PROPERTY ● In its complaint-in-intervention, SLDC claimed that on May 3, 1989, after Sps.
Lu
[100] SAN LORENZO v. CA
G.R. No. L-124242 | January 21, 2005 | Tinga, J.
Ebalobo
PETITIONERS/PROSECUTORS: San Lorenzo Development Corp.
RESPONDENTS/DEFENDANTS: Court of Appeals, Pablo S. Babasanta, Sps. Miguel
Lu and Pacita Zavalla Lu
TOPIC: (as stated in the syllabus)
● Creation, Transmission, Termination of Property Rights
● Voluntary Modes | Tradition/Delivery
FACTS:
● Spouses Lu owned 2 parcels of land in Sta. Rosa, Laguna both measuring 15,808
sqm. or a total of 3.1616 ha.
● Aug. 20, 1986: Sps. Lu allegedly sold the land to Babasanta for P15 per sqm.
Babasanta made a downpayment of 50k as well as several other payments
totalling 200k
● May 1989: Babasanta demanded execution of a final deed of sale in his favor so
he could effect full payment as well as demanded that an alleged 2nd sale to
another be cancelled.
● Pacita Lu replied that when the balance of the payment became due, Babasanta
requested for a reduction of the price and when Lu refused, Babasanta backed
out of the sale. Lu also returned 50k to Babasanta already.
● Babasanta filed with the RTC a Complaint for Specific Performance and Damages
against Sps. Lu.
● In their answer, Sps. Lu alleged that Pacita Lu obtained loans from Babasanta
and when the loans reached 50k, Pacita and Babasanta, w/out the knowledge and
consent of Miguel Lu, verbally agreed to transform the transaction into a contract
to sell the property, with the 50k as downpayment.
● However, Babasanta only paid up to 200k and failed to pay the balance of 260k.
The former allegedly rescinded the contract after Sps. Lu refused to reduce the
price, making the Sps. indebted to Babasanta for 200k instead.
● 1990: San Lorenzo Development Corp. (SLDC), filed a Motion for Intervention
alleging that it had legal interest in the subject matter as the property had been
sold to it by Sps. Lu. SLDC also argued that it was a buyer in good faith and for
value, thus having a better right over the property. RTC granted the motion.
received P632,320, it executed a Deed of Absolute Sale w/ Mortgage in SLDC’s
favor and delivered to SLDC certificates of title over the property clean and free
from any adverse claims or notice of lis pendens.
● RTC upheld sale to SLDC, ordered Sps. Lu to pay Babasanta 200k. It applied NCc
1544 and ruled that since both Babasanta and SLDC did not register the sale in
their favor, ownership should pertain to the buyer who first acquired possession
of the property. It equated the execution of a public instrument in favor of SLDC
as sufficient delivery of the property to the latter. Symbolic possession first
transferred to SLDC and consequently, ownership.
● CA reversed. Sale between Babasanta and Sps. Lu still valid, ordered Sps. Lu to
execute deed of conveyance to Babasanta. It ruled that the Absolute Deed of Sale
w/ Mortgage was void due to SLDC being a purchaser in bad faith. SLDC was in
bad faith as it had prior notice of Babasanta’s claim over the property as SLDC
advanced 200k to Lu upon latter’s claim that she had an obligation to Babasanta.
Denied MR.
● SLDC argued that it had no prior notice of Babasanta’s claim as Lu never
informed SLDC that the lands had been previously sold. It invoked good faith
and that it immediately took possession of the property after the execution of the
sale.
ISSUES and RULING: (Doctrine in bold letters)
● WON… SLDC had a better right over the lands in view of Sps. Lu’s successive
transactions --- YES.
o The agreement between Babasanta and Lu was a contract to sell, not a
contract of sale. While there is no stipulation that the seller reserves
ownership until full payment, the subsequent acts of the parties prove that
Sps. Lu never intended to transfer ownership to Babasanta except upon full
payment.
o In a letter made by Babasanta, he stated that despite demands for execution
of deed of same so he could effect full payment, Sps. Lu failed to do so. In
effect, Babasanta recognizes that ownership would not be transferred until
full payment. Also, Sps. Lu could have executed document of sale upon
acceptance of partial payment, but they did not.
o In a contract to sell, ownership is reserved in the vendor and does not pass
until full payment while in a contract of sale, title passes to the vendee upon
delivery of the thing sold.
o Even if the transaction was a contract of sale, Babasanta’s claim of ownership registered nor possessed the property at any time, SLDC’s right is superior
should still fail. In relation to the acquisition and transfer of ownership, sale than that of Babasanta.
is not a mode, but merely a title. A mode is the legal means by which o Here there is no bad faith on SLDC’s part. The notice of lis pendens serves as
dominion or ownership is created, transferred or destroyed. Title is only the a warning that the property is under litigation. SLDC intervened in the
legal basis by which to affect dominion/ownership. litigation to protect its rights and was vindicated by the judgment of the
o Cited NCC 712. Contracts only constitute titles or rights to the transfer or court in its favor.
acquisition of ownership, while delivery or tradition is the mode of
accomplishing the same. DISPOSITIVE : WHEREFORE, the instant petition is hereby GRANTED. The
o Thus, sale by itself does not transfer or affect ownership. The most it does is decision of the Court of Appeals appealed from is REVERSED and SET ASIDE and
to create the obligation to transfer ownership. the decision of the Regional Trial Court, Branch 31, of San Pedro, Laguna is
o Under the law, ownership is acquired by the vendee from the moment the REINSTATED. No costs.
thing sold is delivered to him in any of the ways in NCC 1497 to 1501.
“delivered” does not necessarily mean actual physical possession of the
property.
o The law recognizes 2 principal modes of delivery: (1) Actual and (2) Legal or
Constructive. Actual delivery consists in placing the thing sold in the control
or possession of the vendee.
o Legal/Constructive delivery may be had thru any of the ff. ways:
(1) Execution of a public instrument evidencing the sale
(2) Symbolical tradition, such as delivery of the keys of the place
where the movable sold is kept
(3) Traditio longa manu, or by mere consent/agreement if the movable sold
cannot yet be transferred to the possession of the buyer at the time of the
sale
(4) Traditio brevi manu, if the buyer already had possession of the object
even before the sale
(5) Traditio constitutum possessorium, where the seller remains in
possession of the property in a different capacity
o Here, Babasanta did not acquire ownership by mere execution of receipt by
Lu acknowledging partial payment. The agreement between them was not
embodied in a public instrument, hence no constructive delivery could have
been effected. Babasanta also had not taken possession of the property after
the sale nor exercised acts of dominion. Thus there was no delivery made to
Babasanta.
o With regard to the argument in double sale, 1st, as mentioned the contract is
one of a contract to sell not a contract of sale. 2nd, since SLDC acquired
possession of the property in good faith in contrast to Babasanta who neither