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  • Contract to Sell

    A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinate to the happening of a future and uncertain event, so that if the suspensive condition does take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly the full payment of the purchase price. (Philippine National Bank v. Court of Appeals and Lapaz Kaw Ngo, G.R. No. 119580, September 26, 1996, citing Rose Packing Co., Inc. v. Court of Appeals, 167 SCRA 309, 318 (1988) and Lim v. Court of Appeals, 182 SCRA 564, 670 (1990)).

    The differences between a contract to sell and a contract of sale are well-settled in jurisprudence. As early as 1951, in Sing Yee v. Santos, 47 O.G. 6372 (1951), it was held:

    “x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon delivery of the thing sold and a contract to sell x x x where by agreement the ownership is reserved in the seller and is not to pass until the full payment, of the purchase price is made. In the first case, non-payment of the price is a positive suspensive condition. Being contraries, their effect in law cannot be identical. In the first case, the vendor has lost and cannot recover the ownership of the land sold until and unless the contract of sale itself is resolved and set aside. In the second case, however, the title remains in the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract.

    In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full payment of the price.(Jacinto v. Kaparaz, 209 SCRA 246 (1992).

    The “Receipt for Partial Payment” shows that the true agreement between the parties is a contract to sell.

    First, ownership over the property was retained by sellers and was not to pass to buyer until full payment of the purchase price. Thus, owners need not push through with the sale should buyer fail to remit the balance of the purchase price before the deadline on March 23, 1990. In effect, petitioners have the right to rescind unilaterally the contract the moment respondent fails to pay within the fixed period. (Chua v. CA, G.R. No. 119255, April 9, 2003, 401 SCRA 54).

    Second, the agreement between the parties was not embodied in a deed of sale. The absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price.

    Third, seller/owners retained possession of the certificate of title of the lot. This is an additional indication that the agreement did not transfer to the buyer, either by actual or constructive delivery, ownership of the property.

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