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G.R. No. 154413, August 31, 2005
Tinga, J.:

FACTS: Respondent (Sps. Ramos) are the owners of 2 fishing vessels. On April 1, 1996,
respondents and petitioners (Sps. Edrada) executed an untitled handwritten document which
provides that the 2 vessels owned by respondents are now in the possession and received in good
running and serviceable order by petitioners; that the documents pertaining to the sale and
agreement of payments between them are to follow; and that the agreed price for the vessel is
P900,000. Upon the signing of document, petitioners delivered to respondents 4 postdated
checks payable to cash by petitioner Rosella Edrada, in various amounts totaling P140,000; 3 of
the checks amounting to P40,000 were honored, while the check for the amount of P100,000 was
dishonored because of a “stop payment” order. Thus, the respondent filed an action against
petitioners for specific performance with damages, before the RTC, praying that petitioners be
obliged to execute the necessary deed of sale of the two fishing vessels and to pay the balance of
the purchase price.

Respondents alleged that: Petitioners contracted to buy the two fishing vessels for the agreed
price of P900,000, as evidenced by the handwritten document, which according to them evinced
a contract to buy. However, despite delivery of said vessels and repeated oral demands,
petitioners failed to pay the balance.

Petitioners’ answer: The document sued upon merely embodies an agreement brought about by
the loans they extended to respondents. According to petitioners, respondents allowed them to
manage or administer the fishing vessels as a business on the understanding that should they find
the business profitable, the vessels would be sold to them for P900,000. But petitioners “decided
to call it quits” after spending a hefty sum for the repair and maintenance of the vessels which
were already in dilapidated condition.

RTC rendered judgment in favor of herein respondents holding that the document is a perfected
contract of sale. CA affirmed.

ISSUE: WON the RTC and the CA were correct in ruling that the document is a perfected
contract of sale thus creating an obligatory force either for the transfer of the vessels, or the
rendition of payments as part of the purchase price.

RULING: NO. The court ruled that, at most, the agreement bares only their intention to enter
into either a contract to sells or a contract of sale. A contract of sale is defined as an agreement
whereby one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefore a price certain in money or its
equivalent. It must evince the consent on the part of the seller to transfer and deliver and on the
part of the buyer to pay. An examination of the document reveals that there is no perfected
contract of sale. The agreement may confirm the receipt by respondents of the two vessels and
their purchase price. However, there is no equivocal agreement to transfer ownership of the
vessel, but a mere commitment that “documents pertaining to the sale and agreement of
payments…[are] to follow.” Evidently, the document or documents which would formalize the
transfer of ownership and contain the terms of payment of the purchase price, or the period when
such would become due and demandable, have yet to be executed. But no such document was
executed and no such terms were stipulated upon.

Assuming arguendo that the document evinces a perfected contract of sale, the absence of
definite terms of payment therein would preclude its enforcement by the respondents through the
instant Complaint. A requisite for the judicial enforcement of an obligation is that the same is
due and demandable. The absence of a stipulated period by which the purchase price should be
paid indicates that at the time of the filing of the complaint, the obligation to pay was not yet due
and demandable.

Respondents, during trial, did claim the existence of a period. Respondent Carmencita
Ramos, during cross-examination, claimed that the supposed balance shall be paid on 30 June
1996. But how do respondents explain why the Complaint was filed on 3 June 1996? Assuming
that the 30 June 1996 period was duly agreed upon by the parties, the filing of the Complaint was
evidently premature, as no cause of action had accrued yet. There could not have been any
breach of obligation because on the date the action was filed, the alleged maturity date for the
payment of the balance had not yet arrived.

In order that respondents could have a valid cause of action, it is essential that there must have
been a stipulated period within which the payment would have become due and demandable. If
the parties themselves could not come into agreement, the courts may be asked to fix the period
of the obligation, under Article 1197 of the Civil Code. The respondents did not avail of such
relief prior to the filing of the instant Complaint; thus, the action should fail owing to its obvious