Buyer’s failure to pay voids contract to sell

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Persida Acosta

Persida Acosta

Dear PAO,
I sold my property last year. The buyer said he cannot pay the purchase price in full so he made a down payment and promised to pay the balance after six months. Following the advice of a friend, I only signed a contract to sell with a condition that a deed of sale would be made after full payment. However, the buyer failed to pay the balance. I really need money now and another buyer is offering to purchase my property. Can I sell the property to another buyer?
Alta

Dear Alta,
You mentioned that the contract you signed is a contract to sell. A contract to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfilment of the condition agreed upon, that is, full payment of the purchase price. It is similar to a contract of sale but it lacks an essential element, which is consent to transfer ownership in exchange for the price (Nabus v. Joaquin & Julia Pacson, 605 SCRA 334).

Thus, a contract to sell does not transfer ownership of the property to the buyer. It is only a promise to sell the property upon compliance with the condition that the purchase price is paid in full. Full ownership remains with the seller. In our laws, ownership includes the right to dispose or alienate the property (jus disponendi) (Samartino v. Raon, 383 SCRA 664). Consequently, the seller as the owner of the property has the right to sell it to whoever he chooses.

In your case, aside from your statement that you signed a contract to sell, the fact that there is a condition in the contract which states that a deed of sale will be executed upon full payment of the price suggests that it is indeed a contract to sell. As the Supreme Court declared, a stipulation in a contract which states that the seller shall execute a deed of sale only upon or after full payment of the purchase price shows that the vendor reserved title to the subject property until full payment of the purchase price and indicates that it is a contract to sell (Diego vs. Diego, 691 SCRA 361). Hence, you are still the owner of the property. As the owner, you have the right to dispose or sell it.


Concerning the right of the buyer in the contract to sell, his failure to make full payment prevented your obligation as prospective seller to execute the deed of sale from arising. Having failed to comply with his obligation under the contract to sell, he has no right to enforce the same (See Ventura vs. Heirs of Sps. Endaya, G.R. No. 190016, October 2, 2013).

We hope this opinion enlightened you on the matter. Please bear in mind that this opinion is strictly based on the facts you narrated and our appreciation of the same. Our opinion may vary if facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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