Pangan v. Perreras
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns a contract for the sale of a lot and a two-door apartment. Spouses Cayetano and Consuelo Pangan owned these properties. On June 2, 1989, Consuelo Pangan agreed to sell these properties to respondents Spouses Rogelio and Priscilla Perreras for P540,000.00, receiving P20,000.00 as earnest money. The parties later agreed to increase the price to P580,000.00. When Consuelo refused to accept further payments and execute the sale, citing her children's (the petitioners-heirs) disapproval, the respondents insisted on enforcing the agreement. 2. Procedural History: The respondents filed a complaint for specific performance against Consuelo and her children (petitioners-heirs) to compel the execution of a deed of sale. Concurrently, Consuelo filed a complaint for consignation to return the earnest money. The Regional Trial Court (RTC) ruled in favor of the respondents, finding a perfected contract of sale concerning Consuelo's shares but not compelling the co-owners (petitioners-heirs) to sell their shares. The RTC ordered Consuelo to convey her divisible shares and dismissed her consignation complaint. The Court of Appeals (CA) affirmed the RTC's decision, upholding the existence of a perfected contract and dismissing the appeal. 3. The Petition: The petitioners-heirs seek reversal of the CA's decision via a petition for review on certiorari under Rule 45 of the Rules of Court. They primarily contest the finding of a perfected contract, arguing that the sale was subject to the suspensive condition of their consent as co-owners, which was withheld. Alternatively, they argue that the agreement was a contract to sell, and the respondents' one-day delay in payment constituted a failure of a positive suspensive condition, rendering the contract ineffective. They also question the characterization of the contract as a contract of sale versus a contract to sell.
Issue(s)
Whether there was a perfected contract between the parties. What is the nature of the contract between the parties (contract of sale vs. contract to sell). What is the effect of the respondents' belated payment on their contract.
Ruling
The petition for review on certiorari is DENIED. The decision of the Court of Appeals dated June 24, 2002, and its resolution dated February 20, 2003, in CA-G.R. CV Case No. 56590 are AFFIRMED.
Ratio Decidendi
On the existence of a perfected contract: The Court held that a perfected contract of sale existed between the parties. Article 1318 of the Civil Code requires consent, object, and cause. While the petitioners-heirs argued that their consent as co-owners was essential, Article 493 of the Civil Code grants a co-owner the absolute right to dispose of their undivided share. Therefore, Consuelo could validly sell her proportionate share, consisting of her conjugal and hereditary interests, without the consent of all co-owners. The Court found no evidence, other than Consuelo's self-serving testimony, that her consent was predicated on her children's approval. The payment and receipt of ₱20,000.00 as earnest money, under Article 1482 of the Civil Code, served as proof of the perfection of the contract, as it was considered part of the price, and there was no stipulation to the contrary. On the nature of the contract: The Court found the characterization of the contract as either a contract of sale or a contract to sell to be irrelevant in this case. While a contract of sale typically involves the transfer of title upon delivery, and a contract to sell reserves ownership until full payment, the lower courts' findings were insufficient to definitively classify it. However, the subsequent actions and the nature of the remedies available under Article 1592 of the Civil Code and the Maceda Law rendered the distinction moot. The petitioners-heirs raised this issue for the first time on appeal, which is generally not allowed. On the effect of the respondents' belated payment: The Court ruled that the respondents' payment on June 15, 1989, for the installment due on June 14, 1989, effectively cured any breach and revived the contract. Under Article 1592 of the Civil Code, in contracts involving immovable property, a vendee may pay even after the expiration of the period, as long as no demand for rescission has been made judicially or by notarial act. Similarly, under Section 4 of the Maceda Law, for cases where less than two years of installments have been paid, a 60-day grace period is provided. The respondents' payment within this period, whether under Article 1592 or the Maceda Law, prevented the rescission or cancellation of the contract. Therefore, the petitioners-heirs' obligation to convey Consuelo's shares subsisted.
Main Doctrine
The payment and receipt of earnest money in a contract of sale, absent any stipulation to the contrary, is proof of the perfection of the contract. Furthermore, even in cases of breach due to nonpayment, the vendee may still defeat the vendor's right to rescind or cancel the contract by paying the amount due before demand for rescission or cancellation is made, or by availing of the grace periods provided under Article 1592 of the Civil Code and the Maceda Law.