Contract of Sale v. Contract to Sell

Question 1

Differentiate between contract of sale v. contract to sell.

Contract of Resciale (Sale)
Contract to Fseull. (Sell)

Answer 1

1. In terms of contract rescission
   A. In contract of sale, notarization of contract of sale is needed for contract rescission.
   B. In contract to sell, there is no prescribed form for its rescission. Just a simple failure to pay the remaining balance of the purchase price is a sufficient ground for the cancellation of the contract.
   (Cabrera vs. Ysaac, GR 166790, November 19, 2014)

Question 2

What is a contract of sale?

Question 3

What is a contract to sell?

Answer 3

One indicia of a contract to sell is that ownership shall not pass until full payment of the price.

A contract to sell has been defined as ‘a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds itself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.’ In a contract to sell, ‘ownership is retained by the seller and is not to pass until the full payment of the price.’ Consequently, once the buyer has paid the purchase price in full, the contract to sell is converted to an absolute sale, and the buyer has the right to demand the execution of a Deed of Absolute Sale in its favor.

(Fil-Estate Properties, Inc. vs. Hermana Realty, Inc., GR 231936, November 25, 2020)