G.R. No. 170405, February 2, 2010
RAYMUNDO S. DE LEON, Petitioner, vs. BENITA T. ONG, Respondent.

FACTS

On March 10, 1993, petitioner Raymundo S. De Leon sold three parcels of land in Antipolo, Rizal, to respondent Benita T. Ong through a notarized Deed of Absolute Sale with Assumption of Mortgage. The purchase price was ₱1.1 million, with respondent paying ₱415,500 directly to petitioner and assuming the outstanding mortgage balance of ₱684,500 with Real Savings and Loan Association, Inc. (RSLAI). Petitioner delivered the keys to the properties and authorized RSLAI to accept payment from respondent and release the certificates of title. Respondent made improvements on the properties and informed RSLAI of her assumption of the loan. Subsequently, respondent discovered that petitioner had sold the same properties to Leona Viloria, changed the locks, and had fully paid his loan to RSLAI, retrieving the titles. Respondent filed a complaint for specific performance, declaration of nullity of the second sale, and damages. The Regional Trial Court (RTC) dismissed the complaint, ruling the agreement was a contract to sell subject to the suspensive condition of RSLAI’s approval of the mortgage assumption, which did not occur. The Court of Appeals (CA) reversed the RTC, declaring the deed a contract of sale, upholding the first sale, nullifying the second sale, and awarding damages to respondent. Petitioner appealed to the Supreme Court.

ISSUE

Whether the parties entered into a contract of sale or a contract to sell.

RULING

The Supreme Court modified the CA decision. It ruled that the parties entered into a contract of sale, not a contract to sell. The deed stated the sale was “in a manner absolute and irrevocable,” and its terms pertained only to the manner of payment, not the transfer of ownership. The execution of the notarized deed, delivery of keys, and petitioner’s authorization to RSLAI constituted delivery and transfer of ownership to respondent. Even assuming the RSLAI approval was a condition, petitioner prevented its fulfillment by paying the loan and retrieving the titles, thus deeming the condition fulfilled under Article 1186 of the Civil Code. The Court further ruled that the second sale to Viloria was not void but constituted a double sale under Article 1544. Respondent was a purchaser in good faith as she bought the property without notice of any defect, paid a partial price, and her obligation to assume the mortgage became impossible without her fault due to petitioner’s actions, releasing her under Article 1266. The ownership of the properties, being immovable, would belong to the buyer who first registers the sale in good faith. Since neither sale was registered, and respondent was first in possession in good faith, she had a better right. The CA’s award of damages to respondent was upheld, and she was ordered to reimburse petitioner for the amount he paid to RSLAI to extinguish the mortgage.