11) San Lorenzo Development Corp.
vs CA ownership of the property until the payment of the
FACTS:
In 1986, spouses Lu allegedly sold through a
verbal contract 2 parcels of land in Sta. Rosa Laguna
to Pablo Babasanta at 15 pesos/sqm. This sale was
in part influenced by Pacita Lu’s being indebted to
Babasanta. Babasanta made a downpayment of 50k
to Pacita Lu, evidenced by a memorandum reciept.
Here thereafter made other payments totalling 200k.
Sometime after that, Babasanta asked the Lus for a
reduction in the price, and the Lus refused. Because
of this, Babasanta allegedly backed out of the sale
and asked that the original loan be carried out. In
1989, Babasanta wrote to the Lus to demand the
execution of a deed of sale in his favor so that he
could pay the full price, but the Lus refused.
Subsequently, Babasanta learned that the lands in
question were sold to San Lorenzo Devt Co.
In 1990 the SLDC intervened in the case,
claiming that they were buyers in good faith, since
from the time that the land was offered to them and
up to the time that they bought it, they didn’t know
that the lands were ‘sold’ to Babasanta. They also
state that after they had paid a total of 632k, the Lus
executed a Deed of Absolute Sale with Mortgage in
its favor. Babasanta’s claims were not annotated on
the titles, and furthermore, SLDC moved to possess
the property after execution of the deed, unlike
Babasanta who never exercised any form of
ownership.
ISSUE:
Who has better claim to the lands?
HELD:
A contract to sell, and not a contract of sale,
was perfected between Lu and Babasanta.
The Court concluded that the contract
between the Lus and Babasanta was a contract to
sell. In this case, the acts of the spouses Lu signfy
that they never intended to transfer ownership to
Babasanta. This was evident in Babasanta’s
repeated requests to have the deed executed in his
favor, all of which the Lus refused. The Lus could
also have executed the Deed when they received
the partial payment, thus the receipt should be
considered at best, a perfected contract to sell. Even
if the 50k downpayment was made in partial
payment of the lands, the Lus still reserved the
full purchase price. In contracts to sell, the payment
of the purchase price acts as a suspensive condition
which, if not fulfilled, prevents the obligation of the
vendor to convey to the buyer.
Sale as mere title, not a mode.
Even if we assume that the contract between
the Lus and Babasanta was a perfected contract of
sale, ownership of the land could not have passed to
Babasanta in the absence of delivery, since in a
contract of sale, ownership is transferred to the
vendee only upon the delivery of the thing sold.
The perfection of a contract is different from
its consummation. In relation to the acquisition and
transfer of ownership, it should be noted that sale is
not a mode, but merely a title. A mode is the legal
means by which dominion or ownership is created,
transferred or destroyed, but title is only the legal
basis by which to affect dominion or ownership.
Under Article 712 of the Civil Code,
"ownership and other real rights over property are
acquired and transmitted by law, by donation, by
testate and intestate succession, and in
consequence of certain contracts, by tradition."
Contracts only constitute titles or rights to the
transfer or acquisition of ownership, while delivery or
tradition is the mode of accomplishing the same.
Therefore, sale by itself does not transfer or affect
ownership; the most that sale does is to create the
obligation to transfer ownership. It is tradition or
delivery, as a consequence of sale, that actually
transfers ownership.
Ownership transferred though delivery
Explicitly, the law 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 Article 1497 to 1501.The
word "delivered" should not be taken restrictively to
mean transfer of actual physical possession of the
property. The law recognizes two principal modes of
delivery, to wit: (1) actual delivery; and (2) legal or
constructive delivery.
1. Actual delivery – consists in placing the thing sold
in the control and possession of the vendee
2. Constructive delivery :
a. execution of public document evidencing
the sale

b. symbolical tradition (delivery of keys to the

place)

c. traditio longa manu or by mere consent or

agreement if the movable cannot be transferred

to possession of buyer at the time of

sale

d. traditio brevi manu or if the buyer had

already possessed the object before the sale

e. traditio constitutum possessorium or when

the seller remains in possession of the

propertyin a different capacity.

Respondent Babasanta did not acquire ownership

by the mere execution of the receipt by Pacita Lu
acknowledging receipt of partial payment for the
property. For one, the agreement between
Babasanta and the Spouses Lu, though valid, was
not embodied in a public instrument. Hence, no
constructive delivery of the lands could have been
effected. For another, Babasanta had not taken
possession of the property at any time after the
perfection of the sale in his favor or exercised acts
of dominion over it despite his assertions that he
was the rightful owner of the