SPOUSES ONNIE SERRANO AND AMPARO HERRERA vs.

GODOFREDO
CAGUIAT, G.R. No. 139173, February 28, 2007

Facts:
Petitioners are registered owners of a lot located in Las Piñas. On March 23, 1900, respondent
offered to buy the lot and petitioners agreed to sell it at 1,500 ₱ per square meter. Respondent then
gave ₱100,000 as partial payment. A few days after, respondent, through his counsel, wrote
petitioners informing them of his readiness to pay the balance of the contract price and requesting
them to prepare the Deed of Sale.

Petitioners, through counsel, informed respondent in a letter that Amparo Herrera would be leaving
for abroad on or before April 15, 1990 and they are canceling the transaction and that respondent
may recover the earnest money (₱100,000) anytime. Petitioners also wrote him stating that they
already delivered a manager’s check to his counsel in said amount. Respondent thus filed a
complaint for specific performance and damages with the RTC of Makati. The trial court ruled
that there was already a perfected contract of sale between the parties and ordered the petitioners
to execute a final deed of sale in favor of respondent. The Court of appeals affirmed said decision.

Issue: Whether or not there was a contract of sale.

Ruling: The transaction was a contract to sell.

“When petitioners declared in the “Receipt for Partial Payment” that they –
“RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED
THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS…
MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR
BEFORE MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL
DEED OF SALE ON THIS DATE.” there can be no other interpretation than that they agreed to
a conditional contract of sale, consummation of which is subject only to the full payment of the
purchase price.

“A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the
vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain
event, so that if the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed. The suspensive condition is commonly full payment of
the purchase price.

“In this case, the “Receipt for Partial Payment” shows that the true agreement between the parties
is a contract to sell. “First, ownership over the property was retained by petitioners and was not to
pass to respondent until full payment of the purchase price. Second, 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 that the parties did not intend immediate transfer of ownership, but only a transfer after
full payment of the purchase price. Third, petitioners retained possession of the certificate of title
of the lot.
“It is true that Article 1482 provides that whenever earnest money is given in a contract of sale, it
shall be considered as part of the price and proof of the perfection of the contract. However, this
article speaks of earnest money given in a contract of sale. In this case, the earnest money was
given in a contract to sell. The earnest money forms part of the consideration only if the sale is
consummated upon full payment of the purchase price. “Clearly, respondent cannot compel
petitioners to transfer ownership of the property to him.”