Facts:

In the case G.R. No. 63745, decided on June 8, 1990, the parties involved were Rodolfo Alfonso and Norma G. Alfonso as petitioners against the Court of Appeals and the respondents, Roberto Chanco and Myrna Garcia Chanco. The dispute originated from a lot measuring 239 square meters located in Barrio Sto. Angel, Sta. Cruz, Laguna, which was owned by the Chancos. They entered an oral agreement with the Alfonsos regarding the sale of this property. The Alfonsos made an initial payment of P2,000.00, for which the Chancos provided a receipt confirming the payment as an advance toward the total consideration for the lot, which was understood to be P6,000.00. The Alfonsos believed that upon obtaining a loan from the Philippine National Bank, they would pay the remaining P4,000.00. However, the Chancos claimed they had communicated that time was of the essence due to their pressing need for money, which necessitated the full payment of the balance within one week; otherwise, they would

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Facts:

Parties and Property

• The respondents, Mr. and Mrs. Roberto Chanco, were the registered owners of a 239-square‑meter lot located in Barrio Sto. Angel, Sta. Cruz, Laguna.
• The petitioners, Mr. and Mrs. Rodolfo Alfonso (also referred to as the Alfonsos), entered into an oral agreement with the Chancos regarding the lot.

The Oral Agreement and Initial Payment

• Evidence shows that the Alfonsos paid an advance of ₱2,000.00 to the Chancos.
• On the occasion of the payment, the Chancos executed a private instrument acknowledging receipt of ₱2,000.00 from the Alfonsos as a partial payment for the lot.
• The instrument, dated August 21, 1973, read: "Ako si Roberto Chanco at Myrna Chanco ay tumanggap ng halagang (dalawang libong piso) ₱2,000.00 sa mag-asawang Rodolfo Alfonso at Norma Alfonso. Bilang paunang bayad sa aking lote sa Monserrat Subdivision na kinatitirikan ng kanilang bahay. Sa katunayan ay pinirmahan sa ibaba nito."
• Both Roberto and Myrna Chanco affixed their signatures on the instrument.

Divergent Understandings of the Agreement

• The Alfonsos’ Position:
• They maintained that the agreement was based on a contract to sell where the total price was to be ₱6,000.00 (₱2,000.00 as down payment plus a balance of ₱4,000.00 payable upon obtaining a loan from the Philippine National Bank).
• They claimed that after securing the loan, they offered to pay the remaining ₱4,000.00 on or about October 6, 1973.
• They alleged that the Chancos unjustifiably refused the payment and, without honoring the agreed terms, proceeded to sell the property to the Namit Spouses.
• The Alfonsos further contended that they protested both to the Chancos and to the Namits.
• The Chancos’ Position:
• They argued that they were in urgent need of money and were thus compelled to sell the property.
• They claimed they provided the Alfonsos a one‑week period to pay the balance (₱4,000.00) following which, upon non-payment, they cancelled the agreement.
• They attempted to return the initial ₱2,000.00 received from the Alfonsos, who in turn refused it.
• Subsequently, the Alfonsos tendered an additional ₱2,500.00, which was also rejected by the Chancos.
• The Chancos then sold the lot to the Namit Spouses (Serafin Namit and Clarita Alvarez) for a total of ₱6,000.00.
• On the basis of the sale, a new Transfer Certificate of Title (T‑73821) was issued in the names of the Namits.

Procedural History

• The Alfonsos filed a suit in the Court of First Instance of Laguna seeking the annulment of the sale and the reconveyance of the property.
• Their legal basis was predicated on the position that their agreement with the Chancos was an absolute sale, which under Article 1592 of the Civil Code, could not be unilaterally cancelled by the seller unless a rescission demand was made judicially or by notarial act.
• The Trial Court issued a judgment in favor of the Alfonsos, ordering:
• Reconveyance of the property to the Alfonsos upon further payment of ₱4,000.00.
• Awarding actual damages of ₱200.00 plus costs.
• The Court of Appeals reversed the judgment, dismissing the complaint and upholding the validity of the sale to the Namit Spouses.
• The Court of Appeals ordered that the Alfonsos be reimbursed ₱2,000.00 for the down payment.
• The Alfonsos were also ordered to pay ₱2,000.00 as attorneys’ fees.
• Each party was to bear their own costs.
• The petitioners (Alfonsos) then elevated the case to the Supreme Court.

Issue:

Nature of the Contract

• Whether the agreement between the Chancos and the Alfonsos was one of an absolute sale or merely a contract (or promise) to sell.
• If it was solely a contract to sell, whether Article 1592 of the Civil Code, which governs absolute sales of immovable property, could be applied.

Timeliness and Acceptance of Payment

• Whether the Alfonsos’ tender of the balance on October 6, 1973 was timely and binding under the terms of the agreement.
• The legitimacy of the Chancos’ cancellation of the agreement in light of the alleged absence of a rescission demand filed judicially or notarially.

Validity of the Subsequent Sale

• Whether the sale of the property by the Chancos to the Namit Spouses was lawful, notwithstanding the prior agreement with the Alfonsos.
• The implications of the extrajudicial cancellation made by the Chancos on the rights of the Alfonsos under their contract.

Evidentiary Foundation and Party Capacities

• Whether the evidence supported the finding that time was of the essence in the Chancos’ agreement.
• Whether the Alfonsos were indeed in a position to pay the full purchase price as alleged by the Chancos.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)