FACTS:

Spouses Onnie and Amparo Herrera are the registered owners of a lot located in Las Piñas, Metro Manila. In March 1990, Godofredo Caguiat offered to buy the lot and the petitioners agreed to sell it for P1,500.00 per square meter. Respondent gave petitioners P100,000.00 as partial payment and the petitioners issued a receipt stating that the balance of the purchase price should be paid on or before March 23, 1990. However, on April 4, 1990, the petitioners informed respondent that they were cancelling the transaction and that he could recover the earnest money anytime. They also delivered a manager's check payable to respondent in the amount of P100,000.00. In response, respondent filed a complaint for specific performance and damages against the petitioners. The trial court ruled that there was a perfected contract of sale and ordered the petitioners to execute a final deed of sale. The Court of Appeals affirmed the trial court's decision, prompting the petitioners to file a petition for review on certiorari before the Supreme Court. The main issue is whether the document entitled "Receipt for Partial Payment" is a contract to sell or a contract of sale.

ISSUES:

1. Whether the document entitled "Receipt for Partial Payment" is a contract to sell or a contract of sale.

2. Whether the delivery of P100,000.00 as down payment is proof of the perfection of a contract of sale.

RULING:

1. The Court ruled that the document entitled "Receipt for Partial Payment" is a contract of sale. According to the Court, when earnest money is given in a contract of sale, it is considered as part of the price and as proof of the perfection of the contract, as provided under Article 1482 of the Civil Code. Thus, the delivery of P100,000.00 as down payment is indeed proof of the perfection of the contract of sale.

PRINCIPLES:

• Earnest money is considered as part of the price and as proof of the perfection of the contract. (Art. 1482, Civil Code)