1. Can you sell an indivisible determinate object in portions?

Article 1225, paragraph 3 of the Civil Code of the Philippines defines what is an “indivisible object”
as connoted by the law. “However, even though the object or service may be physically divisible, if so
provided by law or intended by the parties.” The fine line that separates indivisible objects from divisible
objects is not on the possibility or impossibility of partial prestation but the purpose of such obligation
and the intention of the parties.

However, as stated in paragraph 1 of the same provision “obligations to give definite things and
those which are not susceptible of partial performance shall be deemed to indivisible.”, the intention of
the parties as to objects which are inherently indivisible will not matter, regardless of what was stated in
paragraph 3. This is an exception to the general rule.

Establishing the definition of “indivisible objects”, how does one sell an indivisible object? It
depends on who has the ownership of the “indivisible object.” Article 1463 states that “The sole owner of
a thing may sell an undivided interest therein.” Therefore, if there is only one owner of the “indivisible
object”, he can wholly transfer his interest.

However, the problem arises when there is co-ownership on a thing, regardless of divisibility or
indivisibility. Article 484 defines co-ownership as “whenever the ownership of an undivided thing or right
belongs to different persons.” In this case, two or more persons undividedly own the same thing up to the
smallest possible measurement (e.g. two or more persons own every single cell in terms of living
creatures, or two or more persons own every single atom.) Clearly, what is divided in this case is not the
physical object itself but the rights attached to the object.

In this case, if the sole owner decides to sell an indivisible thing in portions, he is selling an
undivided interest therein. It will be conceived as if he is selling the rights attached to the indivisible thing
rather than selling a portion of an indivisible determinate thing. This produced the legal effect of making
the buyer of the “rights” as a co-owner.

A co-owner, in turn, “have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. However, the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in
the division of the property upon termination of the co-ownership.” (Article 493)

Therefore, one can sell an indivisible determinate object in portions, however, only in terms of
the rights (interest) attached to object. An indivisible determinate object, even though capable of
divisibility cannot be sold partially.

2. Contract to sell vs Contract of sale

In Article 1458 of the Civil Code of the Philippines, the Contract of Sale is defined as a contract
where “one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefore a price certain in money or its equivalent.” From the
definition, we can derive the specific requisites:
 1. Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the
price;
2. Determinate object or subject matter; and,
3. Cause which is the price, certain in money or its equivalent.

On the other hand, a “contract to sell”, which can be also called as a “contract to constitute a
sale” is an agreement between a buyer and a seller whereby the seller promises to sell something to the
buyer and the buyer promises to sell it. There is no clear definition set in the Civil Code, however, a
contract to sell is NOT a contract of sale. There is no conveyance of ownership to the buyer upon the
execution of the contract.

Sale, by its very nature, is a consensual contract because it is perfected by mere consent. In a
decision by the Supreme Court, “a contract to sell may not be considered as a Contract of Sale because
the first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the
transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent
to transfer ownership of the property subject of the contract to sell until the happening of an event.” (G.R.
No. 188064, Reyes vs Tuparan, June 1, 2011)

In other words, a contract to sell may be defined as a bilateral contract whereby a prospective
vendor, while reserving the ownership of the object, binds himself to sell the said properly exclusively to
the prospective vendee upon the fulfillment of the obligation agreed upon. A contract to sell may not
even be considered as a conditional contract of sale where the seller may likewise reserve the title to the
object because fundamentally, it lacks the essential element of consent.

In a conditional contract of sale, there is consent, although it is conditioned upon the happening
of a contingent event which may or may not occur. If the condition is not fulfilled, the perfection of the
contract is abated. Otherwise, ownership automatically transfers by operation of law.

In a contract to sell, upon the fulfillment of the suspensive condition, ownership will not
automatically transfer to the buyer. The prospective seller still has to convey the title to the prospective
buyer by constituting a contract of sale.

3. Price vs Earnest Money

Price refers to the cause, at least to the seller, of the contract of sale which is a “certain in money
or its equivalent” (Article 1458). Generally, price is the cost at which something is obtained in exchange
for something else. There can be no sale without a price (Article 1474). However, absence of price renders
the contract void as opposed to failure of consideration (Article 1475).

Earnest money, on the other hand, is part of the purchase price, and given when there is already
sale. It is also called as a “downpayment”. Therefore, actual payment of the earnest money is a partial
fulfillment of a valid contract of sale. However, the absence of the earnest money does not render a
contract of sale void. In case of mutual agreement not to proceed with the contract or the contract being
void, the vendor must return the amount of the earnest money to the vendee.