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11. CA affirmed the same and cited that the questioned deed of sale of rights is a contract
to sell because it shall become effective only upon approval by the probate court and
upon full payment of the purchase price.
ISSUE: WON the non-happening of a condition affects the validity of the contract itself
HELD: No, the non-happening of a condition only affects the effectivity and not the
validity of the contract.
Under Art 1318 Civil Code, the essential requisites of a contract are: consent of the
contracting parties; object certain which is the subject matter of the contract and
cause of the obligation which is established. Absent one of the above, no
contract can arise. Conversely, where all are present, the result is a valid
contract. However, some parties introduce various kinds of restrictions or
modalities, the lack of which will not, however, affect the validity of the contract.
In the instant case, the Deed of Sale, complying as it does with the essential
requisites, is a valid one. However, it did not bear the stamp of approval of the
court. The contracts validity was not affected for in the words of the stipulation, this
Contract of Sale of rights, interests and participations shall become effective only upon
the approval by the Honorable Court In other words, only the effectivity and not
the validity of the contract is affected.
CONTRACT TO SELL VS. CONTRACT TO SALE
In contracts to sell, ownership is retained by the seller and is not to pass until the full
payment of the price. Such payment is a 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. To illustrate, although a deed of
conditional sale is denominated as such, absent a proviso that title to the property sold
is reserved in the vendor until full payment of the purchase price nor a stipulation giving
the vendor the right to unilaterally rescind the contract the moment the vendee fails to
pay within a fixed period, by its nature, it shall be declared a deed of absolute sale.
In a contract of sale, the non-payment of the price is a resolutory condition which
extinguishes the transaction that, for a time, existed and discharges the obligations
created thereunder. The remedy of an unpaid seller in a contract of sale is to seek either
specific performance or rescission.
In the case at bar, the sale of rights, interests and participation as to portion
pro indiviso of the 2 subject lots is a contract of sale for the reasons that (1) the
sellers did not reserve unto themselves the ownership of the property until full
payment of the unpaid balanceof P225,000.00; (2) there is no stipulation giving
the sellers the right to unilaterally rescind the contract the moment the buyer fails
to pay within the fixed period.
NEED OF PROBATE COURTS APPROVAL EXISTS WHERE SPECIFIC
PROPERTIES OF THE ESTATE ARE SOLD AND NOT WHEN IDEAL AND
INDIVISIBLE SHARES OF AN HEIR ARE DISPOSED OF
The need for approval by the probate court exists only where specific properties of the
estate are sold and not when only ideal and indivisible shares of an heir are disposed
of. In Dillena v. Court of Appeals, the Court declared that it is within the jurisdiction of
the probate court to approve the sale of properties of a deceased person by his
prospective heirs before final adjudication. The probate courts approval is necessary for
the validity of any disposition of the decedents estate. However, reference to judicial
approval cannot adversely affect the substantive rights of the heirs to dispose of their
ideal share in the co-heirship and/or co-ownership among the heirs. It must be recalled
that during the period of indivision of a decedents estate, each heir, being a co-owner,
has full ownership of his part and may therefore alienate it. But the effect of the
alienation with respect to the co-owners shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-ownership.
CONTRACTUAL STIPULATIONS CONSIDERED LAW BETWEEN PARTIES;
EXCEPTION: CONTEMPORANEOUS ACTS OF PARTIES
As a general rule, the pertinent contractual stipulation (requiring court approval) should
be considered as the law between the parties. However, the presence of two factors
militates against this conclusion: (1) the evident intention of the parties appears to
be contrary to the mandatory character of said stipulation. Whoever crafted the
document of conveyance, must have been of the belief that the controversial
stipulation was a legal requirement for the validity of the sale. But the
contemporaneous and subsequent acts of the parties reveal that the original objective
of the parties was to give effect to the deed of sale even without court approval.
Receipt and acceptance of the numerous installments on the balance of the purchase
price by the Cari-ans, although the period to pay the balance of the purchase price
expired in May 1979, and leaving Escanlar and Holgado in possession of Lots 1616 and
1617 reveal their intention to effect the mutual transmission of rights and obligations.
The Cari-ans did not seek judicial relief until late 1982 or three years later; (2) the
requisite approval was virtually rendered impossible by the Cari-ans because
they opposed the motion for approval of the sale filed by Escanlar and Holgado,
and sued the latter for the cancellation of that sale. Having provided the obstacle
and the justification for the stipulated approval not to be granted, the Cari-ans should
not be allowed to cancel their first transaction with Escanlar and Holgado because of
lack of approval by the probate court, the lack of which is of their own making.