CASE DIGEST : G.R. No.

225033, August 15, 2018

SPOUSES ANTONIO BELTRAN AND FELISA BELTRAN VS. SPOUSES APOLONIO

CANGAYDA, JR. AND LORETA E. CANGAYDA

Facts:
Sometime in August 1989,[4] respondents verbally agreed to sell the disputed property
to petitioners for P35,000.00. After making an initial payment,[5] petitioners took
possession of the disputed property and built their family home thereon.[6] Petitioners
subsequently made additional payments, which, together with their initial payment,
collectively amounted to P29,690.00.[7]

However, despite respondents' repeated demands, petitioners failed to pay their

remaining balance of P5,310.00.[8] This prompted respondents to refer the matter to the
Office of the Barangay Chairman of Barangay Magugpo, Tagum City (OBC).[9]

Before the OBC, the parties signed an Amicable Settlement dated August 24, 1992,
bearing the following terms:

That herein [respondent Apolonio, Jr.] is also willing to sign (sic) a deed of sale
agreement after [petitioner Antonio] were (sic) able to pay the remaining balance x x x.

Petitioners failed to pay within the period set forth in the Amicable Settlement.

Last and Final Demand" to vacate the disputed property within 30 days from notice. This
demand was left unheeded.[12]... n so ruling, the RTC characterized the oral agreement
between the parties as a contract to sell. The RTC held that the consummation of this
contract to sell was averted due to petitioners' failure to pay the purchase price in full.
[18] Hence the RTC held that ownership over the disputed property never passed to
petitioners.[19]... petitioners also raised, for the first time on appeal, that the sale of the
disputed property constitutes a sale on installment covered by Republic Act (R.A.) No.
6552,[22] otherwise known as the Maceda Law. Corollarily, petitioners argued that
respondents should not be granted relief, since they failed to comply with the specific
procedure for rescission of sales of real estate on installment basis set forth under the
statute.[23]

The CA affirmed the findings of the RTC and the nature of the contract entered into by
the parties.[25] In addition, it rejected petitioners' invocation of the Maceda Law.
According to the CA, to allow petitioners to seek protection under said law for the first
time on appeal would violate the tenets of due process and fair play.[26]
Issues:
The Petition calls on the Court to resolve the following issues: Whether the CA erred
when it affirmed the RTC Decision characterizing the oral agreement between the
parties as a contract to sell; Whether the oral agreement between the parties is covered
by the Maceda Law; and Whether respondents' action for recovery of possession
should have been dismissed on the ground of prescription and/or laches.

Ruling:
The agreement between the parties is an oral contract of sale. As a consequence,
ownership of the disputed property passed to petitioners upon its delivery.

Based on the foregoing distinctions, the Court finds, and so holds, that the oral
agreement entered into by the parties constitutes a contract of sale and not a contract to
sell.A contract of sale is consensual in nature, and is perfected upon the concurrence of
its essential requisites,[34] thus:The essential requisites of a contract under Article 1318
of the New Civil Code are: (1) consent of the contracting parties; (2) object certain which
is the subject matter of the contract; and (3) cause of the obligation which is
established. Thus, contracts, other than real contracts are perfected by mere consent
which is manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. Once perfected, they bind other
contracting parties and the obligations arising therefrom have the force of law between
the parties and should be complied with in good faith. The parties are bound not only to
the fulfillment of what has been expressly stipulated but also to the consequences
which, according to their nature, may be in keeping with good faith, usage and law.
Being a consensual contract, sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From that
moment, the parties may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts. A perfected contract of sale imposes reciprocal
obligations on the parties whereby the vendor obligates himself to transfer the
ownership of and to deliver a determinate thing to the buyer who, in turn, is obligated to
pay a price certain in money or its equivalent. Failure of either party to comply with his
obligation entitles the other to rescission as the power to rescind is implied in reciprocal
obligations.[35] (Emphasis supplied)

Contrary to the CA's findings, neither respondent Loreta's testimony nor clause 6 of the
Amicable Settlement supports the conclusion that the parties' agreement is not a
contract of sale, but only a contract to sell — the reason being that it is not evident from
said testimony and clause 6 that there was an express agreement to reserve ownership
despite delivery of the disputed property.
A plain reading of respondent Loreta's testimony shows that the parties' oral agreement
constitutes a meeting of the minds as to the sale of the disputed property and its
purchase price. Respondent Loreta's statements do not in any way suggest that the
parties intended to enter into a contract of sale at a later time. Such statements only
pertain to the time at which petitioners expected, or at least hoped, to acquire the
sufficient means to pay the purchase price agreed upon. For emphasis, the Court
reproduces the relevant statements relied upon by the CA:

Our [oral] agreement with [petitioner Antonio] that about 300 square meters lot (sic) that
they will pay P35,000.00 to us but [petitioner Antonio] told us that they will pay the
amount of P35,000.00 when [their] house will be sold, then they will pay you

Clause 6 of the Amicable Settlement merely states respondent Apolonio, Jr.'s

commitment to formalize and reduce the oral agreement of the parties into a public
instrument upon payment of petitioners' outstanding balance. It bears emphasizing that
a formal document is not necessary for the sale transaction to acquire binding effect.
[37] Hence, the subsequent execution of a formal deed of sale does not negate the
perfection of the parties' oral contract of sale which had already taken place upon the
meeting of the parties' minds as to the subject of the transaction and its purchase price.

In a contract of sale, ownership of a thing sold shall pass to the buyer upon actual or
constructive delivery thereof in the absence of any stipulation to the contrary.[38]
Reference to Articles 1477 and 1478 of the Civil Code is in order:Article 1477. The
ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.Article 1478. The parties may stipulate that ownership in
the thing shall not pass to the purchaser until he has fully paid the price.

In accordance with the cited provisions, ownership of the disputed property passed to
petitioners when its possession was transferred in their favor, as no reservation to the
contrary had been made.

Principles:
Jurisprudence defines the distinctions between a contract of sale and a contract to sell
to be as follows:In a contract of sale, title passes to the vendee upon the delivery of the
thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the
vendor and is not to pass until the full payment of the price. In a contract of sale, the
vendor has lost and cannot recover ownership until and unless the contract is resolved
or rescinded; whereas in a contract to sell, title is retained by the vendor until the full
payment of the price, x x x.[33] (Emphasis supplied)