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February 28, 2007 | Sandoval-Guitierrez, J. | Definition-Contract of Sale

1. Spouses Onnie and Amparo Herrera are ISSUE: WON the document entitled "Receipt for
the registered owners of a lot located in Partial Payment" is a contract to sell or a contract
Las Pias. of sale CONTRACT TO SELL
2. Mar 1990: Godofredo Caguiat offered to
buy the lot. Sps Herrera agreed to sell it at HELD: Petition for Review GRANTED. CA decision
P1,500 per square meter. C gave the Sps REVERSED.
P100k as partial payment. In turn, the Sps
gave a receipt (Receipt for Partial Payment RATIO:
of Lot No. 23) stating that C promised to 1. Stages of a contract of sale are:
pay the balance of the purchase price on (1) Negotiation - covering the period from
or before Mar 23, 1990 and that the Sps the time the prospective contracting
will execute and sign the final deed of sale parties indicate interest in the contract
on the same date. Both husband and wife to the time the contract is perfected;
signed the receipt. (2) Perfection - Takes place upon the
3. Mar 28, 1990: C wrote the Sps informing concurrence of the essential elements
them of his readiness to pay the balance of the sale, which is the meeting of the
of the contract price and requesting them minds of the parties as to the object of
to prepare the final deed of sale. the contract and upon the price; and
4. Apr 4, 1990: The Sps sent a letter stating (3) Consummation - Begins when the
that they are canceling the transaction as parties perform their respective
Amparo is leaving for abroad on or before undertakings under the contract of
Apr 15, 1990. Additionally, he can recover sale, culminating in the
the earnest money of P100k anytime. extinguishment thereof.
5. Apr 6, 1990: The Sps wrote C stating that 2. Using stat con (words used therein should
they delivered to his counsel a PNB be given their natural and ordinary
Managers Check dated April 6, 1990 in meaning unless a technical meaning was
the amount of P100k payable to him. intended), the Receipt for Partial
6. C filed a complaint for specific Payment meant that the parties agreed
performance at the RTC Br 63 Makati City. to a conditional contract of sale,
7. TC: There was a perfected contract of sale consummation of which is subject only to
between the parties. The Sps were the full payment of the purchase price.
ordered to execute a final deed of sale in 3. A contract to sell is like a conditional
favor of Caguiat. sale where the efficacy or obligatory force
a. The P100k (whether as downpayment of the vendor's obligation to transfer title
or earnest money) showed that there is subordinated to the happening of a
was already a perfected contract. future and uncertain event. If the
b. Court cited Art 1482 CC: Whenever suspensive condition does not take place,
earnest money is given in a contract the parties would stand as if the
of sale, it shall be considered as part conditional obligation had never
of the price and as proof of the existed. The suspensive condition is
perfection of the contract. commonly full payment of the purchase
c. C was eager to push through with the price.
sale as evidenced by the letters he 4. Differences between a contract to sell and
sent to the Sps. a contract of sale:
d. C had the balance of the purchase Contract of sale
price ready for payment. title passes to the buyer upon delivery
8. CA: Affirmed TC. Denied the Sps Motion of the thing sold
for Reconsideration. non-payment of the price is a negative
9. Petitioners contention: resolutory condition
a. The Receipt is not a perfected the vendor has lost and cannot
contract of sale as provided for in Art recover the ownership of the land sold
1458 in relation to Art 1475 of the CC. until and unless the contract is set
b. P100k cannot be considered as proof aside
of the perfection of a contract of sale Contract to sell
under Art 1482 CC since there was no the ownership is reserved in the seller
clear agreement between the parties and is not to pass until the full
as to the amount of consideration.
payment, of the purchase price is that the parties did not intend
made immediate transfer of ownership, but
full payment is a positive suspensive only a transfer after full payment of
condition the purchase price.
the title remains in the vendor if the Sps retained possession of the certificate
vendee does not comply with the of title of the lot.
condition precedent of making 6. When Art 1482 CC speaks of earnest
payment at the time specified in the money it is in the context of a contract
contract of sale.
5. The "Receipt for Partial Payment" shows 7. Here, the earnest money was given in a
that the true agreement between the contract to sell. The earnest money forms
parties is a contract to sell. part of the consideration only if the sale is
Ownership over the property was consummated upon full payment of the
retained by the Sps and was not to purchase price. Thus, Art 1482 does not
pass to C until full payment of the apply.
purchase price. 8. The suspensive condition (payment of the
Sps have the right to rescind balance by respondent) did not take place.
unilaterally the contract the moment C cannot compel the Sps to transfer
C fails to pay within the fixed period. ownership of the property to him.
The agreement between the parties
was not embodied in a deed of sale.
The absence of a formal deed of
conveyance is a strong indication