G.R. No. 165168, July 9, 2010
Topics:
Oral contract of sale
Doctrines:
The absence of a provision in the Agreement transferring title from the owner to the buyer is taken as a strong indication that the Agreement is a contract to sell. As stated in the Agreement, the payment of the purchase price, in installments within the period stipulated, constituted a positive suspensive condition, the failure of which is not really a breach but an event that prevents the obligation of the seller to convey title in accordance with Article 1184 of the Civil Code.
Summary:
Petitioners appealed the Court of Appeals’ ruling in this case. The Court of Appeals (CA) upholds the Regional Trial Court’s (RTC) rejection of their action for a certain performance where they aimed to compel the respondents to transfer the subject property of their alleged oral sales agreement.
Facts:
Petitioners appealed the Court of Appeals’ ruling in this case. The Court of Appeals (CA) upholds the Regional Trial Court’s (RTC) rejection of their action for a certain performance where they aimed to compel the respondents to transfer the subject property of their alleged oral sales agreement. The property in question is a section of a parcel of land (860 square meters) registered in Eugenia Primero’s name. Eugenia gave Irene Montecalvo a lease on the property. She ultimately signed an unnotified Agreement with Irene, subject to the following conditions:
-Irene agreed to deposit P 40,000.00, which shall comprise a portion of the 50% down payment of the buying cost.
-During the term of negotiation of 30 to 45 days from receipt of said deposit, Irene would pay the balance of the down payment.
-In case of default in the payment of the down payment, the deposit would be returned within 10 days from the lapse of said negotiation period and the Agreement deemed terminated.
-If the negotiations pushed through, the balance would be paid in 10 equal monthly installments from receipt of the down payment, with interest.
Irene didn’t pay the entire deposit by the deadline, set time for negotiations. She still persisted to remain on the contested property while making several payments. On the other hand, Eugenia only refused to accept more payments in 1992 and did not return the deposit. Eugenia disputed Irene’s claim and requested her to leave the land after she forced a survey of the lot and the segregation of a piece. Before the MTC of Iligan City, Eugenia and the heirs of her late husband filed a suit for unlawful detainer against Irene and her husband. They had a novated and revoked Agreement. Due to MTC’s lack of jurisdiction, the lawsuit was dismissed. Issue is not amenable to financial assessment. MTC’s decision to reject the eviction case became conclusive as Eugenia and her kids didn’t file an appeal in response. In retaliation, Irene and Nonilon filed a civil lawsuit against the Lanao del Norte RTC for particular performance, to force Eugenia to transfer the disputed lot. Both the case and the counterclaim were dismissed by RTC, due to a lack of legitimate legal and factual support and directed petitioners to pay the outstanding rent plus 12% interest.
Issue:
Is an oral contract of sale binding upon the seller?
Ruling:
No. Court distinguished a contract of sale from a contract to sell in that in a contract of sale the title to the property passes to the buyer upon the delivery of the thing sold; in a contract to sell, ownership is, by agreement, reserved in the seller and is not to pass to the buyer until full payment of the purchase price. The absence of a provision in the Agreement transferring title from the owner to the buyer is taken as a strong indication that the Agreement is a contract to sell. As stated in the Agreement, the payment of the purchase price, in installments within the period stipulated, constituted a positive suspensive condition, the failure of which is not really a breach but an event that prevents the obligation of the seller to convey title in accordance with Article 1184 of the Civil Code. Hence, for petitioners’ failure to comply with the terms and conditions laid down in the Agreement, the obligation of the predecessor-in-interest of the respondents to deliver and execute the corresponding deed of sale never arose.