Spouses Onnie Serrano v. Godofredo Caguiat

Summary

The Supreme Court resolved the fundamental distinction between a contract to sell and a contract of sale in property transactions. Spouses Serrano received P100,000 as partial payment for their lot from Caguiat, with the balance due March 23, 1990. When sellers canceled the transaction, Caguiat sued for specific performance. The trial court and Court of Appeals ruled for Caguiat, finding a perfected contract of sale based on the earnest money provision. However, the Supreme Court reversed, holding the receipt created a contract to sell where ownership remains with the seller until full payment. Since the suspensive condition (complete payment) failed, the buyer cannot compel transfer. This case clarifies crucial contract law principles regarding conditional property sales and establishes that Article 1482 on earnest money applies only to completed sales, not conditional agreements.