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SPS. ANTONIO BELTRAN v. SPS. APOLONIO CANGAYDA

FACTS:

The respondents, Apolonio, Jr. and Loreta Cangayda, agreed to sell a residential lot to the petitioners, Antonio and Felisa Beltran, for P35,000. After making an initial payment, the petitioners took possession of the lot and built their family home on it. However, the petitioners failed to pay the remaining balance of P5,310. The matter was referred to the Office of the Barangay Chairman and an Amicable Settlement was signed, setting a deadline for payment. The petitioners failed to comply with the settlement. Subsequently, the respondents served a "Last and Final Demand" on the petitioners to vacate the property, which was ignored. The respondents then filed a complaint for recovery of possession and damages before the Regional Trial Court (RTC). The RTC ruled in favor of the respondents, ordering the petitioners to vacate the property and to return the amount already paid to them. The petitioners appealed to the Court of Appeals (CA), arguing that the oral agreement was a contract of sale and that the sale was covered by the Maceda Law. The CA dismissed the appeal, affirming the RTC's decision. The petitioners then filed a Petition for Review on Certiorari before the Supreme Court, raising issues concerning the characterization of the oral agreement, the application of the Maceda Law, and the dismissal of the action based on prescription and laches.

ISSUES:

  1. Whether the agreement between the parties is a contract of sale or a contract to sell.

  2. Whether ownership of the disputed property passed to the petitioners upon its delivery.

  3. Whether the oral agreement between the parties constitutes a contract of sale or a contract to sell.

  4. Whether ownership of the disputed property passed to the petitioners upon delivery.

  5. Whether the slight delay in payment by the petitioners justifies rescission of the contract.

  6. Whether the petitioners are entitled to an additional period to complete payment of the purchase price.

  7. Whether the respondents' cause of action is barred by prescription.

RULING:

  1. The agreement between the parties is a contract of sale. A contract of sale is consensual in nature and is perfected upon the concurrence of its essential requisites, namely: (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. The oral agreement between the parties satisfies these requisites and therefore constitutes a contract of sale and not a contract to sell.

  2. Ownership of the disputed property passed to the petitioners upon its delivery. 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. From the moment of perfection of the contract of sale, the parties may reciprocally demand performance. Therefore, ownership of the disputed property passed to the petitioners upon its delivery.

  3. The oral agreement between the parties constitutes a contract of sale. The Court noted that the testimony of one of the respondents, as well as Clause 6 of the Amicable Settlement, shows that the parties had a meeting of minds as to the sale of the disputed property and its purchase price. The subsequent execution of a formal deed of sale does not negate the perfection of the oral contract of sale.

  4. Ownership of the disputed property passed to the petitioners upon delivery. In a contract of sale, ownership of the thing sold shall pass to the buyer upon actual or constructive delivery unless there is a stipulation to the contrary. Since there was no reservation made by the parties, ownership passed to the petitioners upon delivery.

  5. The slight delay in payment by the petitioners does not justify rescission of the contract. The right to rescission under Article 1191 of the Civil Code is predicated on a breach of faith by the other party. In the absence of any stipulation to the contrary, the vendor's failure to pay within the agreed period does not constitute a breach of faith as long as payment is made before the vendor demands rescission. Therefore, the slight delay in payment does not serve as sufficient ground for rescission.

  6. The court deems it proper to grant the petitioners an additional period of 30 days to settle their outstanding balance, considering that they have already paid more than three-fourths of the purchase price, constituted their family home on the disputed property in good faith, and have lived thereon for 17 years without protest.

  7. Assuming that the failure to pay constitutes breach, the respondents' cause of action has already prescribed as it was filed 17 years after the expiration of the payment period stipulated in the Amicable Settlement.

PRINCIPLES:

  • A contract of sale is a consensual contract whereby one party obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party obligates himself to pay a price certain in money or its equivalent.

  • A contract to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite its delivery to the prospective buyer, commits to sell the property exclusively to the prospective buyer upon full payment of the purchase price.

  • In a contract of sale, title passes to the vendee upon the delivery of the thing sold. In a contract to sell, title is retained by the vendor until the full payment of the price.

  • 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.

  • A contract of sale is perfected upon the meeting of the parties' minds as to the subject of the transaction and its purchase price.

  • Ownership of a thing sold passes to the buyer upon actual or constructive delivery unless there is a stipulation to the contrary.

  • A formal document is not necessary for a sale transaction to acquire binding effect.

  • Rescission may not be resorted to in the absence of breach of faith by the other party.

  • Slight delay in payment is not sufficient to justify rescission of a contract.

  • If the buyer of real property has paid at least two years of installments, he or she is entitled to a grace period of one month for every year of installment payment to pay the outstanding balance.

  • Even in the absence of a specific stipulation, the buyer of real property is entitled to an additional period to pay the balance of the purchase price as long as the buyer has paid at least two years of installments and did not default on the payment of installments due prior to the demand.

  • A cause of action based on the breach of a written agreement prescribes in 10 years.