In a landmark ruling, the Supreme Court has made clear that an acknowledgment receipt alone cannot be treated as a contract of sale unless it clearly shows the seller’s intent to transfer ownership of the property to the buyer.

In a decision penned by Associate Justice Maria Filomena D. Singh and released on 26 February 2025, the SC’s Third Division settled a long-running dispute between Virgilio B. Chavez and Spouses Joselito and Adriana Gopez over two inherited properties worth P31.5 million.

The couple agreed to buy the properties with a down payment of PHP 5 million and were asked to prepare a contract to sell. They paid PHP 200,000 as “earnest money,” documented only through an acknowledgment receipt. When delays and unpaid balances arose, the Chavez family called off the agreement, claiming that the spouses failed to pay the full amount and altered the terms in the draft contract to sell.

The Gopezes turned to the Regional Trial Court to enforce the sale, arguing they had already paid PHP 1.5 million. The RTC, however, ruled that there was only a contract to sell, not a contract of sale, and that the couple had no right to demand the transfer of ownership without full payment.

Though the Court of Appeals later reversed this, saying the receipt contained all the elements of a sale, the Supreme Court upheld the RTC’s decision. It explained that under a contract to sell, the seller’s promise to transfer ownership only arises once the buyer fully pays. The receipt did not include any commitment to immediately transfer title, only that the spouses needed to complete payment and finalize the required documents.

The court also reminded that labeling money as “earnest money” does not automatically create a sale. Instead, it signals good faith and intent to buy, provided conditions are met. Associate Justice Alfredo Benjamin S. Caguioa, concurring, emphasized that a contract to sell may exist even if there is no explicit reservation of ownership, especially when a separate deed of sale is needed once payment is complete.

In the end, the Supreme Court ruling affirms that a simple receipt is not enough proof to demand transfer of property ownership. It must be clear that both parties agree on the actual sale and that conditions, such as full payment and proper documentation, are fulfilled.