Civil Law

Keppel Bank Philippines, Inc. vs Philip Adao

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G.R. NO. 158227 – 473 SCRA 372 – Civil Law – Law on Sales – Contract to Sell vs Contract of Sale

Civil Law – Obligations and Contracts – Positive Suspensive Condition

Project Movers Realty and Development Corporation (PMRDC) owe P200M to Keppel Bank Philippines, Inc. 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 Philip Adao.

In February 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 into 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 title of 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.

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