San Lorenzo Dev’t Corp v.
CA (2005)
Topic: No Form
PARTIES:
Petitioners: San Lorenzo Development Corporation
Respondents: CA, Pablo S. Babasanta, Miguel Lu, Pacita Zavalla Lua
FACTS:
August 20, 1986 – Spouses Lu purportedly sold the 2 parcels of land in Sta. Rosa
Laguna to Pablo Babasanta for the price of P15 per sqm. Babasanta made a down
payment of P50K as evidenced by a memorandum receipt issued by Pacita Lu.
Several other payments totaling P200K were made by Babasanta.
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 notified the spouses about having received the same info that the
spouses sold the same property to another without his knowledge and consent. He
demanded the second sale be cancelled and a final deed of sale be issued in his
favor.
Pacita Lu wrote a letter to Babasanta wherein she acknowledged having agreed to
sell the property to him at P15 per sqm. However, she reminded Babasanta that
when the balance of the purchase price became due, he requested for a reduction of
the price and when she refused, Babasanta backed out of the sale. Pacita added that
she returned the sum of P50K to Babasanta through Eugenio Oya.
June 2, 1989 – Babasanta filed a Complaint for Specific Performance and Damages
against the Lu’s before the RTC Laguna. He alleged that the lands had been sold to
him by the spouses and despite repeated demands of the execution of a final deed
of sale, the Lu’s allegedly refused.
The Lu’s answered alleged that Pacita Lu obtained loans from Babasanta and when
the total advances of Pacita reached P50K, Pacita and Babasanta, without the
knowledge and consent of Miguel Lu, had verbally agreed to transfeorm the
transaction into a contract to sell thw two parcels of land o Babasanta with the P50K
to be considered as down payment for the property and the balance to be paid on or
before Dec. 31, 1987.
Lu added that the total payments made by Babasanta amounted only to P200K and
the latter allegedly failed to pay the balance of P260K despite repeated demands.
Babasanta had purportedly asked Pacita for a reduction of the price from P15 to P12
per sqm and when the Lu’s refused, Babasanta rescinded the contract to sell and
declared that the original loan transaction just be carried out in that the spouses
would be indebted to him in the amount of P20K.
Jan. 19, 1990 – San Lorenzo Development Corporation (SLDC) filed a Motion for
Intervention before the trial court. SLDC alleged that it had legal interest in the
subject matter because on May 3, 1989, the 2 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.
Babasanta argued that SLDC had no legal interest in the case because the 2 parcels
of land involved had already been conveyed to him by the Lu’s and hence, the
vendors were without legal capacity to transfer or dispose of the same.
SLDC alleged that on February 11, 1989, the Spouses Lu executed in its favor an
Option to Buy the lots subject of the complaint. It paid an option money in the
amount of P316K out of the total consideration for the purchase of the 2 lots of
P1.2M. After the Spouses received the P623K, they executed a Deed of Absolute Sale
with Mortgage.
The RTC rendered its decision upholding the sale of the property to SLDC. It ordered
the Spouses Lu to pay Babasanta the sum of P200K with legal interest plus the
further sum of P50K.
Applying Art. 1544, the trial court ruled that both Babasanta and SLDC did not
register the respective sales in their favor, ownership of the property should pertain
to the buyer who first acquired the possession of the property. The trial court
equated the execution of a public instrument in favor or SLDC as sufficient delivery
of the property to the latter.
The CA set aside the judgment of the trial court. It declared that the sale between
Babasanta and the Spouses Lu was valid and subsisting and ordered the spouses to
execute the necessary Deed of Conveyance in favor of Babasanta. The CA ruled that
the Absolute Deed of Sale with Mortgage in favor of SLDC was null and void on the
ground that SLDC was a purchaser in bad faith.
ISSUES/HELD: W/N the memorandum receipt signed by Pacita Lu should be considered a
perfected contract of sale. (NO)
The facts show, as well as the evidence presented by the parties, irresistibly leads to
the conclusion that the agreement between Babasanta and the Spouses Lu is a
contract to sell and not a contract of sale.
Being a consensual contract, a sale is perfected by mere consent and from that
moment, the parties may reciprocally demand performance.
The receipt signed by Pacita Lu merely states that she accepted P50K from
Babasanta as partial payment of 3.6 hectares of farm lot situated in Sta. Rosa,
Laguna. While there is no stipulation that the seller reserves the ownership of the
property until full payment of the price which is a distinguishing feature of a contract
to sell, the subsequent acts of the parties convince us that the Spouses Lu never
intended to transfer ownership to Babasanta except upon full payment of the
purchase price.
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. Doubtlessly, the receipt signed by Pacita Lu
should legally be considered as a perfected contract to sell.
JUDGMENT: Petition GRANTED. Judgment is reversed and set aside.
DOCTRINE:
Contracts, in general, are perfected by mere consent, which is manifested by the
meeting of the offer and the acceptance upon the thing which are to constitute the
contract. The offer must be certain and the acceptance absolute.
Moreover, contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.
