CONTRACT TO SELL

Category: Sales

CONTRACT TO SELL

In Sps. Torrecampo v. Alindogan, Sr., et al., G.R. No. 156405, February 28, 2007, the parties entered into a “Contract to Buy and Sell” and that the balance shall be paid upon the issuance of the title. The question is whether, the contract is a contract of sale of contract to sell.

Held: It is a contract to sell.

             The SC had one again had the occasion to distinguish the two contracts and said that, in a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; in a 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. Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. (Salazar v. CA, G.R. No. 118203, July 5, 1996, 258 SCRA 317).

             Indeed, the true agreement between the parties is a contract to sell. Not only did the parties denominate their contract as “Contract to Buy and Sell”, but also specified therein that the balance of the purchase price is to be paid upon the issuance of a certificate of title indicates that ownership of the subject property did not pass to the buyers.

             In Ursal v. Court of Appeals, et al., G.R. No. 142411, October 14, 2005, 473 SCRA 52; Chua v. CA, 401 SCRA 54 (2003), it was held, thus:

             “Indeed, in contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the existence of the contract of sale that the seller becomes obligated to transfer the ownership of the thing sold to the buyer. Prior to the existence of the contract of sale, the seller is not obligated to transfer the ownership to the buyer, even if there is a contract to sell between them.”