UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW Sales
Dizon (E2024) Professor Gerard Chan
Sps. Castillo v. Sps. Reyes
G.R. No. 170917 – November 28, 2007
Third division | Nachura, J.
Topic:
Contract to Sell
Parties: Spouses Nestor CASTILLO and Rosie REYES-CASTILLO, petitioners; Spouses Rudy REYES and
Consolacion REYES, respondents.
Case Summary: Bohler and Sps. Reyes had an agreement for the sale of Bohler’s house and lot. Because of the
latter’s failure to comply with the partial payment in time, Bohler sold the property to Sps. Castillo. Sps.
Reyes filed a civil case for the annulment of the sale. The SC ruled that the agreement is a contract of sale, not a
contract to sell, and denied the petition for review.
Doctrine:
Contract to sell – ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price; title is retained by the vendor until full payment of the purchase price. The payment
of the purchase price is a positive suspensive condition, failure of which is not a breach but an event that prevents
the obligation
Contract of sale – title to the property passes to the vendee upon the delivery of the thing sold; the vendor loses
ownership over the property and cannot recover it until and unless the contract is resolved or rescinded
FACTS OF THE CASE
• In 1997, Bohler (seller) negotiated for the sale of Bohler’s house and lot (located in Aklan) to Sps. Reyes
(buyer #1) for the consideration of P165,000. In the agreement signed by the parties, a partial payment
amounting to P130,000 was stipulated, of which Sps. Reyes produced P20,000 in cash and P110,000 in
check. Bohler insisted that the entire partial payment be made in cash in order for her to redeem the
property form the bank and demanded so from Sps. Reyes, otherwise she would cancel the sale. Sps.
Reyes failed to do so; hence, Bohler sold the property to Sps. Castillo (buyer #2).
o After learning of the sale, the Reyeses immediately tendered the check, asked the bank for
certification that it was funded, and consulted their lawyer who sent a notice of lis pendens to the
Register of Deeds and the Provincial Assessor.
o Sps. Reyes subsequently filed a civil case for the annulment of sales, specific performance and
damages with RTC-Kalibo, Aklan, against Bohler and Sps. Castillo.
• The RTC dismissed the complaint, declaring the agreement with Sps. Reyes a Contract to Sell.
Considering that no actual sale happened between Bohler and Sps. Reyes, Bohler could validly sell the
property to Sps. Castillo.
• The CA reversed the decision, declaring the agreement a Contract of Sale. Ownership was not reserved
by the vendor and non-payment of the purchase price was not made a condition for the contract’s
effectivity.
• Sps. Castillo raised the case to the SC through a petition for review on certiorari.
ISSUE/S & RATIO/S
W/N the agreement is a perfected contract of sale or a mere contract to sell—IT IS A CONTRACT OF
SALE.
• Sale is a consensual contract and is perfected by mere consent, which is manifested by a meeting of the
minds as to the offer and acceptance thereof on the subject matter, price and terms of payment of the price.
This was clearly indicated by the agreement, which contains all the requisites of a contract of sale:
o Bohler and Sps. Reyes had a meeting of minds on the subject matter of the contract (house and
lot); the price (P165,000); and on the terms of payment (initial P130,000, remaining balance before
December 15, 1997). At that precise moment when the consent of both parties was given, the
contract of sale was perfected.
• It cannot be considered a contract to sell because the seller made no express reservation of ownership or
title to the subject house and lot.
• (Please refer to the Doctrine for how the Court differentiated the two contracts)
RULING
Petition for review on certiorari is denied due course.
NOTES
Lis pendens (suit pending) - notice of a pending action or lis pendens involving a real property can be recorded
in the Register of Deeds of the place where the property is located. The purpose of the notice is to warn persons
(such as prospective purchasers or others having an interest in the property under suit) that the title to the
property is in litigation and that they will be bound by the possible adverse judgment.
