G.R. No. 242366 , February 26, 2025
VENUSTRIANO B. CHAVEZ, JR., ET AL., PETITIONERS, vs. SPOUSES JOSELITO AND ADRIANA GOPEZ, RESPONDENTS.

FACTS

Petitioners (Chavez et al.) are co-owners of two adjacent lots with a house, which they inherited. They decided to sell the properties and, through a broker, were introduced to respondents, the Spouses Gopez. The parties allegedly agreed on terms including a net purchase price of PHP 31.5 million, with the Spouses Gopez to pay taxes and handle estate settlement, and to make a PHP 5 million downpayment. The Spouses Gopez issued a check for PHP 200,000.00 as earnest money. Petitioners claimed the Spouses Gopez never paid the full downpayment, delayed preparing necessary documents (special powers of attorney, extrajudicial settlement, and a Contract to Sell), and submitted a draft Contract to Sell that modified the agreed terms. The Spouses Gopez countered that they had made partial payments totaling PHP 1.5 million and that the delay was due to petitioners’ failure to furnish required authenticated documents. On February 27, 2012, petitioner Virgilio Chavez informed the Spouses Gopez he was no longer interested in the sale. The Spouses Gopez later discovered the titles had been cancelled and reissued in the petitioners’ names and the properties were being offered to others, prompting them to file a Complaint for Specific Performance and Damages. The Regional Trial Court (RTC) dismissed the complaint, ruling the agreement was a Contract to Sell, the suspensive condition (full downpayment) was not fulfilled, and petitioners rightfully rescinded it. The Court of Appeals (CA) reversed the RTC, declaring the “Acknowledgement Receipt” dated October 21, 2011—which acknowledged receipt of a PHP 200,000.00 check “as earnest money for the purchase of the property… for the amount of PHP 31.5 million”—as a perfected Contract of Sale, not a Contract to Sell.

ISSUE

Whether the Court of Appeals erred in declaring that the Acknowledgement Receipt between the parties constitutes a Contract of Sale, rather than a Contract to Sell.

RULING

The Supreme Court granted the petition and reversed the Decision of the Court of Appeals. The Court ruled that the Acknowledgement Receipt, by its terms, is merely a receipt for earnest money given in contemplation of a future Contract to Sell and Deed of Absolute Sale. It does not embody a perfected Contract of Sale. The receipt explicitly references future documents—”Contract to Sell, Deed of Absolute Sale & Extrajudicial Settlement of Estate”—indicating the parties’ intent to be bound only upon the execution of those formal agreements. The earnest money was a guarantee that the buyer would not back out from the negotiation and formalization of the principal contract. Since the parties did not agree on all essential terms, such as the manner and schedule of payment beyond the earnest money, and contemplated the execution of a more formal contract, no meeting of the minds on a Contract of Sale occurred. The subsequent conduct of the parties, including their negotiations over the draft Contract to Sell, confirms the preliminary nature of their agreement. Therefore, the CA erred in characterizing the transaction as a Contract of Sale. The Supreme Court reinstated the RTC Decision dismissing the complaint for specific performance, ordering the rescission of the oral contract to sell, and directing petitioners to return the PHP 1.5 million to the Spouses Gopez.