Explanation of Article 320
The first paragraph clarified the permissibility of stipulating the suspension of the transfer of ownership of the sold item on a suspensive condition, and that what is contained in Article (318) that the sale, upon its conclusion, implies the transfer of ownership is not of public order; thus, it is permissible to agree otherwise. If the sale is for a deferred price payable at a specific time, or for an installment price in specified installments, and the seller stipulates to the buyer that the sale is suspended on a suspensive condition, which is the buyer's fulfillment of the deferred price at the specified time, or his fulfillment of all installments at the agreed time, then the sale is valid, and the condition is enforceable, whether the seller delivers the sold item to the buyer before fulfilling the price or not. As a result, the ownership of the sold item is transferred to the buyer suspended on a suspensive condition, and if the buyer disposes of the sale or mortgage or otherwise in this suspended ownership before the condition is fulfilled, his disposal is also suspended on a suspensive condition.
There is also nothing to prevent the seller, instead of suspending the transfer of ownership of the sold item to the buyer on a suspensive condition, from making it suspended on a resolutory condition, which is the non-fulfillment of the price. Thus, ownership is transferred to the buyer upon the contract being suspended on a resolutory condition; and if the price is not fulfilled, the seller may rescind the sale without the need for a judicial ruling.
The second paragraph clarified the effect when the suspensive condition is fulfilled by the buyer's payment of the price, which is that the buyer becomes the absolute owner of the sold item and its fruits from the beginning of the contract, and the seller's ownership of the sold item is retroactively removed. The implication of the suspensive condition is that if the condition fails and the buyer delays in paying the price, the buyer's ownership is retroactively removed due to the non-fulfillment of the condition, and the ownership returns absolutely to the seller.
As a result, the seller, upon the non-fulfillment of the condition, can demand compensation from the buyer due to the dissolution of the contract. If the seller stipulates that the compensation is to retain all or some of the installments that the buyer had paid, this is an agreed compensation subject to the provisions of Article (179); the court may reduce it if it is excessive.
The seller, instead of insisting on the dissolution of the contract upon the failure of the condition, can demand the execution of the contract; thus, requiring the buyer to pay the remaining installments due, because this condition is established for the benefit of the seller, and he may waive it.
Related To
Article 320
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The seller may, if the payment is deferred or made in installments, require that the transfer of ownership to the buyer be conditional upon the seller’s receipt of the payment in full, even if the sold item is delivered.
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If the seller receives the payment in full, the buyer shall be deemed the owner of the sold item from the date the sale is concluded.