CASE DIGEST: DE LEON V. ONG - G.R. NO. 170405

 CASE DIGEST: DE LEON V. ONG

De Leon vs. Ong

611 SCRA 381, G.R. No. 170405 February 2, 2010

DOCTRINES:

• In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. Should the buyer default in the payment of the purchase price, the seller may either sue for the collection thereof or have the contract judicially resolved and set aside. The non-payment of the price is therefore a negative resolutory condition. 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 defaults in the payment thereof, the seller can only sue for damages.

• A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of some other person’s claim or interest in the property. The law requires, on the part of the buyer, lack of notice of a defect in the title of the seller and payment in full of the fair price at the time of the sale or prior to having notice of any defect in the seller’s title.

FACTS:

Raymundo De Leon sold three parcels of land with improvements situated in Antipolo, Rizal to respondent Benita T. Ong for P1.1 million.

These properties were mortgaged to Real Savings and Loan Association, Incorporated (RSLAI). The contract between De Leon and Ong states that De Leon sells, transfers, conveys in a manner absolute and irrevocable, unto Ong the said properties under the terms and conditions that (1) upon full payment of Ong of the amount P415,000, De Leon shall execute and sign a deed of assumption of mortgage in favor of Ong without any further cost whatsoever; and that Ong shall assume payment of the outstanding loan of P684,500 with REAL SAVINGS AND LOAN.

Ong partially paid De Leon the P415,500. De Leon, on the other hand, handed the keys to the properties. Thereafter, Ong undertook repairs and made improvements on the properties.

Subsequently, Ong learned that petitioner again sold the same properties to one Leona Viloria. Ong filed a Complaint against De Leon and Viloria in the RTC. Ong claimed that since De Leon had previously sold the properties to her, he no longer had the right to sell the same to Viloria. And that they entered into a contract of sale. De Leon, on the other hand, insisted that he entered into a contract to sell since the validity of the transaction was subject to a suspensive condition, that is, the approval by RSLAI of Ong’s assumption of mortgage.

RTC ruled in favor of De Leon. CA reversed and declared the second sale void.

ISSUES:

(1) Was the contract between De Leon and Ong a contract of sale, or a contract to sell? (2) Was the subsequent sale to Viloria valid?

HELD:

(1)

Clearly, it was a contract of sale the parties entered into. The deed executed by the parties stated that petitioner sold the properties to respondent "in a manner absolute and irrevocable" for a sum of P1.1 million. Nothing in said instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price.

Petitioner executed a notarized deed of absolute sale, which is equivalent to the delivery of a thing sold (Art. 1498 CC), in favor of respondent. The totality of petitioner’s acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent.

(2)

This case involves a double sale as the disputed properties were sold validly on two separate occasions by the same seller to the two different buyers in good faith.

Article 1544 of the Civil Code provides:

“Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.”

In this instance, petitioner delivered the properties to respondent when he executed the notarized deed and handed over to respondent the keys to the properties. For this reason, respondent took actual 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.