San Lorenzo Devt Corp (SLDC) vs CA, Babasanta and Spouses Lu (2005)

FACTS:

• Spouses Lu owned 2 parcels of farm lot at Barangay Pulong, Sta. Cruz,Sta Rosa,
Laguna (3.1616 ha)
• The lands were sold to Babasanta in 1986 with DP 50,000php as evidenced by memo
receipt. Total payments made amounted to 200,000php
• In 1989, Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed
of sale in his favor so that he could effect full payment of the purchase price.
• Babasanta filed before RTC San Pedro, Laguna, for specific performance and damages.
• In 1990, SLDC filed a Motion for Intervention, alleging it had legal interest in the
subject matter under litigation because on May 1989, the two parcels of land involved,
had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a
buyer in good faith.
• SLDC paid option money to Spouses Lu, the latter executed DOAS w/ mortgage. The
certificate of title was delivered to SLDC, free from adverse claims or notice of lis
pendens.
• RTC rendered its Decision upholding the sale of the property to SLDC. (Art 1544 -
ownership of the property should pertain to the buyer who first acquired possession of
the property.)
• On appeal, CA set aside judgment of RTC, declaring the sale bet. Babasanta and
Spouses Lu was valid and subsisting, while the DOAS w/ M was null and void on the
ground that SLDC was purchaser in bad faith.

ISSUE:

W/N Babasanta acquires ownership over the subject property

RULING:

NO.

The agreement between Babasanta and the Spouses Lu is a contract to sell and not a
contract of sale.

The receipt signed by Pacita Lu merely states that she accepted the 50,000 from Babasanta
as partial payment. The refusal of Pacita to execute DOAS in favor of Babasanta not until full
payment will be made, means that Pacita reserves the ownership of the property. Moreover,
had the sellers intended to transfer title, they could have easily executed the document of
sale in its required form simultaneously with their acceptance of the partial payment, but they
did not.

Mere sending of a letter by the vendee expressing the intention to pay without the
accompanying payment is not considered a valid tender of payment.

In case of double sale, Art 1544 governs: Should it be immovable property, the ownership
shall belong to the person acquiring it who in good faith first recorded it in the Registry of
Property. However, this article does not apply to promise to sell.

Court ruled, no double sale. CA decision reversed. RTC decision REINSTATED