CONTRACT OF SALE V. CONTRACT TO SELL V.

CONDITIONAL SALE

The Court agrees with the ruling of the courts below that the subject Deed of
Conditional Sale with Assumption of Mortgage entered into by and among the two
parties and FSL Bank on November 26, 1990 is a contract to sell and not a contract
of sale. The subject contract was correctly classified as a contract to sell based on
the following pertinent stipulations:

8. That the title and ownership of the subject real properties shall remain with the
First Party until the full payment of the Second Party of the balance of the purchase
price and liquidation of the mortgage obligation of ₱2,000,000.00. Pending
payment of the balance of the purchase price and liquidation of the mortgage
obligation that was assumed by the Second Party, the Second Party shall not sell,
transfer and convey and otherwise encumber the subject real properties without
the written consent of the First and Third Party.

9. That upon full payment by the Second Party of the full balance of the purchase
price and the assumed mortgage obligation herein mentioned the Third Party shall
issue the corresponding Deed of Cancellation of Mortgage and the First Party shall
execute the corresponding Deed of Absolute Sale in favor of the Second Party.[7]

Based on the above provisions, the title and ownership of the subject properties
remains with the petitioner until the respondent fully pays the balance of the
purchase price and the assumed mortgage obligation. Thereafter, FSL Bank shall
then issue the corresponding deed of cancellation of mortgage and the petitioner
shall execute the corresponding deed of absolute sale in favor of the respondent.
Accordingly, the petitioner’s obligation to sell the subject properties becomes
demandable only upon the happening of the positive suspensive condition, which
is the respondent’s full payment of the purchase price. Without respondent’s full
payment, there can be no breach of contract to speak of because petitioner has
no obligation yet to turn over the title. Respondent’s failure to pay in full the
purchase price is not the breach of contract contemplated under Article 11911 of

1Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
the New Civil Code but rather just an event that prevents the petitioner from being
bound to convey title to the respondent. The 2009 case of Nabus v. Joaquin & Julia
Pacson s enlightening:

A contract of sale is defined in Article 1458 of the Civil Code, thus:

Art. 1458. By the contract of sale, one of the contracting parties obligates himself
to transfer the ownership of and to deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent.
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Sale, by its very nature, is a consensual contract because it is perfected by mere

consent. The essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in

exchange for the price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, 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, which for present purposes we shall take as the full payment of the
purchase price. What the seller agrees or obliges himself to do is to fulfill his
promise to sell the subject property when the entire amount of the purchase
price is delivered to him. In other words, the full payment of the purchase price

The injured party may choose between the fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing
of a period.
This is understood to be without prejudice to the rights of third persons who have acquired
the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)
partakes of a suspensive condition, the non-fulfillment of which prevents the
obligation to sell from arising and, thus, ownership is retained by the prospective
seller without further remedies by the prospective buyer.
xxx xxx xxx
Stated positively, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, the prospective seller’s obligation to sell the subject
property by entering into a contract of sale with the prospective buyer becomes
demandable as provided in Article 1479 of the Civil Code which states:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price

certain is binding upon the promissor if the promise is supported by a consideration
distinct from the price.

A contract to sell may thus be defined as 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 fulfillment of the
condition agreed upon, that is, full payment of the purchase price.

A contract to sell as defined hereinabove, may not even be considered as a

conditional contract of sale where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event which may
or may not occur. If the suspensive condition is not fulfilled, the perfection of the
contract of sale is completely abated. However, if the suspensive condition is
fulfilled, the contract of sale is thereby perfected, such that if there had already
been previous delivery of the property subject of the sale to the buyer, ownership
thereto automatically transfers to the buyer by operation of law without any
further act having to be performed by the seller.

In a contract to sell, upon the fulfillment of the suspensive condition which is the
full payment of the purchase price, ownership will not automatically transfer to
the buyer although the property may have been previously delivered to him. The
prospective seller still has to convey title to the prospective buyer by entering
into a contract of absolute sale.

Further, Chua v. Court of Appeals, cited this distinction between a contract of sale
and a contract to sell:

In a contract of sale, the title to the property passes to the vendee upon the
delivery of the thing sold; in a contract to sell, ownership is, by agreement,
reserved in the vendor and is not to pass to the vendee until full payment of the
purchase price. Otherwise stated, in a contract of sale, the vendor loses
ownership over the property and cannot recover it until and unless the contract
is resolved or rescinded; whereas, in a contract to sell, title is retained by the
vendor until full payment of the price. In the latter contract, payment of the price
is a positive suspensive condition, failure of which is not a breach but an event
that prevents the obligation of the vendor to convey title from becoming
effective.

It is not the title of the contract, but its express terms or stipulations that determine
the kind of contract entered into by the parties. In this case, the contract entitled
“Deed of Conditional Sale” is actually a contract to sell. The contract stipulated that
“as soon as the full consideration of the sale has been paid by the vendee, the
corresponding transfer documents shall be executed by the vendor to the vendee
for the portion sold.” Where the vendor promises to execute a deed of absolute
sale upon the completion by the vendee of the payment of the price, the contract
is only a contract to sell.” The aforecited stipulation shows that the vendors
reserved title to the subject property until full payment of the purchase price.
Xxx

Unfortunately for the Spouses Pacson, since the Deed of Conditional Sale executed
in their favor was merely a contract to sell, the obligation of the seller to sell
becomes demandable only upon the happening of the suspensive condition. The
full payment of the purchase price is the positive suspensive condition, the failure
of which is not a breach of contract, but simply an event that prevented the
obligation of the vendor to convey title from acquiring binding force. Thus, for its
non-fulfilment, there is no contract to speak of, the obligor having failed to perform
the suspensive condition which enforces a juridical relation. With this
circumstance, there can be no rescission or fulfillment of an obligation that is still
non-existent, the suspensive condition not having occurred as yet. Emphasis should
be made that the breach contemplated in Article 1191 of the New Civil Code is
the obligor’s failure to comply with an obligation already extant, not a failure of
a condition to render binding that obligation. [Emphases and underscoring
supplied]

Consistently, the Court handed down a similar ruling in the 2010 case of Heirs of
Atienza v. Espidol, [9] where it was written:
Regarding the right to cancel the contract for non-payment of an installment,
there is need to initially determine if what the parties had was a contract of sale
or a contract to sell. In a contract of sale, the title to the property passes to the
buyer upon the delivery of the thing sold. In a contract to sell, on the other hand,
the ownership is, by agreement, retained by the seller and is not to pass to the
vendee until full payment of the purchase price. In the contract of sale, the buyer’s
non-payment of the price is a negative resolutory condition; in the contract to sell,
the buyer’s full payment of the price is a positive suspensive condition to the
coming into effect of the agreement. In the first case, the seller has lost and cannot
recover the ownership of the property unless he takes action to set aside the
contract of sale. In the second case, the title simply remains in the seller if the buyer
does not comply with the condition precedent of making payment at the time
specified in the contract. Here, it is quite evident that the contract involved was
one of a contract to sell since the Atienzas, as sellers, were to retain title of
ownership to the land until respondent Espidol, the buyer, has paid the agreed
price. Indeed, there seems no question that the parties understood this to be the
case.

Admittedly, Espidol was unable to pay the second installment of P1,750,000.00

that fell due in December 2002. That payment, said both the RTC and the CA, was
a positive suspensive condition failure of which was not regarded a breach in the
sense that there can be no rescission of an obligation (to turn over title) that did
not yet exist since the suspensive condition had not taken place. x x x. [Emphases
and underscoring supplied]
DISPOSITION OF PUBLIC LANDS

To sum up, we now observe the following rules relative to the disposition of public
land or lands of the public domain, namely:
(1) As a general rule and pursuant to the Regalian Doctrine, all lands of the public
domain belong to the State and are inalienable. Lands that are not clearly under
private ownership are also presumed to belong to the State and, therefore, may
not be alienated or disposed;
(2) The following are excepted from the general rule, to wit:
(a) Agricultural lands of the public domain are rendered alienable and disposable
through any of the exclusive modes enumerated under Section 11 of the Public
Land Act. If the mode is judicial confirmation of imperfect title under Section 48(b)
of the Public Land Act, the agricultural land subject of the application needs only to
be classified as alienable and disposable as of the time of the application, provided
the applicant’s possession and occupation of the land dated back to June 12, 1945,
or earlier. Thereby, a conclusive presumption that the applicant has performed all
the conditions essential to a government grant arises,36 and the applicant becomes
the owner of the land by virtue of an imperfect or incomplete title. By legal fiction,
the land has already ceased to be part of the public domain and has become private
property.37
(b) Lands of the public domain subsequently classified or declared as no longer
intended for public use or for the development of national wealth are removed
from the sphere of public dominion and are considered converted into patrimonial
lands or lands of private ownership that may be alienated or disposed through any
of the modes of acquiring ownership under the Civil Code. If the mode of
acquisition is prescription, whether ordinary or extraordinary, proof that the land
has been already converted to private ownership prior to the requisite acquisitive
prescriptive period is a condition sine qua non in observance of the law (Article
1113, Civil Code) that property of the State not patrimonial in character shall not
be the object of prescription.

REPUBLIC ACT No. 11231

An Act Removing the Restrictions Imposed on the Registration, Acquisition,

Encumbrance, Alienation, Transfer and Conveyance of Land Covered by Free
Patents Under Sections 118, 119 and 121 of Commonwealth Act No. 141,
Otherwise Known as "The Public Land Act", as Amended
Section 1. This Act shall be known as the "Agricultural Free Patent Reform Act".

Section 2. It is the declared policy of the State to remove the restrictions on free
patents to allow the efficient and effective utilization of these lands in order to
contribute to wealth creation, entrepreneurship, and economic development.

Section 3. Agricultural public lands alienated or disposed in favor of qualified public

land applicants under Section 44 of Commonwealth Act No. 141, as amended, shall
not be subject to restrictions imposed under Sections 118, 119 and 121 thereof
regarding acquisitions, encumbrances, conveyances, transfers, or dispositions.
Agricultural free patent shall now be considered as title in fee simple and shall not
be subject to any restriction on encumbrance or alienation.

Section 4. This Act shall have retroactive effect and any restriction regarding
acquisitions, encumbrances, conveyances, transfers, or dispositions imposed on
agricultural free patents issued under Section 44 of Commonwealth Act No. 141, as
amended, before the effectivity of this Act shall be removed and are hereby
immediately lifted: Provided, That nothing in this Act shall affect the right of
redemption under Section 119 of Commonwealth Act No. 141, as amended, for
transactions made in good faith prior to the effectivity of this Act.

RA 8552 DOMESTIC ADOPTION ACT

b) "A child legally available for adoption" refers to a child who has been voluntarily
or involuntarily committed to the Department or to a duly licensed and accredited
child-placing or child-caring agency, freed of the parental authority of his/her
biological parent(s) or guardian or adopter(s) in case of rescission of adoption.

(c) "Voluntarily committed child" is one whose parent(s) knowingly and willingly
relinquishes parental authority to the Department.

(d) "Involuntarily committed child" is one whose parent(s), known or unknown, has
been permanently and judicially deprived of parental authority due to
abandonment; substantial, continuous, or repeated neglect; abuse; or
incompetence to discharge parental responsibilities.
(e) "Abandoned child" refers to one who has no proper parental care or
guardianship or whose parent(s) has deserted him/her for a period of at least six
(6) continuous months and has been judicially declared as such.

Section 7. Who May Adopt. – The following may adopt:

(a) Any Filipino citizen of legal age, in possession of full civil capacity and legal rights,
of good moral character, has not been convicted of any crime involving moral
turpitude, emotionally and psychologically capable of caring for children, at least
sixteen (16) years older than the adoptee, and who is in a position to support and
care for his/her children in keeping with the means of the family. The requirement
of sixteen (16) year difference between the age of the adopter and adoptee may
be waived when the adopter is the biological parent of the adoptee, or is the spouse
of the adoptee's parent;

(b) Any alien possessing the same qualifications as above stated for Filipino
nationals: Provided, That his/her country has diplomatic relations with the Republic
of the Philippines, that he/she has been living in the Philippines for at least three
(3) continuous years prior to the filing of the application for adoption and maintains
such residence until the adoption decree is entered, that he/she has been certified
by his/her diplomatic or consular office or any appropriate government agency that
he/she has the legal capacity to adopt in his/her country, and that his/her
government allows the adoptee to enter his/her country as his/her adopted
son/daughter: Provided, Further, That the requirements on residency and
certification of the alien's qualification to adopt in his/her country may be waived
for the following:

(i) a former Filipino citizen who seeks to adopt a relative within the fourth (4th)
degree of consanguinity or affinity; or

(ii) one who seeks to adopt the legitimate son/daughter of his/her Filipino spouse;
or

(iii) one who is married to a Filipino citizen and seeks to adopt jointly with his/her
spouse a relative within the fourth (4th) degree of consanguinity or affinity of the
Filipino spouse; or
(c) The guardian with respect to the ward after the termination of the guardianship
and clearance of his/her financial accountabilities.

Husband and wife shall jointly adopt, except in the following cases:

(i) if one spouse seeks to adopt the legitimate son/daughter of the other; or

(ii) if one spouse seeks to adopt his/her own illegitimate son/daughter: Provided,
However, that the other spouse has signified his/her consent thereto; or

(iii) if the spouses are legally separated from each other.

In case husband and wife jointly adopt, or one spouse adopts the illegitimate
son/daughter of the other, joint parental authority shall be exercised by the
spouses.

Section 8. Who May Be Adopted. – The following may be adopted:

(a) Any person below eighteen (18) years of age who has been administratively or
judicially declared available for adoption;

(b) The legitimate son/daughter of one spouse by the other spouse;

(c) An illegitimate son/daughter by a qualified adopter to improve his/her status to

that of legitimacy;

(d) A person of legal age if, prior to the adoption, said person has been consistently
considered and treated by the adopter(s) as his/her own child since minority;

(e) A child whose adoption has been previously rescinded; or

(f) A child whose biological or adoptive parent(s) has died: Provided, That no
proceedings shall be initiated within six (6) months from the time of death of said
parent(s).
Section 9. Whose Consent is Necessary to the Adoption. – After being properly
counseled and informed of his/her right to give or withhold his/her approval of the
adoption, the written consent of the following to the adoption is hereby required:

(a) The adoptee, if ten (10) years of age or over;

(b) The biological parent(s) of the child, if known, or the legal guardian, or the
proper government instrumentality which has legal custody of the child;

(c) The legitimate and adopted sons/daughters, ten (10) years of age or over, of the
adopter(s) and adoptee, if any;

(d) The illegitimate sons/daughters, ten (10) years of age or over, of the adopter if
living with said adopter and the latter's spouse, if any; and

(e) The spouse, if any, of the person adopting or to be adopted.

DIVORCE OBTAINED BY FILIPINO SPOUSE

G.R. No. 221029, April 24, 2018 - REPUBLIC OF THE PHILIPPINES, Petitioner, v.
MARELYN TANEDO MANALO, Respondent.

Paragraph 2 of Article 26 speaks of "a divorce x x x validly obtained abroad by the

alien spouse capacitating him or her to remarry. " Based on a clear and plain reading
of the provision, it only requires that there be a divorce validly obtained abroad.
The letter of the law does not demand that the alien spouse should be the one who
initiated the proceeding wherein the divorce decree was granted. It does not
distinguish whether the Filipino spouse is the petitioner or the respondent in the
foreign divorce proceeding. The Court is bound by the words of the statute; neither
can We put words in the mouths of the lawmakers.37 "The legislature is presumed
to know the meaning of the words, to have used words advisedly, and to have
expressed its intent by the use of such words as are found in the statute. Verba
legis non est recedendum, or from the words of a statute there should be no
departure."38

xxx
Jurisprudence has set guidelines before Philippine courts recognize a foreign
judgment relating to the status of a marriage where one of the parties is a citizen
of a foreign country. Presentation solely of the divorce decree will not suffice.89 The
fact of divorce must still first be proven.90 Before a foreign divorce decree can be
recognized by our courts, the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it.91

x x x Before a foreign judgment is given presumptive evidentiary

value, the document must first be presented and admitted in
evidence. A divorce obtained abroad is proven by the divorce decree
itself. Indeed the best evidence of a judgment is the judgment itself.
The decree purports to be a written act or record of an act of an
official body or tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other hand, a writing
or document may be proven as a public or official record of a foreign
country by either (1) an official publication or (2) a copy thereof
attested by the officer having legal custody of the document. If the
record is not kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper diplomatic or
consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by
the seal of his office.92