totheperformanceofthecontract,nottheperfectionthereofnorthetransferofownership.

Settledistherulethatthesellerisobligedtotransfertitleoverthepropertiesanddeliverthesametothe
[18] [19]
buyer. In this regard, Article 1498 of the Civil Code provides that, as a rule, the execution of a
notarizeddeedofsaleisequivalenttothedeliveryofathingsold.

In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent.
Moreover, not only did petitioner turn over the keys to the properties to respondent, he also authorized
RSLAI to receive payment from respondent and release his certificates of title to her. The totality of
petitioners acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the
propertiestorespondent.Clearly,itwasacontractofsalethepartiesenteredinto.

Furthermore,evenassumingarguendothattheagreementofthepartieswassubjecttothecondition
that RSLAI had to approve the assumption of mortgage, the said condition was considered fulfilled as
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that RSLAI had to approve the assumption of mortgage, the said condition was considered fulfilled as
petitionerpreventeditsfulfillmentbypayinghisoutstandingobligationandtakingbackthecertificatesof
titlewithoutevennotifyingrespondent.Inthisconnection,Article1186oftheCivilCodeprovides:

Article1186.Theconditionshallbedeemedfulfilledwhentheobligorvoluntarilypreventsitsfulfillment.





VOIDSALEORDOUBLESALE?


Petitioner sold the same properties to two buyers, first to respondent and then to Viloria on two
[20]
separate occasions. However, the second sale was not void for the sole reason that petitioner had
previouslysoldthesamepropertiestorespondent.Onthisaccount,theCAerred.

This case involves a double sale as the disputed properties were sold validly on two separate
occasionsbythesamesellertothetwodifferentbuyersingoodfaith.

Article1544oftheCivilCodeprovides:

Article 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferredtothepersonwhomayhavefirsttakenpossessionthereofingoodfaith,ifitshouldbemovable
property.

Shoulditbeimmovableproperty,theownershipshallbelongtothepersonacquiringitwhoingood
faithfirstrecordeditintheRegistryofProperty.

Shouldtherebenoinscription,theownershipshallpertaintothepersonwhoingoodfaithwasfirstin
thepossessionand,intheabsencethereof,tothepersonwhopresentstheoldesttitle,providedthereis
goodfaith.(emphasissupplied)

This provision clearly states that the rules on double or multiple sales apply only to purchasers in good
faith.Needlesstosay,itdisqualifiesanypurchaserinbadfaith.

Apurchaseringoodfaithisonewhobuysthepropertyofanotherwithoutnoticethatsomeother
personhasarightto,oraninterestin,suchpropertyandpaysafullandfairpriceforthesameatthetime
[21]
ofsuchpurchase,orbeforehehasnoticeofsomeotherpersonsclaimorinterestintheproperty. The
lawrequires,onthepartofthebuyer,lackofnoticeofadefectinthetitleofthesellerandpaymentinfull
ofthefairpriceatthetimeofthesaleorpriortohavingnoticeofanydefectinthesellerstitle.

Wasrespondentapurchaseringoodfaith?Yes.
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Wasrespondentapurchaseringoodfaith?Yes.

Respondent purchased the properties, knowing they were encumbered only by the mortgage to
RSLAI.Accordingtoheragreementwithpetitioner,respondenthadtheobligationtoassumethebalance
ofpetitionersoutstandingobligationtoRSLAI.Consequently,respondentinformedRSLAIofthesaleand
of her assumption of petitioners obligation. However, because petitioner surreptitiously paid his
outstanding obligation and took back her certificates of title, petitioner himself rendered respondents
obligationtoassumepetitionersindebtednesstoRSLAIimpossibletoperform.

Article1266oftheCivilCodeprovides:

Article1266.Thedebtorinobligationstodoshallbereleasedwhentheprestationbecomelegallyor
physicallyimpossiblewithoutthefaultoftheobligor.

Since respondents obligation to assume petitioners outstanding balance with RSLAI became impossible
withoutherfault,shewasreleasedfromthesaidobligation.Moreover,becausepetitionerhimselfwillfully
preventedtheconditionvisvisthepaymentoftheremainderofthepurchaseprice,thesaidconditionis
considered fulfilled pursuant to Article 1186 of the Civil Code. For purposes, therefore, of determining

whetherrespondentwasapurchaseringoodfaith,sheisdeemedtohavefullycompliedwiththecondition
ofthepaymentoftheremainderofthepurchaseprice.

Respondentwasnotawareofanyinterestinoraclaimonthepropertiesotherthanthemortgageto
RSLAIwhichsheundertooktoassume.Moreover,Viloriaboughtthepropertiesfrompetitionerafterthe
lattersoldthemtorespondent.Respondentwasthereforeapurchaseringoodfaith. Hence, the rules on
doublesaleareapplicable.
Article1544oftheCivilCodeprovidesthatwhenneitherbuyerregisteredthesaleoftheproperties
withtheregistrarofdeeds,theonewhotookpriorpossessionofthepropertiesshallbethelawfulowner
thereof.

In this instance, petitioner delivered the properties to respondent when he executed the notarized
[22]
deed andhandedovertorespondentthekeystotheproperties.Forthisreason,respondenttookactual
possession and exercised control thereof by making repairs and improvements thereon. Clearly, the sale
was perfected and consummated on March 10, 1993. Thus, respondent became the lawful owner of the
properties.

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Nonetheless,whiletheconditionastothepaymentofthebalanceofthepurchasepricewasdeemed
fulfilled, respondents obligation to pay it subsisted. Otherwise, she would be unjustly enriched at the
expenseofpetitioner.

Therefore,respondentmustpaypetitionerP684,500,theamountstatedinthedeed.Thisisbecause
theprovisions,termsandconditionsofthecontractconstitutethelawbetweentheparties.Moreover,the
deeditselfprovidedthattheassumptionofmortgagewaswithoutanyfurthercostwhatsoever.Petitioner,
on the other hand, must deliver the certificates of title to respondent. We likewise affirm the award of
damages.

WHEREFORE, the July 22, 2005 decision and November 11, 2005 resolution of the Court of
Appeals in CAG.R. CV No. 59748 are hereby AFFIRMED with MODIFICATION insofar as

respondent Benita T. Ong is ordered to pay petitioner Raymundo de Leon P684,500 representing the
balanceofthepurchasepriceasprovidedintheirMarch10,1993agreement.

Costsagainstpetitioner.

SOORDERED.

RENATOC.CORONA
AssociateJustice
Chairperson






WECONCUR:



ANTONIOT.CARPIOPRESBITEROJ.VELASCO,JR.
AssociateJusticeAssociateJustice



ANTONIOEDUARDOB.NACHURADIOSDADOM.PERALTA
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ANTONIOEDUARDOB.NACHURADIOSDADOM.PERALTA
AssociateJusticeAssociateJustice



ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewas
assignedtothewriteroftheopinionoftheCourtsDivision.


RENATOC.CORONA
AssociateJustice
Chairperson

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairpersonsAttestation,I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice

*PerSpecialOrderNo.818datedJanuary18,2010.
[1]
TheCourtofAppealswasimpleadedasrespondentbutwasexcludedpursuanttoSection4,Rule45oftheRulesofCourt.
[2]
CoveredbyTCTNos.226469,226470and226471registeredinthenameofpetitioner.
[3]
Rollo, pp. 5556. There is a marked discrepancy between the total amount and the sum of the payments to be made by respondent (or
P1,099,500).
[4]
TherecordsofthiscaserevealedthatpetitionersoutstandingobligationtoRSLAIamountedtoP715,000asofApril1,1993.
[5]
Respondenthadthepropertiescleanedandlandscaped.Shelikewisehadthehouse(builtthereon)paintedandrepaired.
[6]
DocketedasCivilCaseNo.932739.
[7]
PennedbyJudgeFranciscoA.Querubin.Id.,pp.129151.
[8]
DocketedasCAG.R.CVNo.59748.
[9]
PennedbyAssociateJusticeEugenioS.LabitoriaandconcurredinbyAssociateJusticesEliezerR.delosSantosandArturoD.Brion(nowa
memberofthisCourt)oftheThirdDivisionoftheCourtofAppeals.Rollo,pp.3034.
[10]
Id.,pp.4647.
[11]
UnderRule45oftheRulesofCourt.
[12]
Dijamcov.CourtofAppeals.G.R.No.113665,7October2004,440SCRA190,197.SeealsoJ.B.L.Reyes,5OUTLINEOFPHILIPPINE
CIVILLAW,23(1957).
[13]
Id.
[14]
Supranote3.
[15]
Supranote4.
[16]
Paragraph2ofthedeeddidnotprescribeaperiodwithinwhichrespondentshouldsettlepetitionersobligationtoRSLAI.
[17]
SeeCivilCode,Art.1370whichprovides:
Article 1370. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal
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Article 1370. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaningofthestipulationsshallcontrol.
Ifthewordsappeartobecontrarytotheevidentintentionoftheparties,thelattershallprevailovertheformer.
[18]
CIVILCODE,Art.1495provides:
Article1495.Thevendorisboundtotransfertheownershipofanddeliver,aswellaswarrantthethingwhichistheobjectofthesale.
[19]
CIVILCODE,Art.1498provides:
Article1498.Whenasaleismadethroughapublicinstrument,theexecutionthereofshallbeequivalenttothedeliveryofthething
whichistheobjectofthecontract,iffromthedeed.thecontrarydoesnotappearorcannotbeclearlyinferred.
Withregardtomovableproperty,itsdeliverymayalsobemadebythedeliveryofthekeysoftheplaceordepositorywhereitisstoredor
kept.(emphasissupplied)
[20]
SeeDelfinv.Lagon,G.R.No.132262,15September2006,502SCRA24,31.
[21]
Centenov.SpousesViray,440Phil.881,885(2002).
[22]
SeeCIVILCODE,Art.1498.

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