Alfonso v. Court of Appeals
REITERATIONFacts
The Antecedents: Mr. and Mrs. Roberto Chanco were the registered owners of a lot. They entered into an oral agreement with Mr. and Mrs. Rodolfo Alfonso for the sale of the lot. The Alfonsos paid P2,000.00, and the Chancos executed a private instrument acknowledging receipt of the payment as an advance for their lot, on which the Alfonsos' house was built. Procedural History: The Alfonsos claimed they agreed to pay P4,000.00 as the balance upon obtaining a loan, which they did around October 6, 1973. They alleged the Chancos unjustifiably refused to accept payment and sold the property to the Namit spouses despite protests. The Alfonsos filed suit to annul the sale and compel reconveyance, arguing their contract was an absolute sale requiring judicial or notarial demand for rescission under Article 1592 of the Civil Code. The Trial Court ruled in favor of the Alfonsos, ordering reconveyance and damages. The Court of Appeals reversed, dismissing the complaint, upholding the sale to the Namits, and ordering reimbursement of the P2,000.00 to the Alfonsos, with attorney's fees. The Court of Appeals found that time was of the essence, no deed of absolute sale was executed, and the Alfonsos were not in a position to pay the full amount. The Petition: The Alfonsos appealed to the Supreme Court, seeking reversal of the Court of Appeals' decision.
Issue(s)
Whether Article 1592 of the Civil Code applies to the agreement between the Alfonsos and the Chancos. Whether the cancellation of the agreement and subsequent sale to the Namit spouses were valid.
Ruling
The petition is DENIED and the judgment of the Court of Appeals is AFFIRMED. The sale of the lot to the Namit spouses is upheld.
Ratio Decidendi
On whether Article 1592 of the Civil Code applies to the agreement between the Alfonsos and the Chancos: The Supreme Court held that Article 1592 of the Civil Code, which requires a judicial or notarial demand for rescission in the sale of immovable property, is not applicable to the agreement in this case. The Court found that the facts declared by the Court of Appeals did not demonstrate the existence of a contract of sale, but rather a contract to sell. In a contract to sell, title remains with the vendor until the fulfillment of a positive suspensive condition, such as full payment of the price. The absence of a formal deed of conveyance, as noted in similar cases, is a strong indication that the parties did not intend immediate transfer of title. Therefore, the legal provision invoked by the Alfonsos, Article 1592, cannot apply to a contract to sell or a promise to sell. On whether the cancellation of the agreement and subsequent sale to the Namit spouses were valid: The Supreme Court affirmed the Court of Appeals' finding that time was of the essence in the agreement between the Chancos and the Alfonsos, given the Chancos' urgent need for money. The Court also noted that only a receipt for an advance payment was executed, not a deed of absolute sale. Based on these factual premises, the Court found it conformable with law and equity to uphold the extrajudicial cancellation made by the Chancos of their agreement with the Alfonsos and the subsequent sale of the lot to the Namit Spouses. The Court reiterated the doctrine that Article 1592 does not apply to a contract to sell where title remains with the vendor until full payment of the price.
Main Doctrine
Article 1592 of the Civil Code, which requires a judicial or notarial demand for rescission of a contract involving immovable property, does not apply to a contract to sell where title remains with the vendor until full payment of the price.