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372 SUPREME COURT REPORTS ANNOTATED

Keppel Bank Philippines, Inc. vs. Adao
*

G.R. No. 158227. October 19, 2005.

KEPPEL BANK PHILIPPINES, INC., petitioner, vs.

PHILIP ADAO, respondent.

Ejectment; Forcible Entry; Unlawful Detainer; The Supreme

Court consistently held that the only issue for resolution in an
ejectment case is physical or material possession on the property
involved, independent of any claim of ownership by any of the
party litigants. However, the question of ownership may be
provisionally ruled upon for the sole purpose of determining who is
entitled to possession de facto.—In previous cases, this Court
consistently held that the only issue for resolution in an ejectment
case is physical or material possession of the property involved,
independent of any claim of ownership by any of the party
litigants. Ejectment cases are designed to summarily restore
physical possession to one who has been illegally deprived of such
possession, without prejudice to the settlement of the parties’
opposing claims of juridical possession in

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* FIRST DIVISION.

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VOL. 473, OCTOBER 19, 2005 373

Keppel Bank Philippines, Inc. vs. Adao

appropriate proceedings. We also said that the question of

ownership may be provisionally ruled upon for the sole purpose of
determining who is entitled to possession de facto.

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Banks and Banking; Torrens System; Persons dealing with

registered property can rely solely on the certificate of title and
need not go beyond it. However, this rule does not apply to banks.
Banks are required to exercise more care and prudence than
private individuals in dealing even with registered properties for
their business is affected with public interest.—It is true that
persons dealing with registered property can rely solely on the
certificate of title and need not go beyond it. However, as correctly
held by the Court of Appeals, this rule does not apply to banks.
Banks are required to exercise more care and prudence than
private individuals in dealing even with registered properties for
their business is affected with public interest. As master of its
business, petitioner should have sent its representatives to check
the assigned properties before signing the compromise agreement
and it would have discovered that respondent was already
occupying one of the condominium units and that a contract to
sell existed between respondent and PMRDC. In our view,
petitioner was not a purchaser in good faith and we are
constrained to rule that petitioner is bound by the contract to sell.
Civil Law; Contracts; Sales; Contract to Sell; Unlike in a
contract of sale, in a contract to sell, there is yet no actual sale nor
any transfer of title, until and unless, full payment is made.—In
this case, the contract to sell does not by itself give respondent the
right to possess the property. Unlike in a contract of sale, here in
a contract to sell, there is yet no actual sale nor any transfer of
title, until and unless, full payment is made. The payment of the
purchase price is a positive suspensive condition, the failure of
which is not a breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey title from
acquiring an obligatory force. Respondent must have fully paid
the price to acquire title over the property and the right to retain
possession thereof. In cases of non-payment, the unpaid seller can
avail of the remedy of ejectment since he retains ownership of the
property.
Ejectment; Forcible Entry; Unlawful Detainer; Even though
ejectment cases are governed by the Rules on Summary Procedure,
there is still need to present substantial evidence to support
respondent’s claim of full payment.—Even though ejectment cases
are

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Keppel Bank Philippines, Inc. vs. Adao

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governed by the Rules on Summary Procedure, there is still need

to present substantial evidence to support respondent’s claim of
full payment. Section 9 of the Rules on Summary Procedure
provides that parties shall submit, together with their position
papers, the affidavits of their witnesses and other evidence on the
factual issues defined. His lone affidavit is self-serving, and
cannot be considered as substantial evidence. As a general rule,
one who pleads payment has the burden of proving it. Even where
the petitioner alleged non-payment, the general rule is that the
burden rests on the respondent to prove payment, rather than on
the petitioner to prove non-payment.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the opinion of the Court.

Divine Grace Fetalvero-Dagoy for Keppel Bank
Philippines, Inc.
Pedro Delgado Diwa for respondent.

QUISUMBING, J.:
1

On appeal is the Decision dated April 30, 2003 of the Court

of Appeals in CA G.R. SP No. 71477. The Court of Appeals
affirmed the Decision of the Regional Trial Court which
had earlier sustained the Decision of the Metropolitan Trial
Court, dismissing the ejectment case against respondent
Philip Adao.
The case stemmed from the court-approved Compromise
Agreement between petitioner Keppel Bank and Project2
Movers Realty and Development Corporation (PMRDC).
By virtue of the agreement, PMRDC through its President
Mario P. Villamor assigned, transferred and conveyed to
petitioner, by

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1 Rollo, pp. 7-14. Penned by Associate Justice Elvi John S. Asuncion,

with Associate Justices Ruben T. Reyes, and Lucas P. Bersamin
concurring.
2 Id., at pp. 50-55.

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Keppel Bank Philippines, Inc. vs. Adao

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way of dacion en pago, twenty-five properties consisting of

townhouses, condominium units and vacant lots, as partial
settlement of their two hundred million pesos
(P200,000,000) outstanding obligation. Pursuant thereto,
petitioner secured Condominium Certificates of Title over
the units.
Upon inspection, petitioner found respondent Philip
Adao occupying Unit 4 of the Luxor Villas Townhouse, one
of the 25 properties above-mentioned. On February 18,
2000, petitioner sent a written demand to respondent to
vacate the unit within 30 days from receipt of the notice.
Respondent refused and, instead, offered to purchase the
unit. However, the parties failed to reach an agreement on
the matter.
On October 19, 2000, petitioner sent respondent a final
demand to vacate. Since the demand was not heeded,
petitioner filed a civil case for ejectment docketed as Civil
Case No. 8911 against respondent.
In his defense, respondent alleged that he has long been4
occupying the contested unit by virtue of a Contract to Sell
dated February 7, 1995 between him and PMRDC. He
stated that to avoid litigation, he offered to purchase the
unit for 2.5 million pesos, in addition to the 3 million pesos
he already paid to PMRDC. He added that had his pre-
agreed marketing services with PMRDC been duly audited
to his credit, the unit would have already been fully paid.
Respondent contended that petitioner’s remedy is to
demand from PMRDC the immediate replacement of the
property as provided
5
in their Compromise Agreement and
Dacion en Pago.
On August 6, 2001, the MeTC dismissed the complaint
and held Adao as the lawful possessor of the property.
Petitioner appealed to the Regional Trial Court, which, 6
on
March 4, 2002, affirmed in toto the MeTC decision. The
RTC held that,

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3 Id., at pp. 56-58.

4 Id., at pp. 168-173.
5 Id., at pp. 66-67.
6 Id., at p. 83.

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by virtue of the dacion en pago, petitioner merely stepped

into the shoes of PMRDC. Hence, petitioner must respect
the contract to sell between PMRDC and respondent. It
also held that petitioner failed to show non-payment by
respondent, and that in case of non-payment, the remedy of
the vendor is either rescission with recovery of possession
or specific 7performance based on breach of contract, but not
ejectment. Petitioner moved for reconsideration but it was
denied on June 5, 2002.
Petitioner elevated the case to the Court of Appeals. The
appellate court held that petitioner must respect the
contract to sell though such is not annotated in the
certificate of title because petitioner was not a purchaser in
good faith, having failed to exercise due diligence required
of banks. As an unpaid seller, petitioner
8
can only rescind
the contract under Article 1526 of the Civil Code which
does not sanction the filing of an action for ejectment. The
Court of Appeals affirmed the RTC decision and,
subsequently, denied reconsideration. It decreed as follows:

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7 Id., at pp. 80-81.

8 Art. 1526. Subject to the provisions of this Title, notwithstanding that
the ownership in the goods may have passed to the buyer, the unpaid
seller of goods, as such, has:

(1) A lien on the goods or right to retain them for the price while he is
in possession of them;
(2) In case of the insolvency of the buyer, a right of stopping the goods
in transitu after he has parted with the possession of them;
(3) A right of resale as limited by this Title;
(4) A right to rescind the sale as likewise limited by this Title.

Where the ownership of the goods has not passed to the buyer, the
unpaid seller has, in addition to his other remedies, a right of withholding
delivery similar to and coextensive with his rights of lien and stoppage in
transitu where the ownership has passed to the buyer.

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VOL. 473, OCTOBER 19, 2005 377

Keppel Bank Philippines, Inc. vs. Adao

“WHEREFORE, premises considered, the instant petition is

DENIED. The assailed March 4, 2002 decision of the RTC is
hereby AFFIRMED.9
SO ORDERED.”

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Petitioner now comes before us and alleges that the Court

of Appeals seriously erred when:

i. … it ruled that the petitioner Bank must respect

the terms and conditions of the Contract to Sell
allegedly executed on 07 February 1995 despite the
fact that petitioner had no knowledge thereof and
that said Contract to Sell was not annotated on
CCT No. 9522-R prior to the execution of the court-
approved Compromise Agreement and Dacion en
Pago between the petitioner and PMRDC.
ii. … it affirmed the finding of the RTC that
respondent had fully paid the purchase price under
the Contract to Sell on the basis of respondent’s
unsubstantiated and general allegation in his
Answer with Compulsory Counterclaim and when it
shifted the burden of proof upon petitioner to prove
that respondent had not fully paid the alleged
purchase price. Such ruling contravenes the well-
settled legal rule that “he who alleges must prove
the same.”
iii. … it affirmed the ruling of the RTC that the
complaint for ejectment filed by petitioner is not the
proper remedy.

iii.a The RTC’s suggested remedy, as affirmed by the

Court of Appeals, of filing an action for “rescission
with recovery of possession based on breach of
contract” wrongfully presumes that the alleged
Contract to Sell is binding on the petitioner.
iii.b The RTC’s suggested remedy, as affirmed by the
Court of Appeals, is contrary to law and
jurisprudence because in a contract to sell,
ownership is retained by the seller until the buyer
has fully paid the purchase price;

iv. … it affirmed the ruling of the RTC that petitioner’s

recourse must be against PMRDC and/or its
President, Mario P. Villamor.
v. … it affirmed the RTC’s position that it was not
duty-bound to rule on the issue of ownership to
settle the issue of posses-

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9 Rollo, p. 14.

378

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378 SUPREME COURT REPORTS ANNOTATED

Keppel Bank Philippines, Inc. vs. Adao

sion and relied heavily on the alleged Contract to Sell10 as the basis
of respondent’s right to possess the Subject Property.

In sum, the issues for our resolution are: (1) Is petitioner

bound by the contract to sell? (2) Is the remedy of ejectment
legally available to the petitioner? and (3) Who is entitled
to physical possession of the property?
Petitioner contends he is not bound by the contract to
sell as it was not annotated in the certificate of title. It
maintains that the contract to sell specifically provides that
title shall be transferred to the respondent only after full
payment of the purchase price. Not having fully paid the
price, respondent is not the owner. Petitioner adds that
respondent has the burden of proving payment since under
the rules on evidence, a party must prove his own
affirmative allegation. Petitioner also maintains that
PMRDC merely tolerated the possession by the respondent
but such possession became illegal when, as the new owner,
it demanded that respondent immediately vacate the
property.
Respondent counters that an ejectment suit is merely
concerned with possession de facto and the issue of
ownership need not be resolved. He claims to have a better
right of possession having fully paid the purchase price.
Further, respondent asserts that petitioner, being a
successor-in-interest of PMRDC, is bound by the Contract
to Sell. Finally, respondent avers that ejectment cases are
governed by the Rules on Summary Procedure which relies
merely on affidavits
11
and position papers submitted. Hence,
his Affidavit dated June 25, 2001 was sufficient to prove
full payment.
Prefatorily, this case started with a complaint for
ejectment filed with the MeTC. In previous cases, this
Court consistently held that the only issue for resolution in
an ejectment case is physical or material possession of the
property involved, independent of any claim of ownership
by any of the

_______________

10 Id., at pp. 23-24.

11 Id., at pp. 174-176.

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VOL. 473, OCTOBER 19, 2005 379

Keppel Bank Philippines, Inc. vs. Adao
12

party litigants. Ejectment cases are designed to

summarily restore physical possession to one who has been
illegally deprived of such possession, without prejudice to
the settlement of the parties’ opposing13 claims of juridical
possession in appropriate proceedings. We also said that
the question of ownership may be provisionally ruled upon
for the sole purpose 14
of determining who is entitled to
possession de facto.
Respondent bases his right of possession on the Contract
to Sell. On the other hand, petitioner argues it is not bound
by the said contract since the same is not annotated in the
Certificate of Title.
It is true that persons dealing with registered property
can rely solely
15
on the certificate of title and need not go
beyond it. However, as correctly held by the Court of
Appeals, this rule does not apply to banks. Banks are
required to exercise more care and prudence than private
individuals in dealing even with registered properties
16
for
their business is affected with public interest. As master
of its business, petitioner should have sent its
representatives to check the assigned properties before
signing the compromise agreement and it would have
discovered that respondent was already occupying one of
the condominium units and that a contract to sell existed
between respondent and PMRDC. In our view, petitioner
was not a purchaser in good faith and we are constrained to
rule that petitioner is bound by the contract to sell.

_______________

12 National Onion Growers Cooperative Marketing Association, Inc. v.

Lo, G.R. No. 141493, 28 July 2004, 435 SCRA 358, 362.
13 Barnes v. Quijano Padilla, G.R. No. 160753, 28 June 2005, 461 SCRA
533, 543.
14 Umpoc v. Mercado, G.R. No. 158166, 21 January 2005, 449 SCRA
220, 238-239.
15 Lim v. Chuatoco, G.R. No. 161861, 11 March 2005, 453 SCRA 308,
322-323.
16 Manlapat v. Court of Appeals, G.R. No. 125585, 8 June 2005, 459
SCRA 412, 432.

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Keppel Bank Philippines, Inc. vs. Adao

Nonetheless, in this case, the contract to sell does not by

itself give respondent the right to possess the property.
Unlike in a contract of sale, here in a contract to sell, there
is yet no actual sale nor any transfer of title, until and
unless, full payment is made. The payment of the purchase
price is a positive suspensive condition, the failure of which
is not a breach, casual or serious, but a situation that
prevents the obligation of the17 vendor to convey title from
acquiring an obligatory force. Respondent must have fully
paid the price to acquire title over the property and the
right to retain possession thereof. In cases of non-payment,
the unpaid seller can avail of the remedy of ejectment since
he retains ownership of the property.
Respondent avers that since ejectment cases are decided
merely on the basis of affidavits and position papers, his
affidavit before the MeTC sufficiently proves his full
payment of the purchase price. Nothing could be more
erroneous because even though ejectment cases are
governed by the Rules on Summary Procedure, there is still
need to present substantial evidence 18 to support
respondent’s claim of full payment. Section 9 of the Rules
on Summary Procedure provides that parties shall submit,
together with their position papers, the affidavits of their
witnesses and other evidence on the factual issues defined.
His lone affidavit is self-serving, and cannot be considered
as substantial evidence. As a general rule, one who pleads
payment has the burden of proving it. Even where the
petitioner alleged non-payment, the general rule is that the

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17 Rivera v. Del Rosario, G.R. No. 144934, 15 January 2004, 419 SCRA
626, 638.
18 SEC. 9. Submission of affidavits and position papers.—Within ten
(10) days from receipt of the order mentioned in the next preceding
section, the parties shall submit the affidavits of their witnesses and other
evidence on the factual issues defined in the order, together with their
position papers setting forth the law and the facts relied upon by them.

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VOL. 473, OCTOBER 19, 2005 381

Keppel Bank Philippines, Inc. vs. Adao

burden rests on the respondent to prove payment,

19
rather
than on the petitioner to prove non-payment.

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Considering that respondent failed to discharge the

burden of proving payment, he cannot claim ownership of
the property and his possession thereof was by mere
tolerance. His continued possession became unlawful
20
upon
the owner’s demand to vacate the property. We stress,
however, that this adjudication, is only a provisional
determination of ownership
21
for the purpose of settling the
issue of possession, and does not bar or prejudice an action
22

between the same parties involving title to the property.

WHEREFORE, the petition is GRANTED. The Decision
dated April 30, 2003 of the Court of Appeals in CA G.R. SP
No. 71477 is REVERSED and SET ASIDE. Respondent is
hereby ordered to vacate the property.
Costs against respondent.
SO ORDERED.

Davide, Jr. (C.J., Chairman), Ynares-Santiago and

Carpio, JJ., concur.
Azcuna, J., I take no part. I was a director of Keppel
Bank.

Petition granted, judgment reversed and set aside.

Notes.—The issue in an ejectment case is the right to

physical possession of the premises or possession de facto.
(Del Rosario vs. Court of Appeals, 241 SCRA 519 [1995])

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19 See Mayon Hotel and Restaurant v. Adana, G.R. No. 157634, 16 May
2005, 458 SCRA 609, 641-642.
20 Supra, note 14 at pp. 235-236.
21 Supra, note 12.
22 Co v. Militar, G.R. No. 149912, 29 January 2004, 421 SCRA 455, 459.

382

382 SUPREME COURT REPORTS ANNOTATED

Basmayor vs. Atencio

While it is true that a person dealing with registered lands

need not go beyond the certificate of title, it is likewise a
well-settled rule that a purchaser or mortgagee cannot
close his eyes to facts which should put a reasonable man
on his guard. (Adriano vs. Pangilinan, 373 SCRA 544
[2002])

——o0o——

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