Sales and Rights of Ownership

1. Who can own land in the Philippines?

Acquisition and ownership of private lands in the Philippines is limited and/or reserved to Filipinos or to
Corporations or partnerships where at lease 60% of the authorized capital of which is owned by Filipino
citizens, except: When such property is acquired prior to the 1973 Constitution; Acquisition by an alien or
foreigner by hereditary succession; Aliens/foreigners owning not more than 40% interest in a condominium
project pursuant to RA 4726; Where a former natural born Filipino who became a citizen of another
country but is now returning to the Philippines to reside hereat permanently. Hence, hay acquire through
sale, donation, or through a tax sale, foreclosure sale, or execution sale not more than 1,000 sq. m. for
urban land or not more than 10,000 sq. m. for rural land to be used solely for residential purposes and
subject to other limitations and requirements as provided under the law (Batas Pambansa No. 185); A
Filipina who marries an alien retains her Philippine citizenship (to avoid being stateless) unless by her own
act or omission she is deemed to have renounced her Filipino citizenship, may acquire and own private
lands in the Philippines.
2. What are the bundle of rights of property ownership?
The bundle of rights theory inherent to property ownership are the right to use (Jus-Utendi), the right to
enjoy the fruits of (Jus-Fruendi), the right to dispose (Jus-Disponendi), the right to abuse (Jus-Abutendi),
the right to recover (Jus-Vindicandi), and the right to possess (Jus-Possidendi). The rights incident to
ownership are, the right: to enjoy and dispose of a property without other limitations than those
established by law; to file action against third parties to recover ownership; to use force as may be
reasonably necessary to repeal or prevent an actual or threatened unlawful invasion or usurpation of his
property (Art. 429, NCC, relate to Art. 312, RPC); the right to enclose or fence property - walls ditches,
live or dead hedges - or by any other means without detriment of servitudes constituted thereon; to
demand indemnity for damages caused to property; the right to compensation in the event of
expropriation; the right to be restored to possession in case of unlawful dispossession; the right to the
surface and subsurface of the land, right to construct thereon any works, plantation and excavation
without detriment to servitude and subject to special laws and without right to complain of the
reasonable requirements of aerial navigation; the right to hidden treasure; the right to accession and
fruits of the property; the right to "quiet title" to real property or any interest therein.
3. What is the Steward Concept of property ownership?
The Steward Concept is a legal doctrine which holds that property ownership presupposes noncomittant
obligations to the state and the community and that property is supposed to be held by the individual only
as trustee for people in general; and that as mere steward, the property owner must exercise his rights to
the property not just for his own exclusive and selfish benefit or interest but for the good and general
welfare of the nation as a whole.
4. What is the Regalian Doctrine of property ownership?
A principle in law which means that all natural wealth - agricultural, forest or timber, and mineral lands
of the public domain and all other natural resources belong to the state. Thus, even if the private person
owns the property where minerals are discovered, his ownership for such does not give him the right to
extract or utilize said minerals without permission from the state to which such minerals belong.
5. What are the limitations on right of property ownership?
CONSTITUTIONAL - such as police power, eminent domain or expropriation of private property for public
use, taxation and escheat when revision of private property to state ownership in case of death of
property owner without an heir; LEGAL - zoning ordinances, regulations on subdivision projects, building
code, and other special laws and regulations; and CONCENSUAL/VOLUNTARY - easements and servitudes,
usufructs, lease agreements, restrictions in subdivision and condominium deeds or restriction.
6. What are the different modes of acquiring property ownership?
Private Grant - such as in a voluntary deeds of sales of property; Public Grant - by administrative method
of government such as in homesteads, free patent, etc; Descent - by hereditary succession or inheritance;
Accretion - the process by which soil is deposited to lands adjoining rivers or flowing waters; Reclamation
- the filling of submerged land by deliberate act; Adverse Possession or Prescription - the continuous,
public and uninterrupted possession of a property for a period fixed by law; Voluntary Transfer - such as
by execution of sale; Involuntary Alienation or Involuntary Grant - the process by which the land is taken
against the consent of the owner. Examples are expropriation proceeding, execution of judgement, tax
sales, and foreclosure of mortgage; Devise - the acquisition of land by a person through the will of the
owner or the testator such as in donation; Emancipation Patent - the grant of agricultural land to tenant-
farmers in the implementation of the land reform program of the government.
7. What are easements and servitudes?
EASEMENT refers to a right of use over the property of another. Traditionally, the permitted kinds of uses
were limited, themost important being rights of way and rights concerning flowing waters. The easement
was normally for the benefit of adjoining lands, no matter who the owner was, rather than for the benefit
of a specific individual. On the other hand, SERVITUDE is a burden imposed upon another. Servitudes are
also classed as positive and negative. A positive servitude is one which obliges the owner of a servient
estate to permit or suffer something to be done on his property by another. A negative servitude is one
which does not bind the servient proprietor to permit something to be done upon his property by another,
but merely restrains him from making a certain use of his property which would impair the easement
enjoyed by the dominant tenement. It is stated in the law that a person has a right (easement) to impose
a burden (servitude) upon another in cases provided for by law.
8. What are requirement for a compulsory easement of Right-of-Way?
Property is surrounded by other properties and there is no adequate exit to the public highway; payment
of proper indemnity; the isolation was not due to owners own acts; and the right of way claimed is at the
point least prejudicial.
9. What is Torrens Title, its meaning and implication?
A Torrens Title is a certificate of ownership issued under the Torrens System of registration by the
government, through the Register of Deeds, naming and declaring the owner in fee simple of the real
property described therein, free any and/or liens and encumbrances exept such as may be expressly
noted thereon or otherwise reserve by law.
10. What is a Contract of Sale?
By the COntract of Sale, one of the contracting parties obligates himself to transfer the ownership of and
to deliver a determined thing, and the other to pay therefor a price certain in money or its equivalent.
11. What are the essential elements of a Contract of Sale?
The essential elements (those without these can be NO valid sale) of a Contract of Sale are: (1) Consent
or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (2) Determinate
subject matter generally, there is no sale of generic thing, morover, if the parties differ as to objects,
there can be no meeting of minds; and (3) Price certain in money or its equivalent ( this is the cause or
consideration, and the price need not necessarily in money).
12. Who may enter into Contract of Sale? Who cannot enter into sale contract?
Generally, all persons who are authorized under the Civil Code of the Philippines to obligate themselves,
may enter into a contract of sale. However, the following persons cannot give consent to a contract,
hence, they cannot enter into a contract of sale: (1) unemancipated minors (note: majority age now is 18
based on Art 234of RA6804 Family Code), and (2) insane or demented persons, and deaf-mutes who do not
know how to read or write.
13. Double Sale. If the same land is sold to two diferent vendees, who has the better right to the land?
The rule on double sale is as follows: (1) The buyer is good faith who first REGISTERED the property with
the Register of Deeds has the better right; (2) In case neither registered, the buyer in good faith who was
first in POSSESSION; and (3) should there be neither registration nor possession, then the buyer in good
faith whocan present the OLDEST TITLE.
14. What is the General Rule governing the capacity to buy or sell real properties in the Philippines?
The following rules govern theacquisition or sale of real properties in the Philippines: (1) As a rule, all
persons, natural or juridical, who are authorized by the constitution to own lands, and bythe New Civil
Code to obligate themselves, may buy or sell real properties.
15. What is the bearing of citizenship on the capacity to buy or sell real properties in the Philipines?
Only Filipino citizens or corporation with at least 60% of the capital owned by Filipino citizens can acquire
lands in the Philippines. A Filipino citizen, who got married to a foreigner retains the Filipino citizenship
and thus also retains the right to acquire lands in the Philipines. A Filipino citizen, who acquires
citizenship of another countrycan retain ownership of land acquired by him prior to his change of
citizenship.
16. Can spouses sell properties to each other?
The answer is NO, except when a separation of property was agreed upon in the marriage settlement, or
when there has been juridical separation of property.
17. Who cannot acquire real properties by purchase, even at public or judicial auction, either in person
or through the mediation of another?
The guardian, with regards to the property of the person under his guardianship Agent, with respect
to the property whose administration or sale have been entrusted to him, unless the principal was
informed before the purchase Executor and administrator, with respect to the property under their
administration Public offers and employees, with respect to government properties entrusted to them;
this provision shall apply to judges and government experts who take part in the sale Justices, judges,
prosecuting attorneys, clerks of superior courts, and other officers and employees connected with the
administration of justice, with respect to the properties in litigation before the court within their
jurisdiction; this prohibition shall apply to lawyers, with respect to the property under litigation which
they handle by virtue of their profession Other person disqualified by law
18. What are the characteristics of a contract of sale?
Consensual it is perfected by mere consent without any further act; Bilateral both contracting
parties are bound to fulfill obligations towards each other, the seller, to deliver and transfer ownership of
the thing sold and the buyer, to pay the price; Onerous the thing sold is conveyed in consideration of
the price and vice versa; Commutative - the thing sold is considered the equivalent of the price paid
and vice versa; Nominative it is given a special name or designation in the Civil Code; Principal it
does not depend for its existence and validity upon another contract.
19. What are the two types of Contract of Sale?
Absolute - An Absolute Contract of Sale is one where the property is sold, transferred and conveyed to
the vendee in fee simple, ownership transferred irrevocably upon the consummation of the contract and
subject to no other condition whatsoever. Conditional - While a Conditional Contract of Sale is one
where property sold, transferred or conveyed to the vendee is less than fee simple, ownership thereto
although already transferred to the vendee is subject to the conditions agreed upon.
20. What is the difference between Contract to Sell and Contract of Sale?
As to transfer of title In contract of sale, title passes to the buyer upon delivery of the thing sold, while
in contract to sell, the title is not yet passed until the full payment of the purchase price. As to payment
of price In contract of sale, non-payment of the price is a negative resolutory condition, while in
contract to sell, full payment is a positive suspensive condition As to ownership of seller In contract of
sale, seller lost ownership of the thing sold, while in contract to sell ownership stays with the seller.
21. What is the difference between the sale and the agency to sell?
In sale, buyer receives goods as owner, while in agency to sell, agent receives goods but ownership
remains with principal. In sale, buyer pays the price, while in agency to sell, agent accounts proceed of
sale in behalf of the principal In sale, buyer cannot return goods, while in agency to sell, an agent can
return goods in case it was not sold. In sale, seller guarantees the thing sold, while in agency to sell,
agent assumes to personal liability on things sold. In sale, buyer can do whatever he wants on the goods,
while in agency to sell, agent must follow instruction of the principal.
22. What is the difference between sale and dation in payment (dacion en pago)?
In sale, no pre-existing debt before the agreement, while in dation in payment, there is pre-existing debt.
In sale, obligation to pay is created after the agreement, while in dation in payment, obligation to pay is
satisfied. In sale, the price is not fixed prior to the agreement, while in dation in payment, the price is
already determined which is the debt. In sale, buyer had to pay the price after the contract, while in
dation in payment, payment is already received in the form of loan.
23. What is an option contract?
Option contract is an agreement which gives a person the right to buy a certain specified property from
another person within the agreed period and agreed price. It is distinct from the contract the parties may
later enter into upon the consummation of the option. A consideration of an option contract is just as
important as that of any other contract. An option without consideration is void.
24. What is an offer to buy or sell?
When an offer is made, and accepted by the offeree within the stipulated period before it was withdrawn
by the offerer, there is constituted binding contract of sale although the option is given without
consideration.
25. What is an earnest money?
It is money given by the buyer to the seller, as a proof of the perfection of the contract. Actually, it is a
partial payment of the purchase and it must be deducted therefrom.
26. What is the difference between option money and earnest money?
Earnest money is part of the purchase price, while option money is given as distinct consideration for an
option contract. Earnest money is given only when there is already a sale, while there is an option money
27. Which sale must be in writing?
Sale of personal property at a price not less than P500.00. Sale of real property or an interest therein
regardless of the price involved; and Sale of property not to be performed within a year from the date
thereof regardless of the nature of the property and the price involved.
28. Suppose the contract is on installment basis, is it a Contract to Sell or a Conditional Contract of Sale?
It depends of the stipulation in the contract. If for instance, land is promised to be sold, and title given
only the down-payment and the monthly installments therefore shall have been fully paid, then the
agreement is a Contract to Sell. (i.e.) the following contract by stipulating that for and in consideration
of P10,000.00 of which P5,000.00 is hereby received and the balance payable in two equal installments, I
promise to sell and convey unto the vendee the land described herein upon full payment of the purchase
price, is a Contract to Sell. On the other hand, in the same example above, after the word received
and the balance payable in two equal installments, I hereby sell, transfer and convey the said parcel of
landthen this is a Conditional Contract of Sale or, in short, Contract of Sale.
29. If the contract authorizes the vendor to automatically rescind the contract upon the failure of the
vendee to pay there or more equal installments, may the vendor actually treat the contract as
automatically rescinded if the vendee failed to pay the installments?
If it is a Contract to Sell, Yes. Failure to make the needed payment is failure to comply with the
suspensive condition. Hence, the promissor is not obliged to convey title and after an unsuccessful
demand for the said price, there would be nothing wrong if he sells the property to another. He can also
forfeit the installment payments already made to be considered as rental for the use of the property
subject of the Contract to Sell. On the other hand, if the contract is a Conditional Contract of Sale and/or
a Contract of Sale, the vendor cannot rescind the contract even if it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take place.
The vendee may pay, even after the expiration of the period, as long as no demand for the contract has
been made upon him either judicially or by a notarial act. After the demand, the court may not grant him
a new term.
30. What are the obligations of the vendor?
To deliver a determine thing To transfer its ownership (seller/ vendor need not to be the owner at
the time of perfection of the contract; however, to the owner at the time of delivery To warrant
against eviction and against hidden defects To pay for the expenses of the deed of sale
31. What are the obligations of the vendee/ buyer?
To accept the property sold To pay the price of the property

32. What is the warranty against defects of a property sold? What is its difference from warranty against
eviction?
In a Contract of Sale, unless a contrary intention appears, there is: An implied warranty that the
thing shall be free from any hidden faults or defects, or any charge or encumbrances not declared or
made known to the buyer An implied warranty against eviction by virtue of which if the vendee is
deprived of the whole or part of the things purchased by a final judgment based on a right prior to the
sale or an act imputable to the vendor, such vendor shall answer for the eviction although nothing has
been said in the contract on the subject
33. Who pays for the documentation and registration of the property Sale?
There are two parts of the whole paperwork: (1) Documentation of Sale and (2) Registration of Property
to New Owner. Documentation includes Notarization of Deed of Sale, Documentary Stamp Tax of the Deed
of Sale Document, Capital Gains Tax, Ad-Valorem Tax, Real Estate Tax Declaration. Documentation is
supposed to be paid by the vendor. When the BIR issues the Certificate of Authority to Register,
documentation of sale is already complete. The next step is the legal obligation of the vendee to Register
the Property and pay all expenses related to it including Transfer Tax, new Real Estate Tax Declaration,
and Title Registration. But there are times that both parties make special agreement to the contrary.
34. How do you resolve an issue wherein the area of the land sold should later turn out to be greater or
smaller than that stated in the contract?
If the sale is for a lump sum, (not for a certain price per square meter) there shall be no increase or
decrease of the price, although there be a greater or lesser area than that stated in the contract If the
sale be made with statement of its area at the rate of a per-price per square meter, the following rules
shall apply: If the actual area is bigger, the vendee may Accept the area included in the contract and
reject the excess, or Accept the whole area, but must PAT the excess area at the contract price If the
actual area is smaller the vendee may choose to have a proportional reduction of the price, or Rescind
the contract provided: That the lack in the area be not less than 10% of that in the contract, or That he
would not have bought had he known of its smaller area
35. What is a Pacto de Retro Sale?
A Pacto de Retro Sale is a contract of sale with the stipulation that the vendor shall have the right to buy
back or redeem the property within an agreed period.
36. What are other specific conditions of a Pacto de Retro Sale?
This is a principal and independent contract Title passes to the vendee; possession is delivered too
vendee may dispose of the same as absolute owner vendee is obliged to pay the taxes if the seller
does not repurchase the property on the date named in the contract, he losses all his interest therein
extension of the period of redemption is not allowed; however, partial redemption is permissible the
object may either be movable or immovable
37. How long is the period within which the vendor-a-retro can redeem the property?
The period of redemption in a pacto de retro sale depends on the stipulation of the parties, but cannot
exceed ten (10) years. If there is no stipulation, the period of redemption is four (4) years.
38. When is marital consent needed in Deed of Sale?
When the property relations between the spouses is one of absolute community, or When the
property relations between the spouses is one of conjugal partnership and the property involved was
required during the marriage at the expense of the common fund
39. When is marital consent not necessary in Deed of Sale?
When the property relations between the spouse is one of absolute separation, or When the property
relations between the spouses is one of conjugal partnership, but the property involved: Was brought
into the marriage by either of the spouses as husbands capital or wifes paraphernal property Was
acquired by either spouses by inheritance Was acquired with exclusive funds of either of the spouses
40. What are the rights of real estate installment buyers?
Under the Realty Installment Buyers Act (RA 6552) otherwise known as the Maceda Law, if the buyer has
paid less than two (2) years of installments, he is entitled to a grace period of not less than sixty (60)
days; if he fails to pay the installments due within the grace period given, he is still entitled to a notarial
notice of at least thirty (30) days duration before the seller may cancel or rescind the contract. If the
buyer has paid at least two (2) years of installments, he is entitled to: Pay, without additional interest,
unpaid installments due within the total grace period earned by him (i.e.) one (1) month for every year of
installments payment effected; provided however, that such right shall be exercised by him only once in
every five (5) years during the life of the contract or its extension, if any Refund, if contract is
cancelled after the notarial notice of cancellation or rescission of at least thirty (30) days duration, of the
cash surrender value of payments made (i.e.) 50% of total payments effected during the first five (5)
years but not exceed 90% of total payments made *Downpayments, deposits or options on contract shall
be included in the computation of total payments made. In both categories of installment buyers, they
shall have the additional right to: Transfer or assign their rights to the contract Pay in full the
purchase before the expiration of the contract term without interest Have the contract annotated on
their titles
41. What are the rights of real estate installment buyers?
Under the Realty Installment Buyers Act (RA 6552) otherwise known as the Maceda Law, if the buyer has
paid less than two (2) years of installments, he is entitled to a grace period of not less than sixty (60)
days; if he fails to pay the installments due within the grace period given, he is still entitled to a notarial
notice of at least thirty (30) days duration before the seller may cancel or rescind the contract. If the
buyer has paid at least two (2) years of installments, he is entitled to: Pay, without additional interest,
unpaid installments due within the total grace period earned by him (i.e.) one (1) month for every year of
installments payment effected; provided however, that such right shall be exercised by him only once in
every five (5) years during the life of the contract or its extension, if any Refund, if contract is
cancelled after the notarial notice of cancellation or rescission of at least thirty (30) days duration, of the
cash surrender value of payments made (i.e.) 50% of total payments effected during the first five (5)
years but not exceed 90% of total payments made *Downpayments, deposits or options on contract shall
be included in the computation of total payments made. In both categories of installment buyers, they
shall have the additional right to: Transfer or assign their rights to the contract Pay in full the
purchase before the expiration of the contract term without interest Have the contract annotated on
their titles
42. How are sales extinguished?
Same causes as all other obligations; to wit: payment, performance or loss of the thing due, by
condonation or remission of the debt, confusion or merger of the rights of the creditor and debtor. By
compensation and by novation By redemption (conventional or legal redemption)
43. What is conventional redemption? When does it take place?
In Pacto de Retro sale, conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with obligation to return the following: Price of the sale Expenses of the
contract Other legitimate expenses Necessary expenses on the thing sold Useful expenses on the
thing sold
44. What is legal redemption?
Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the
contract, in the place of one who acquires a thing by purchase or dation in payment (dacion en pago), or
by any other transaction whereby ownership is transmitted by onerous title.
45. What are the examples of legal redemption?
By a co-owner: each co-owner can redeem in proportion to what he owns By an adjacent owner of
rural land provided: The land is one (1) hectare or less The grantee has rural land already, otherwise,
grantee must be given chance to own rural land, preference to owner of smaller area; if the same area,
to the first who requested redemption. By an adjacent owner of urban property : if seller had
previously bought the small area for speculation; preference is given to adjacent owner with the best
intended use for the land. Here also, Right of Pre-emption is grantedright to redeem/ purchase before
property is disposed of.
46. How long is the period of redemption or pre-emption?
Within thirty (30) days from notice in writing by vendor Within thirty (30) days from date assignee
demands payment