OWNERSHIP IS RESERVED IN A CONTRACT TO SELL

Doctrine: In a contract to sell, ownership is retained by a seller and is not to be transferred to the
vendee until full payment of the price. Such payment is a positive suspensive condition, the failure of
which is not a breach of contract but simply an event that prevents the obligation from acquiring
binding force. (Heirs of Pedro Escanlar vs. CA, G.R. No. 119777. October 23, 1997.)

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TICKLER

Heirs of Escanlar vs CA
G.R. No., 119777 Date October 23, 1997
ROMERO, J.

FACTS:
Consolidated petitions for review of the decision of the CA

The Private Respondents executed a Deed of Sale in favor of petitioners. Petitioners paid P50,000.00
as a form of downpayment, but was unable to pay the remaining balance (paid only 12 installments).
Being former lessees, petitioners continued in possession of the said lots, and continued to pay rent.
Private Respondent later sold the said lots to another party.

Private Respondent then filed an action for cancellation of sale against petitioners, for failure to pay the
balance. Petitioners however, sold their rights and interests over the said lots to Jayme, and turned over
possession.

The Regional Trial Court ruled that the Sale to petitioners was nullified since all the properties of the
estate had been transferred and titled to in the name of the Chua spouses. On appeal, the Court of
Appeals affirmed, questioned deed of sale (one with petitioners) is a contract to sell because it shall
become effective only upon approval by the probate court and upon full payment of the purchase price.

ISSUE:
Whether or not the sale was a contract to sell and therefore, private respondents may rescind the
contract the moment the buyer fails to pay.

HELD:
No. It is a contract of sale.

Under Article 1477 of the Civil Code, the ownership of the thing sold is acquired by the vendee upon
actual or constructive delivery thereof.

Private respondents as sellers did not reserve unto themselves the ownership of the property until full
payment of the unpaid balance. There is no stipulation giving the sellers the right to unilaterally rescind
the contract the moment the buyer fails to pay within the fixed period. Prior to the sale, petitioners were
already in possession of the subject property as lessees. Upon sale to them of the rights, interests and
participation as to the 1/2 portion pro indiviso, they remained in possession, not in concept of lessees
anymore but as owners through symbolic delivery known as traditio brevi manu.

Therefore, although a deed of conditional sale is denominated as such, absent a proviso that title to the
property sold is reserved in the vendor until full payment of the purchase price nor a stipulation giving
the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed
period, by its nature, it shall be declared a deed of absolute sale.