John Carlo T.

Pajo

Agustin v. De Vera
G.R. No. 233455 April 3, 2019
Facts: Gregorio De Vera (Gregorio) owned a parcel of land in Dagupan City. On Jan 6, 1986, Gregorio and
Spouses Hipolito and Lolita Agustin entered into a “Contract to Purchase and Sale” whereby Gregorio
agreed to sell to Spouses Agustin the property with the total contract price of Php 30,000.00, that the
amount of Php15,000 will be paid to Gregorio upon execution of this contract and the balance shall be
paid through Bank Loan to which it shall be mortgaged, that Gregorio obligates himself to have the title
release from mortgage from the bank within one (1) month from the day of the execution of this
contract, the spouses can immediately take possession of the land upon payment of Php 15,000.00
On May 17, 2001, Hipolito Agustin sold half of the purchased land to his sister, Imelda Agustin, who
introduced improvements on the property and constructed a sari-sari store. An annotation of adverse
claim was made by the siblings Agustin on Aug 12, 2007 since Gregorio has had not yet delivered the
title to them.
On Sept 3, 2007, Gregorio executed a deed of absolute sale of the subject property to his sister, Romana
De Vera for Php 500,000.00. The Deed of sale was registered on Sept 6, 2010. After the execution,
Gregorio died on Sept 17, 2007.
The second sale prompted Hipolito to file a case for specific performance and acknowledgement of the
Contract of Purchase and Sale and Judicial Declaration of Ownership in the RTC of Dagupan. The (first)
case was dismissed without prejudice for lack of jurisdiction. On September 28, 2010, the Agustin
siblings filed another case alleging that they were surprised to discover a deed of sale over the same
property purportedly executed by Gregorio, then already eighty (80) years old, fourteen (14) days prior
to his death in favor of Romana. Romana cause the registration of the subject property in her favor. The
sibling Agustin claims Romana is a buyer in bad faith, the siblings are the first buyers in good faith, and
contends that the deed of sale between Romana and Gregorio is void.
The RTC held in favor of the Siblings Agustin. The RTC found that the sale of the property to Hipolito was
absolute notwithstanding the title of their agreement. It also found it did not express reservation of
ownership pending full payment of the purchase price, it being a contract of sale and not a contract to
sell. Romana was declared a buyer in faith for having knowledge of the ownership claim of the Siblings
Agustin. Romana appealed to the CA.
The CA reversed the decision favoring Romana citing that the contract between Gregorio and Hipolito is
a contract to sell and not of a contract of sale. Thereafter, the Sibling Agustin filed an instant Petition for
Review on Certiorari under Rule 45 of the Rules of Courtafter they were denied of their Motion for
Reconsideration on Apr 18, 2017. Hence, this case.
ISSUE: Whether the contract entered by Hipolito and Gregorio is a contract of sale or a contract to sell.
RULING: The SC ruled that contract between Hipolito, and Gregorio is a contract of sale.
RATIO:
1.) Elements of a Contract of Sale
The elements of a valid contract of sale under Article 1458 of the Civil Code: (1) consent or
meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its
equivalent.
In this case, the SC found that the elements are present. By entering into the agreement entitled
"Contract to Purchase and Sale," both parties had arrived at a meeting of the minds that the seller,
i.e., Gregorio, transferred the ownership and possession of the subject property to the buyer, i.e.,
John Carlo T. Pajo

Hipolito, with the latter obliged to pay a price certain in money, i.e., P30,000.00. Furthermore, the
SC appreciated the evidence on record holding that the parties had a clear meeting of the mind that
the ownership and possession over the subject property should be transferred to Hipolito upon
execution of the contract.

2.) Contract of Sale vis-à-vis Contract to Sell

The Contract to Sell is defined as a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite its delivery to the prospective buyer, commits
to sell the property exclusively to the prospective buyer upon full payment of the purchased price.
In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a
contract to sell, by agreement, the ownership is reserved in the vendor and is not to pass until the full
payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and
unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor
until the full payment of the price.
In this case it is not disputed that there is absolutely no stipulation of the contract between Gregorio
and Hipolito to the effect that ownership over the subject is reserved in favor of Gregorio pending the
complete payment of the purchase price by Hipolito Neither is there a provision granting Gregorio the
unilateral right to rescind the contract in case of non-payment. Therefore, bearing in mind the
foregoing, the contract between Gregorio and Hipolito is a contract of sale, and not a contract to sell.
Upon closer reading of the contract, the SC held that there was a clear stipulation in the subject
contract therein “reserving title in the vendor until full payment of the purchase price or giving the
vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed
period.”

3.) Rule on Double Sales

Even if the rule on double sales is applied to the instant case, the SC’s decision remains the same.
The Siblings Agustin would still have a better right of ownership over the subject property. According to
Article 1544 of the Civil Code, if the same thing should have been sold to different vendees, in the case
of immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property. Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no
inscription, the ownership shall pertain to the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest title, provided there is good faith.
It is indisputable that Romana was a buyer in bad faith. Hence, Hipolito and Imelda have the better
right of ownership over the subject property. In this case, it was clear that there is an annotation made
prior to the execution of deed of sale between Gregorio and Romana on Sept 3, 2007

COMMENTS:
By analogy of the case, it discusses several topics under the law on sales. Notably, the elements
of the contract of sale, the differences between contract to sell and contract of sale, its legal
implications and effects, and the rules on double sale. It is important to remember the fundamentals on
the law on sale in order the evade legal hurdle such as in this case of Agustin v. De Vera.
It was notable that the SC held that provision of the Contract between Gregorio and Hipolito
was clear on whether the said contract is contract of sale or contract to sell. In such contracts, it is
imperative to know and understand the effects of the provisions made in the contract.
In this case, the SC clearly discussed Contract of Sale and Contract to Sell. The elements of a
contract of sale is always necessary to determine the nature of contract executed. The elements could
be found in Art. 1458. These are: (1) consent or meeting of the minds; (2) determinate subject matter;
John Carlo T. Pajo

and (3) price certain in money or its equivalent. While the SC defined the Contract to Sell from Spouses
Beltran v. Spouses Cangayda, citing Platinum Plans Phil. Inc. v. Cucueco 552 Phil 133, 144 (2006). In this
case, the SC ruled that the parties had a clear meeting of the mind that the ownership and possession
over the subject property should be transferred to Hipolito upon the execution of the contract, noting
the third paragraph of the said agreement.
As to the difference between the two, the SC was not shy in discussing the cases of Spouses
Beltran v. Spouses Cangada, the case of Platinum Plans Phil. Inc. v. Cucueco, Coronel v, Court of Appeals,
and Spouses Castillo v Spouses Reyes. To surmise, the SC note that contract of sale, title passes to the
vendee upon the delivery of the thing sold, the vendor has lost and cannot recover ownership until and
unless the contract is resolved or rescinded. Also, the vendor has lost and cannot recover ownership
until and unless the contract is resolved or rescinded.
In contract to sell, the SC explained that it is a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property despite its delivery to the prospective
buyer, commits to sell the property exclusively to the prospective buyer upon full payment of the
purchase price. The tile is retained by the vendor until the full payment of the price.
Lastly, the Civil Code provides rules on double sale whether the property is immovable or
movable. In this case, the SC highlighted Art. 1544 par. 2 and 3. To wit:
“Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith.”
In applying the foregoing, the SC held Romana was a buyer in bad faith. Here, the SC pointed out
the presence of the annotation of adverse claim which was executed by the Siblings Agustin on Aug 22,
2007. This was made prior to the execution of the Deed of Sale between Romana and Gregorio on Sept
3, 2007. Furthermore, even with the prior annotation of Hipolito’s adverse claim, Romana own witness
transacted existed of the transaction between Gregorio and Hipolito.