G.R. No. 222957 , March 29, 2023
ATTY. ROGELIO B. DE GUZMAN, PETITIONER, VS. SPOUSES BARTOLOME AND SUSAN SANTOS, RESPONDENTS.

FACTS

Respondents-spouses Bartolome and Susan Santos agreed to purchase a property from petitioner Atty. Rogelio B. De Guzman for ₱1,500,000.00, with a ₱250,000.00 downpayment and monthly installments of ₱15,000.00. They entered into a document denominated as a “Contract to Sell” dated November 2000. After paying the downpayment, respondents changed their mind, sought a refund, and eventually filed a complaint for rescission and recovery of down payment against the petitioner. During the pendency of the case, petitioner sold the property to a third party. The Regional Trial Court (RTC) initially dismissed the complaint but later granted a motion for new trial and declared the contract rescinded, ordering the return of the downpayment less reasonable rent. The Court of Appeals (CA) affirmed the RTC’s order. Petitioner filed the instant Petition, arguing rescission is inapplicable to a contract to sell and that respondents’ default triggered the contract’s automatic cancellation and forfeiture clause.

ISSUE

The primary issue in the Separate Opinion is the correct characterization of the contract between the parties—whether it is a contract to sell or a contract of sale—and the consequent legal implications of that characterization on the remedies available.

RULING

Justice Caguioa, in his Separate Opinion, agrees with the ponencia’s grant of the Petition but arrives at a different conclusion on the nature of the contract. He opines that the contract between the parties is a contract of sale, not a contract to sell. He argues that the prevailing jurisprudential definition of a “contract to sell” (where ownership is reserved until full payment and full payment is a suspensive condition) should be revisited. He contends that under the Civil Code, a contract of sale is perfected by mere consent, and the agreement here, which obligated the vendor to transfer title upon full payment and allowed the vendees immediate possession, contained all essential elements of a perfected contract of sale. However, despite this characterization, Justice Caguioa concurs with the result because the contract contained a valid automatic cancellation and forfeiture clause. Since respondents admitted defaulting on four monthly installments, the contract was ipso facto rescinded, and the downpayment was forfeited in favor of the petitioner.