Sales Digested Case Part 2

SPOUSES MARIO ONG AND MARIA CARMELITA ONG and DEMETRIO VERZANO v.
SPOUSES
ERGELIA OLASIMAN and LEONARDO OLASIMAN
485 SCRA 464 (2006)
The issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is
registered land and the purchaser is buying the same from the registered owner whose title to the
land is clean in such case the purchaser who relies on the clean title of the registered owner is
protected if he is a purchaser in good faith for value.
Paula Verzano sold an unregistered parcel of land covered by Tax Declaration No. 18-270-A 1 in her
name to her niece Bernandita Verzano-Matugas (Bernandita). Bernandita subsequently sold the
same to Spouses Ergelia nd Leonardo Olasiman. Paula thereafter died without an issue and was
survived by her sibling Demetrio Verzano, Victoria Verzano, and the children of her
deceased brother Isebero Verzano, namely Isebero Verzano, Jr. Epifanio Verzano, Bernandita and
Estrella Verzano.
Demetrio executed a document entitled ―Extrajudicial Settlement by Sole Heir and Sale‖ where he
adjudicated to himself the subject property. He likewise sold the same to Spouses Carmelita Ong and
Mario Ong.
Spouses Olasiman filed a Complaint against Spouses Ong and Demetrio for annulment of the
―Extrajudicial Settlement by Sole Heir and Sale,‖ quiet of title and damages before the Regional
Trial Court of Dumaguete City.
The Regional Trial Court dismissed the complaint. On appeal, the Court of Appealsreversed the
dismissal and ruled that the ―Extrajudicial Settlement by Sole Heir and Sale‖ as null and
void. Consequently, it likewise declared that the sale in favor of Spouses Ong is null and void.
ISSUE:
Whether or not the ownership over the parcel of land, by virtue of the ―Extrajudicial Settlement by
Sole Heir and Sale‖, is transferred to Spouses Ong
HELD:
When Paula sold to Bernandita by Deed of Absolute Sale dated June 1, 1992 the parcel of land of
which the questioned lot formed part, ownership thereof was transferred to the latter in accordance
with Article 1496 of the Civil Code which 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 articles 1497 to
1501, or in any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee.
The Deed of Absolute Sale in favor of Bernandita contains nothing contrary to an intent to transfer
ownership.
When Paula died on November 26, 1992, she no longer owned the questioned lot and, therefore,
her brother Demetrio could not have inherited it. The ―Extrajudicial Settlement by Sole Heir and
Sale‖ did not thus confer upon Demetrio ownership of the questioned lot; hence, he could not have
conveyed it to Spouses Ong.
The issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is
registered land and the purchaser is buying the same from the registered owner whose title to the
land is clean in such case the purchaser who relies on the clean title of the registered owner is
protected if he is a purchaser in good faith for value. Since the properties in question are unregistered
lands, Spouses Ong as subsequent buyers thereof did so at their peril. Their claim of having bought
the land in good faith, i.e., without notice that some other person has a right to or interest in the
property, would not protect them if it turns out, as it actually did in this case, that their seller did not
own the property at the time of the sale.
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.

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SPOUSES MARIO ONG AND MARIA CARMELITA ONG and DEMETRIO VERZANO v.

485 SCRA 464 (2006)

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

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