SPOUSES SERRANO VS.

CAGUIAT 517 SCRA 57

G.R. NO. 139173 FEBRUARY 28, 2007

FACTS:

Spouses Serrano are registered owners of a lot located in Las Pinas. On March 23, 1990, Caguiat offered
to buy the lot and the Serranos agreed to sell it at 1,500.00/sqm. Caguiat then paid them a partial
payment of 100,000.00 as evidenced by a receipt indicating therein Caguiat’s promise to pay the
remaining balance.

Respondent, after making known his readiness to pay the balance, requested from petitioners the
preparation of the necessary Deed of Sale. Petitioners 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 relying on Article 1482 of the Civil Code ruled that the payment of 100,000.00 being an
earnest money signified perfection of the contract of sale and ordered the petitioners to execute a final
deed of sale in favor of respondent. The Court of Appeals denied petitioners’ motion for reconsideration
in affirmation of the lower court’s decision.

ISSUE:

WON there was a contract of sale. NO.

HELD:

The transaction was a contract to sell. When petitioners declared in the Receipt of 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 Pinas…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.

documents shall be executed by the Nabuses. The Pacsons thereafter occupied the land and built an
auto shop thereon. In 1977, Bate Nabus died,leaving Julie Nabus and her daughter Michelle to execute a
Deed of Extrajudicial Settlement over the property. Anew TCT was issued in their names in 1984. By
1984, the Pacsons have made 364 payments, leaving a balance of57k. Sometime later, Julie Nabus
approached Joaquin Pacson for the remaining balance. While the Pacsons claimed they were ready to
pay the balance, they asked Nabus to return in 4 days as they wanted to make sure of the remaining
balance; wanted to see the new deeds issued in the Nabuses’ name; wanted to see the guardianship
papers of the Nabus child. However, Julie Nabus did not return. The Pacsons later discovered that the
entire lothad been sold to a Betty Tolero, and that a new title had been issued in Tolero’s name.

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.

Aggrieved they prayed to annul Tolero’s title, as well as of the other documents issued to the Nabuses.

In this case, the “Receipt of Partial Payment” shows that the true agreement between the parties is a
contract to sell.

They also claimed that Pacson’s signature in apage of the contract was absent.

First, ownership of the parcel of land 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 the lot.

The RTC and the CA both ruled in favor of the Pacsons and ordered the execution of a Deed of Absolute
Sale in favor of the Pacsons, upon their payment of the full purchase price.

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 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.