De Leon vs. Benita T. Ong GR No. 170405, Feb.

2, 2010 Absolute and Conditional Sales Facts: On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T. Ong (respondent). The said properties were mortgaged to a financial institution; Real Savings & Loan Association Inc. (RSLAI). The parties then executed a notarized deed of absolute sale with assumption of mortgage. As indicated in the deed of mortgage, the parties stipulated that the petitioner (de leon) shall execute a deed of assumption of mortgage in favor of Ong (respondent) after full payment of the P415,000. They also agreed that the respondent (Ong) shall assume the mortgage. The respondent then subsequently gave petitioner P415,000 as partial payment. On the other hand, de leon handed the keys to Ong and de leon wrote a letter to inform RSLAI that the mortgage will be assumed by Ong. Thereafter, the respondent took repairs and made improvements in the properties. Subsequently, respondent learned that the same properties were sold to a certain Viloria after March 10, 1993 and changed the locks, rendering the keys given to her useless. Respondent proceeded to RSLAI but she was informed that the mortgage has been fully paid and that the titles have been given to the said person. Respondent then filed a complaint for specific performance and declaration of nullity of the second sale and damages. The petitioner contended that respondent does not have a cause of action against him because the sale was subject to a condition which requires the approval of RSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell. The RTC dismissed the case. On appeal, the CA upheld the sale to respondent and nullified the sale to Viloria. Petitioner moved for reconsideration to the SC. Issue: Whether the parties entered into a contract of sale or a contract to sell? Held: In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. The non-payment of the price is a negative resolutory condition. Contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price. In the present case, the deed executed by the parties did not show that the owner intends to reserve ownership of the properties. The terms and conditions affected only the manner of payment and not the immediate transfer of ownership. It was clear that the owner intended a sale because he unqualifiedly delivered and transferred ownership of the properties to the respondent.