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G.R. No. 158227: Keppel Bank Phils., Inc. v. Philip Adao

October 19, 2005, 473 scra 372
Contract to Sell vs Contract of Sale

Project Movers Realty and Development Corporation (PMRDC) owe P200M to Keppel Banks.
By way of dacion en pago, PMRDC transferred and conveyed to the bank 25 of its properties
consisting of townhouses and condominiums. One of the units transferred was occupied by
Adao.

In Feb 2000, the Bank demanded Adao to vacate. Adao refused. An ejectment case was filed.
Adao averred that he had a Contract to Sell with PMRDC. He presented an affidavit showing
that he made full payment thereof. The MeTC, RTC and CA ruled in favor of Adao. The lower
courts ordered Keppel to respect the contract to sell between Adao and PMRDC for when the
properties were transferred by way of dacion en pago, the bank merely stepped on the shoes of
PMRDC.

ISSUE: Whether or not Keppel is bound by the contract to sell.

HELD: No. Though Keppel is not a purchaser in good faith for not looking into the property
(checking if it was infirm and free from other claims), the bank is not bound by it.

The contract to sell does not by itself give Adao 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. Adao
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.

Adao must also, aside from showing an affidavit, show other proof of full payment made
to PMRDC. Considering that Adao 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 upon the owner’s demand to vacate the property.