Spouses Herrera v.

Caguiat
G.R. 139173 – February 28, 2007
J. Sandoval-Gutierrez

Topic: Contract of Sale (NCC1458)

Petitioners: Spouses Onnie Serrano And Amparo Herrera

Respondents: Godofredo Caguiat

FACTS:
 Sometime in March 1990: Caguiat (respondent) offered to buy a lot in Las Pinas, Metro Manila owned
by Sps. Herrera (Petitioners). The Herreras agreed to sell the lot for PHP 1,500/sqm. Caguiat then gave
PHP 100,000 as partial payment, and in turn, petitioners issued a Receipt for Partial Payment stating
that the partial payment was received and that the balance of the purchase price is to be paid on or
before March 23, 1990. The receipt also stated that the final Deed of Sale (DoS) will be executed on
that date.
 March 28, 1990: Caguiat informed the petitioners of his readiness to pay the balance, requesting them
to prepare the DoS. However, on April 4, 1990, the Herreras informed Caguiat that they are canceling
the transaction, and that he can recover the earnest money of PHP 100,000 anytime. Subsequently, the
Herreras wrote Caguiat stating that they delivered the check for PHP 100,000 to his counsel.
 In view of the cancellation of the contract, Caguiat filed with RTC Makati a complaint for specific
performance and damages.
 RTC MAKATI: The RTC rendered its decision in favor of Caguiat, finding that there was a
perfected Contract of Sale between the parties. It ruled that the PHP 100,000 as downpayment or
earnest money showed that there was already a perfected Contract of Sale, following NCC14821. The
Herreras’ allegation that it was Caguiat who did not appear on March 23 was not appreciated by the
Trial Court.
 COURT OF APPEALS: The CA affirmed the RTC’s ruling.

ISSUE + HELD:
W/N the Receipt for Partial Payment is a Contract to Sell or a Contract of Sale [It is a Contract to Sell]
 Petitioners contend that the Receipt is not a perfected contract of sale as provided for in Article 1458 2.
The delivery of the partial payment cannot be considered as proof of perfection of a CoS under
NCC1482 since there was no clear agreement between the parties as to the amount of
consideration.
 Words used in a contract should be given their ordinary meaning unless a technical meaning was
intended. Thus, when petitioners declared in the Receipt for Partial Payment that the PHP 100,000 is a
“Partial Payment” and that they will execute and sign the final deed of sale upon full payment, there can
be no other interpretation that they agreed to a conditional contract of sale. In a contract to sell (CTS),
ownership is retained by the seller and is not to pass to the buyer until full payment of the price.
 Proofs (Prooves? Luh siya.) that the Receipt for Partial Payment shows that the true agreement is a
CTS:
o Ownership over the property was retained by petitioners and was not to pass to respondent until
full payment of the purchase price
o The agreement between the parties was not embodied in a deed of sale
o Petitioners retained possession of the certificate of title of the lot

1
Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof
of the perfection of the contract.
2
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver
a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be
absolute or conditional.
  On NCC1482: The earnest money contemplated in this article talks of a CoS not of CTS, therefore this
is not applicable in this instant case.

RULING: WHEREFORE, we GRANT the instant Petition for Review. The challenged Decision of the Court of
Appeals is REVERSED and respondent's complaint is DISMISSED.