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G.R. No. 139173, February 28, 2007

Facts: Petitioners are registered owners of a lot located in Las Pias. On March 23, 1900, respondent
offered to buy the lot and petitioners agreed to sell it at 1,500 per square meter. Respondent then gave
100,000 as partial payment. A few days after, respondent, through his counsel, wrote petitioners
informing them of his readiness to pay the balance of the contract price and requesting them to prepare
the Deed of Sale. Petitioners, through counsel, informed respondent in a letter that Amparo Herrera
would be leaving for abroad on or before April 15, 1990 and they are cancelling the transaction and that
respondent may recover the earnest money (100,000) anytime. Petitioners also wrote him stating that
they already delivered a managers 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 ruled that there was already a perfected contract of sale between the parties and ordered the
petitioners to execute a final deed of sale in favor of respondent. The Court of appeals affirmed said

Issue: Whether or not there was a contract of sale.

Held: The transaction was a contract to sell.

When petitioners declared in the Receipt for 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 PiasMr. 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.

A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendors
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.

In this case, the Receipt for Partial Payment shows that the true agreement between the parties is a
contract to sell. First, ownership over the property 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 title of the lot. 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 was given in a contract to sell. 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.