“Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.
“A contract of sale may be absolute or conditional.”
On the other hand, a contract to sell has been defined jurisprudentially as follows: On the other hand, a contract to sell has been defined jurisprudentially as follows: “A contract to sell, on the other hand, 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 purchase price” (Platinum Plans Phil. Inc. vs Cucueco, GR 147405, April 25, 20065, Ponente: Associate Justice Adolfo Azcuna).
Following the above definitions, the Supreme Court in the case of Spouses Beltran vs Spouses Cangayda (GR 225033, Aug. 15, 2018), penned by Associate Justice Alfredo Benjamin Caguioa, provides the distinctions between a contract of sale and a contract to sell to wit: “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In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price, xxx.”
It is clear that in a contract of sale, in the absence of any stipulation to the contrary, ownership of the thing sold shall pass to the buyer upon actual or constructive delivery (execution of the deed of sale) thereof.
Under a contract to sell and conditional contract of sale, the actual delivery of the property does not necessarily mean the transfer of ownership.
To elaborate this point, reference to Articles 1477 and 1478 of the Civil Code is in order: “Article 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.
“Article 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price.”
A reading of the cited provisions dictates that the law recognizes the validity of a contract wherein the transfer of ownership is reserved by the seller until he or she is fully paid. In this regard, a contract of sale is notably different from a conditional sale and contract to sell since the former connotes the absolute transfer of ownership upon delivery of the thing sold, while the contract to sell and conditional contract of sale is pertinent for their similarity, i.e., the necessity of the suspensive condition’s fulfillment before any transfer of ownership.
Nonetheless, although both contract to sell and conditional contract of sale speak of a suspensive condition before any transfer of ownership takes in, they are distinguished by the effect of the fulfillment of the condition (full payment of the purchase price). In a contract to sell, the fulfillment of the suspensive condition does not automatically transfer the ownership to the buyer although the property may have been previously delivered to him. In this situation, the prospective seller must still convey title to the prospective buyer by entering into a contract of absolute sale.
Meanwhile, in a conditional contract of sale, the fulfillment of the suspensive condition (full payment of the purchase price) renders the sale absolute and the previous delivery of the property has the effect of automatically transferring the seller’s ownership to the property to the buyer.
These legal terms vary as to the time when the transfer of ownership takes place. With that in mind, the importance of carefully reading the contents and nomenclature of the contract couldn’t be understated enough.
After all, as we have mentioned, the legal consequences and remedy depend on the kind of sales contract that you and your prospective seller would ultimately agree on.