UPDATES IN REGULATORY FRAMEWORKS

LAW ON SALES - Where the sale is not subject to any

condition whatsoever and where title
passes to the buyer upon delivery of
ART. 1458. By the contract of sale one of the thing sold
the contracting parties obligates himself to - ownership of the property sold passes
transfer the ownership of and to deliver a to the vendee upon the actual or
determinate thing, and the other to pay constructive delivery thereof. Payment
therefor a price certain in money or its of the purchase price is not essential
equivalent. to the transfer of ownership as long as
the property sold has been delivered.
A contract of sale may be absolute or - Its perfection is not dependent on any
conditional. (1445a) condition
- Example:
o condition is imposed upon the
SALE (ARTICLE 1458) buyer’s obligation to pay the
- One of the contracting parties price
obligates himself to transfer the o Nagbayad ng installment still
ownership and to deliver a considered as an absolute sale.
determinate thing, and the other to (already perfected but hindi pa
pay therefor a price certain in money lang binabayaran ng buo)
or its equivalent
- The contract transfers no real rights; it B. CONDITIONAL
merely causes certain obligations to - Where the sale contemplates a
arise contingency and in general, where the
Seller: obligation to deliver contract subject to certain conditions
Buyer: obligation to pay the price (art. 1503). The delivery of the thing
sold does not transfer ownership until
Real obligation the condition is fulfilled
- Even if the object is delivered, it does
STAGES OF A CONTRACT OF SALE not transfer ownership until the
condition is performed
1. NEGOTIATION - Example:
- It covers the period from the time the o condition is imposed upon the
prospective contracting parties seller’s obligation to deliver
indicate interest in the contract to the the thing; nagbenta ng car and
time the contract is perfected ang condition
o Nagbenta ng kotse, condition
2. PERFECTION ay ibigay yung COR but hindi
- It takes place upon the concurrence of pa rin nabibigay (not a valid
the essential elements of the sale, sale)
which is the meeting of minds of the
parties as to the object of the contract ESSENTIAL ELEMENTS OF A CONTRACT
and upon the price. OF SALE

3. CONSUMMATION A. CONSENT/MEETING OF THE MINDS

- Begins when the parties perform their - Refers to the consent on the part of
respective undertakings under the the seller to transfer and deliver and
contract of sale, culminating in the on the part of the buyer to pay
extinguishment thereof. - The parties must be legally
capacitated or have the capacity to
KINDS OF CONTRACT SALE give consent since it is consensual.
- There may because were an
AS TO PRESENCE OR ABSENCE OF expopriation or sale against the will of
CONDITIONS the owner may exist

A. ABSOLUTE Example:
UPDATES IN REGULATORY FRAMEWORKS
Expopriation existence of a perfected contract of
o May kaso ka and natalo ka sa sale.
kaso and sinisingil ka ng
creditor so kinailangan kuhanin CHARACERISTICS OF A CONTRACT OF
yung asset mo. Yung asset mo SALE
will be sold in an auction where
it will be considered as a valid A. CONSENSUAL
sale since ordered by the - The contract is perfected by mere
court) consent without any further act.

Sale of conjugal property B. BILATERAL/RECIPROCAL

o requires the consent of both - Both contracting parties are bound to
the husband and the wife. The fulfill obligations reciprocally towards
absence of the consent of one each other
renders the sale null and void - The seller, to deliver and transfer
ownership of the thing sold and the
B. OBJECT/SUBJECT MATTER buyer, to pay the price
- Refers to a determinate thing which is
the object of the contract. The subject
matter may be real or personal
property (but not service) C. ONEROUS
- A buyer can only claim right of - The thing sold is conveyed in
ownership over the object of the deed consideration of the price and vice
of sale and nothing else. Where the versa.
parcel of land de scribed in the - Buyer: pay the price
transfer certificate of title is not in its - Seller: deliver and transfer ownership
entirety the parcel sold, the court may - As opposed to gratuitous
decree that the certificate of title be
cancelled and a correct one be issued D. COMMUTATIVE
in favor of the buyer, with out having - the thing sold is considered the
to require the seller to execute in equivalent of the price paid and
favor of the buyer an instrument to vice versa
effect the sale and transfer of the - contract may be aleatory (bind
property to the true owner. themselves reciprocally to do
something in return of something that
C. CAUSE/CONSIDERATION is uncertain to happen) as in the case
- Refers to the price certain in money of a hope (lottery ticket)
or its equivalent such as check or - General Rule: yung price na
promissory note, or the assumption by ibabayad mo is in equivalent sa value
the buyer of the mortgage debt of a ng isang object
seller which is the consideration for
the thing sold. There can be no sale Ex. 1000 pesos payment, dapat ung
without a price value should also be 1000 pesos.
- The price must be real, not fictitious;
otherwise, the sale is void although But we have the test of cumulativeness is
the transaction may be shown to have subjective. Hindi required na exact yung
been in reality a donation or some value. Ang nirerequire is kapag both parties
other contract. believe in all honesty that what they
- A seller cannot render invalid a have receiving is a good value of what is
perfected contract of sale by merely transferred.
contradicting the buyer’s allegation
regarding the price and subsequently E. NOMINATE
raising the lack of agreement as to the - The Civil code refers to it by a special
price. designation or name (ex. Contract of
- The absence of any of the above sale)
essential elements negates the
F. PRINCIPAL
UPDATES IN REGULATORY FRAMEWORKS
- For the contract to validly exist, there
is no necessity for it to depend upon
the existence of another valid
contract.
CONTRACT FOR A CONTRACT OF
OPTION CONTRACT OF PIECE OF WORK SALE
SALE The thing Would have existed
An option is an Fixes definitely the transferred is one and been the
unaccepted offer relative rights and not in existence and subject of a sale to
obligations of both which would never some other person
parties at the time have existed but for even if the order
of its execution the order of the had not been given
It states the terms The offer and the person desiring it
and conditions on acceptance are
which the owner is concurrent, since
willing to sell the the minds of the
land, if the holder contracting parties
elects to accept meet in the terms of
them within the agreement DACION EN PAGO CONTRACT OF
time limited SALE
If the holder does so A special mode of
elect, he must give payment where the
notice to the other debtor offers
party and the another thing to the
accepted offer creditor
thereupon becomes REQUISITES:
a valid and binding There must be the
contract perf of the
If an acceptance is prestation in lieu of
not made within the payment (animo
time fixed, the solvendi)
owner is no longer
bound by his offer, There must be some
and the option is at difference between
an end the prestation due
and that which is
TEST IN DETERMINING WHETHER IT IS A given in substitution
CONTRACT OF SALE OR PURCHASE OR A (aliud pro alio)
MERE OPTION
- Whether or not the agreement could There must be an
be specially enforced agreement between
the creditor and
EARNEST MONEY debtor that the
- Downpayment or advanced payment obligation is
- Consider as part of the price and as immediately
extingused by
proof of the perfection of the contract
reason of the perf of
- Must be deducted from the total price.
a prestation diff
from that due
EARNEST MONEY OPTION MONEY
Part of the purchase Money given as a
price distinct NATURAL AND ACCIDENTAL ELEMENTS
consideration for an
option contract
A. NATURAL ELEMENTS
Is given only where Applies to a sale not
there is already a yet perfected - Those which are deemed to exist in
sale. certain contracts, in the absence of
When earnest When the would-be any contrary stipulations like warranty
money is given, the buyer gives option against eviction (art. 1548) or hidden
buyer is bound to money, he is not defects (art. 1561)
pay the balance required to buy - Nandito kahit pag-usapan or hindi
UPDATES IN REGULATORY FRAMEWORKS
until he has
B. ACCIDENTAL ELEMENTS fully paid the
- Those which may be present or absent price
depending on the stipulations of the PAYMENT non-payment full payment
parties, like conditions, interest, OF PRICE of the price is is a positive
penalty, time or place of payment a negative suspensive
- Wala kung hindi pinag-usapan resolutory condition
condition (the failure
(remedy of of which is
the seller is to not a breach,
EFFECT OF ABSENCE OF PRICE/NON- exact casual or
PAYMENT OF PRICE fulfillment or serious, of
1. There can be no sale without a to rescind the the contract
price. A contract of sale is void and contract) but simply
produces no effect whatsoever where an event
the same is without cause or that prevents
consideration in that the purchase the
price, which appears thereon as paid, obligation of
has, in fact, never been paid by the the vendor
buyer to the seller. Such sale is to convey
nonexistent and cannot be considered title from
acquiring
consummated
binding
- Where the figures referred to by the
force.)
buyer as prices are mere estimates OWNERSH the vendor the title
given them by the seller of the IP OF has lost and remains in
condominium units in question, the VENDOR can not the vendor if
transaction lacks an essential requisite recover the the vendee
for the perfection of the contract of ownership of does not
sale. the thing sold comply with
and delivered the condition
2. Non-payment of the purchase precedent of
price is a resolutory condition for making
which the remedy is either rescission payment at
or specific performance under Article the time
1191 of the Civil Code. It constitutes a specified in
the contract.
very good reason to rescind a sale, for
it violates the very essence of the
contract of sale.
CONTRACT CONDITIONA
OF SALE L SALE
TRANSFER may not even the first
OF TITLE be considered element of
But the failure to pay the price in full as a consent is
within a fixed period does not, by itself, conditional present,
dissolve a contract of sale in the absence of contract of sale although it is
any agreement that payment on time is where the conditioned
essential or make it null and void for lack of seller may upon the
consideration, but results at most in default likewise happening of
on the part of the vendee for which the reserve title to a contingent
vendor may exercise his legal remedies. the property event which
subject of the may or may
CONTRACT CONTRACT sale until the not occur.
OF SALE TO SELL fulfillment of
(right to the suspensive
purchase) condition
TRANSFE title passes to ownership in SALE OF there being no upon the
R OF the buyer the thing SUBJECT previous sale fulfillment of
TITLE upon delivery shall not PROPERTY of the the
of the thing pass to the TO A property, a suspensive
sold purchaser THIRD third person condition, the
UPDATES IN REGULATORY FRAMEWORKS
PERSON buying such sale becomes ver, the provisions of the Penal Code
property absolute and relative to the disposal of effects or
despite the this will instruments of a crime shall be
fulfillment of definitely applicable to the things or the price of
the suspensive affect the contract.”
condition such seller’s title
as the full thereto. TWO PARTIES ARE GUILTY
payment of the
- Art. 1412. If the act in which the
purchase price,
for instance, unlawful or forbidden cause consists
cannot be does not constitute a criminal offense,
deemed a the following rules shall be observed:
buyer in bad o When the fault is on the part of
faith both contracting parties,
neither may recover what he
OTHER CASES OF CONTRACT TO SELL has given by virtue of the
1. Where the subject matter is not contract, or demand the
determinate or the price is not certain performance of the other’s
2. A sale of future goods (see Art. 1462.) undertaking;
even though the contract is in the o When only one of the
form of a present sale operates as a contracting parties is at fault,
contract to sell the goods. he cannot recover what he has
3. Where the stipulation of the parties is given by reason of the
that the deed of sale and contract, or ask for the
corresponding certificate of sale would fulfillment of what has been
be issued only after full payment of promised him. The other, who
the purchase price is not at fault, may demand the
return of what he has given
OBJECT OF A CONTRACT OF SALE without any obligation to
comply with his promise
REQUISITES CONCERNING OBJECT
B. RIGHTS
A. THINGS - All rights which are not
- Aside from being determinate (article intransmissible or personal (except
1459 and 1460), the law requires that Intransmissible rights: right to vote,
the subject matter must be licit or right to public office) may also be the
lawful, that is, it should not be object of sale (art. 1347) like the right
contrary to law, morals, good of usufruct (art. 572), the right of
customs, public order or public conventional redemption (art. 1601),
credit (art. 1624).
ART. 1459. The thing must be licit and the - However, while services may be
vendor must have a right to transfer the the object of a contract (contract of
ownership thereof at the time it is piece of work), they cannot be the
delivered. (n) object of a contract of sale.
policy (art. 1347 and 1409) and - If pwedeng i-transmitt, pwedeng
should not be impossible (art. 1348) ibenta
- Rights and objects lang ang pwedeng
ibenta
ILLICIT – the contract is void and cannot
be ratified. RIGHT OF VENDER TO TRANSFER
OWNERSHIP
ONE PARTIES IS GUILTY
- “Art. 1411. When the nullity proceeds Illicit per se (in itself)
from the illegality of the cause or - Illicit by nature or inherently unlawful
object of the contract, and the act - Example: selling of rotten food for
constitutes a crimi nal offense, both consumption
parties being in pari delicto, they shall
have no action against each other, Illicit by accidence (by chance)
and both shall be prosecuted. Moreo
UPDATES IN REGULATORY FRAMEWORKS
- Valid sana but because of a certain A. WHEN A THING IS DETERMINATE
provision, naging illegal sya - A thing is determinate or specific (not
- Example: selling of jueteng tickets generic) when it is particularly
designated or physically segregated
IF THE CONTRACT IS ILLICIT, THE from all others of the same class. (art.
CONTRACT IS VOID 1460)
A. SELLER MUST BE OWNER OR - Example: capable of being made
AUTHORIZED BY OWNER OF THING determinate; lot on 281 Trapiche 1,
SOLD Tanauan City, Batangas
- It is essential in order for a sale to be
valid that the vendor must be able to B. SUFFICIENT IF SUBJECT MATTER IS
transfer ownership (art. 1459) and CAPABLE OF BEING DETERMINATE
therefore, he must be the owner or at - It is not necessary that the thing sold
least must be authorized by the owner must be in sight at the time the
of the thing sold. contract is entered into
- This rule is in accord with a well- - It is sufficient that the thing is
known principle of law that one cannot determinable or capable of being
transmit or dispose of that which he made determinate without the
does not have – nemo dat quod necessity of a new or further
non-habet agreement between the parties to
- You can’t dispose or sold what you ascertain its identity, quantity or
can’t have quality.
- Capable of being determined or
B. RIGHT MUST EXIST AT THE TIME determinable sya kahit na hindi mo
OF DELIVERY sya nakita the moment na nag sign ng
- Sale, being a consensual contract, it is
perfected by mere consent, and ART. 1461. Things having a potential
ownership by the seller of the thing existence may be the object of the
sold is not an element of perfection. contract of sale.
- It is sufficient if the seller has the
“right to transfer the ownership The efficacy of the sale of a mere
thereof at the time it is hope or expectancy is deemed subject to
delivered”. Thus, the seller is the condition that the thing will come into
deemed only to impliedly warrant that existence. The sale of a vain hope or
“he has a right to sell a thing at expectancy is void. (n)
the time when the ownership is to contract. Hindi na rin kailangan
pass” magkaroon ng additional agreement
- Example: nagbenta ka ng hindi sayo para lang maidentify yung thing.
at the time of the perfection of
REQUISITIES
ART. 1460. A thing is determinate when it
1. At the time the contract is entered
is particularly designated or physically
into, the thing is capable of being
segregated from all others of the same
made determinate;
class.
2. There is no necessity of a new or
further agreement between the
The requisite that a thing be
parties
determinate is satisfied if at the time the
contract is entered into, the thing is
SALE OF HOPE OR EXPECTANCY OR
capable of being made determinate
EMPTIO SPEI (ART. 1461)
without the necessity of a new or further
- The efficacy of the sale of a mere
contract (allowed) but dapat sayo na hope or expectancy is deemed subject
yung right at the time of delivery to the condition that the thing
contemplated or expected will come
into existence.
SUBJECT MATTER MUST BE - Pwedeng ibenta ang pag-asa or hope
DETERMINATE or expentancy
UPDATES IN REGULATORY FRAMEWORKS
- Example: lotto ticket, umaasa na 1. Sale of a thing having potential
mananalo sa lotto pag bumili ka. It is a existence
valid sale since there is a possibility 2. Sale of future goods
that you will win. Kahit na hindi ka 3. Contract for delivery at a certain price
manalo, valid pa rin sya. of an article which the vendor in
- If the hope or or expectancy is vain, ordinary course of business
the sale is void. manufacturers or procures for the
- Example: binentahan ka ng used general market, whether the same is
lottery ticket or yung na-draw na na on hand at the time or not.
ticket then void na yun since wala ng
possibility na manalo dun

SALE OF THINGS HAVING POTENTIAL

EXISTENCE OR EMPTIO REI SPERATI OR
EMPTIO SPERATAE (ART. 1461)
- Even a future thing (art. 1347) not
existing at the time of the contract
may be the object of sale provided
that it has a potential or existence,
that is, it is reasonably certain to KINDS OF GOODS
come into existence as a natural
increment or usual incident of A. EXISTING GOODS (ART. 1462)
something in existence already - Goods owned or possessed by the
belonging to the seller and the title seller
will vest in the buyer the moment the
thing exists. B. FUTURE GOODS AS OBJECT OF
- Object is existing or has the potential SALE (ART. 1462)
to exist if hindi pa sya nag eexist
ART. 1463. The sole owner of a thing may
ngayon
sell an undivided interest therein.
- Example: May alaga kang babaeng
baboy. May potential itong magkaanak
kahit na hindi pa talaga sya buntis - A sale of future goods, even though
kasi it is a natural or usual occurrence. the contract is in the form of a present
sale, is valid only as an executory
EMPTIO REI EMPTIO SPEI contract to be fulfilled by the
SPERATAE acquisition and delivery of the goods
Sale of a thing Sale of mere hope specified.
with potential or expectancy that - Examples:
existence the thing will come o Harvest of palay
to existence
o Parcel of land
Sale is subject to Sale is effective
the condition that even if the thing
the thing will exist; does not come
if it does not, into existence SALE OF UNDIVIDED INTEREST IN A
there is no unless it is a vain THING (ART. 1463)
contract hope - Portion lang ang binibenta
The object is a the object is a - Example: portion of a land
future thing present thing
which is the hope A. SALE BY SOLE OWNER
or expectancy

GENERAL RULE: A person cannot sell or

convey what he does not have or own

EXCEPTIONS:
UPDATES IN REGULATORY FRAMEWORKS
- The sole owner of a thing may sell the - Replaceable of equal quality and
ART. 1462. The goods which form the quantity of goods without loss of value
subject of a contract of sale may be either
existing goods, owned or possessed by the A. EFFECT
seller, or goods to be manufactured, - The owner of a mass of goods may sell
raised, or acquired by the seller after the only an undivided share thereof,
perfection of the contract of sale, in this provided the mass is specific or
Title called “future goods.” capable of being determinate.
ART. 1464. In the case of fungible goods, - Example: Ibebenta yung kalahati ng
there mayThere
be may beofaan
a sale contract of sale
undivided shareof bigas sa loob ng warehouse. Co-owner
goods,
of whose mass,
a specific acquisition by the
though the seller
seller na yung bumili
purports to sell and the buyer to buy a
definite number, weight or measure of the QUALIFICATION
goods in the mass, and though the
number, weight or measure of the goods 1. By such sale, the buyer becomes
in the mass is undetermined. By such a a co-owner with the seller of the
sale the buyer becomes owner in common
of such a share of the mass as the ART. 1465. Things subject to a resolutory
number, weight or measure bought bears condition may be the object of the
to the number, weight or measure of the contract of sale.
mass. If the mass contains less than the whole mass in the proportion in
number, weight or measure bought, the which the definite share bought
buyer becomes the owner of the whole bears to the mass
mass and the seller is bound to make good
2. It must follow that the aliquot
entire thing; or only a specific portion
share of each owner can be
thereof; of an undivided interest
determined only by measurement
therein and such interest may be
of the entire mass.
designated as an aliquot part of the
- Para malaman kung ilan yung
whole
magiging portion ng kay buyer, dapat
- The legal effect of the sale of an
munang bilangin yung entire mass
undivided interest in a thing is to
- If eventually nalaman na kulang pala
make the buyer a co-owner of the
yung nabenta, then the buyer
thing sold.
becomes the owner of the whole mass
kahit na portion lang naman yung
B. SALE OF CO-OWNER
binibili nya. Furthermore, the seller
- The co-owner of a things, being the
shall supply whatever is lacking from
owner of his undivided interest, can
goods of the same kind and quality,
dispose of his share even without the
subject to any stipulation to the
consent of the other co-owner/s. The
contrary.
effect of alienation shall be limited to
his portion only
B. RISK OF LOSS
- All owners will bear the loss. (co-
- Example: yung buyer na nakabili ng
owner, seller or other owners of the
undivided interest sa sole property mo
remainder of the mass)
will become the co-owner and that co-
owner can dispose his portion of the
C. SUBJECT MATTER
property even without the consent of
- Take note that in the sale of an
the original owner since yung pag-aari
undivided share, either of a thing (art.
na rin yung ng co-owner.
1463) or of that of mass of goods (art.
1464), the subject matter is an
incorporeal right (art. 1501). Here,
RULES IN THE SALE OF UNDIVIDED
ownership passes to the buyer by the
SHARE OF A SPECIFIC MASS (ART. 1464)
intention of the parties.
FUNGIBLE GOODS/INTERCHANGEABLE
GOODS
UPDATES IN REGULATORY FRAMEWORKS
SALE OF THING SUBJECT TO A
RESOLUTORY CONDITION (ART. 1465) B. Sale: the buyer has to pay the price
- One of the obligations of the vendor is
to transfer the ownership of the thing Agency to sell: has simply to
object of the contract. account for the proceeds of the sale
- If the resolutory condition attached to he may make on behalf of the
the object of the contract, which principal
object may include things as well as
rights (art. 1427 and 1347), should C. Sale: the buyer, as a general rule,
happen, then the vendor cannot cannot return the object sold
transfer the ownership of what he sold
since there is no object. Agency to sell: the agent can return
- Condition or happening of which will the object in case he is unable to sell
extinguished the obligation the same to a third person.
- Example: Extrajudicial foreclosure –
debtor may utang kay creditor eh D. Sale: the seller warrants the thing
hindi na makabayad, sinangla nya sold
yung lupa nya sa creditor. (ibebenta
yung property sa public auction) may Agency to sell: the agent makes no
1 year to redeem yung nag mortgage warrant for which he assumes
sa public auction dun sa highest personal liability as long as he acts
bidder. (right to buy back) Once ma within his authority and in the name of
buy-back, hindi na yung highest the seller. (will not assume personal
bidder ang owner and hindi na liability since hindi sya yung may-ari)
mattransfer ni vendor (court) yung
property. E. Sale: the buyer can deal with the
thing sold as he pleases

Agency to sell: must act and is

bound according to the instructions of
his principal.

AGENCY TO SELL

SALE AND AGENCY TO SELL

DISTINGUISHED (ART. 1466)

A. Sale: the buyer receives the goods as

owner

Agency to sell: the agent receives

the goods as the goods of the
principal who retains his ownership
over them and has the right to fix the CONTRACT FOR A PIECE OF WORK (ART.
price and the terms of the sale and 1713)
receive the proceeds less the agent’s - The contractor binds himself to
ART. 1466. In construing a contract execute a piece of work for the
containing provisions characteristic of both employer, in consideration of a certain
the contract of sale and of the contract of price or compensation. The contractor
agency to sell, the essential clauses of the may either employ his labor or skill or
whole instrument shall be considered. (n) also furnish the material

commission. Kukuha ng ahente or SCHOOLS OF THOUGHT

agent para ibenta yung property mo
where ikaw pa rin yung owner but may A. MASSACHUSETTS RULE
commission ka na ibibigay once na
mabenta yung property.
UPDATES IN REGULATORY FRAMEWORKS
- If specially done at the order of - A person who undertakes to do a
another, this is a contract for a specific job or piece of work for other
piece of work persons, using his own means and
methods
Regularly ginagawa even if out of stock
now and kailangan gumawa ng panibagong TEST OF A CONTRACTOR
batch - sale - He renders service in the course of an
independent occupation, representing
B. NEW YORK RULE the will of his employer only as to the
- If the thing already exists, it is a sale result of his work and not as to the
- If not, then it is a contract for a piece means by which it is accomplished.
of work
ART. 1468. If the consideration of the
C. ENGLISH RULE contract consists partly in money, and
- If material is more valuable, it is a partly in another thing, the transaction
sale shall be characterized by the manifest
- If skill is more valuable, it is a intention of the parties. If such intention
contract for a piece of work does not clearly appear, it shall be
considered a barter if the value of the
RULE TO DETERMINE IF THE CONTRACT thing given as a part of the consideration
IS ONE OF SALE OR A PIECE OF WORK exceeds the amount of the money or its
(ART. 1467)
- If ordered or manufactured in the
SALE BARTER
ordinary course of business, it is a
A thing is given in A thing is given in
sale exchange of a price exchange of another
- If it manufactured specially for the certain in money or thing
customer and upon his special order, its equivalent
and not for the general market, it is a If the consideration is partly in money
and partly in another thing:
ART. 1467. A contract for the delivery at a
1. The transaction is characterized by
certain price of an article which the vendor
the manifest intention of the
in the ordinary course of his business parties.
manufactures or procures for the general 2. If there is no manifest intention:
market, whether the same is on hand at a. Barter if the value of the
the time or not, is a contract of sale, but if thing is more valuable than
the goods are to be manufactured money
specially for the customer and upon his b. Sale if the value of the thing
special order, and not for the general is equal or less than the
market, it is a contract for a piece of work. amount of money

contract for a piece of work

Why do we need to identify is sale or a

piece of work?
- Risk of loss of delivery. Kung sino ang
gumawa, sya ang magbebear ng risk
of loss
o Sale: buyer
o Piece of work: Company
- Mas mababa kasi ang tax ng
contractor kaysa sa sale

BARTER (SWAP)
- One of the parties bind himself to give RULES WHEN EXCHANGE CONSISTS
one thing in consideration of a PARTLY IN MONEY AND PARTLY IN
promise to give another thing ANOTHER (ART. 1468)

CONTRACTOR A. INTENT
UPDATES IN REGULATORY FRAMEWORKS
- The manifest intention of the parties is CAUSE IN A CONTRACT OF SALE
paramount in determining whether it
is one of barter or of sale and such REQUISITES FOR VALID PRICE (RCMM)
intention may be ascertained by
taking into account the A. REAL (ART. 1471)
contemporaneous and subsequent - the price is not simulated or not
acts of the parties (art. 1371) fictitious
- Identifying whether the exchange is B. CERTAIN OR ASCERTAINABLE (ART.
barter or a sale 1469)
- It is certain if it is expressed and
B. IF INTENT DOES NOT CLEARLY agreed in terms of specific amt of
APPEAR money.
- If this intention cannot be ascertained, - It is ascertainable if it is sufficient that
it shall be considered a barter if the it be so with reference to another
value of the thing given as part of the thing certain, or that the
consideration exceeds the amount of determination thereof be left to the
the money or its equivalent, otherwise judgment of special person/s
it’s a sale. C. IN MONEY OR ITS EQUIVALENT (ART.
- Value of the thing > price paid = 1468)
Barter D. MANNER OF PAYMENT MUST BE
- Value of the thing < price paid = Sale AGREED UPON
- Value of the thing = Price paid = Sale - The agreement on the manner of
payment goes into the price, such that
Example: a disagreement on the manner of the
o Barter payment is tantamount to a failure to
o $ to euro agree on the price.
o Peso to Peso
o Sale RULES REGARDING PRICE
o Peso to $
A. NO SALE IF PRICE NOT CERTAIN
OR ASCERTAINABLE (dapat alam
ART. 1469. In order that the price may be
kung magkano binibenta para
considered certain, it shall be sufficient
maconsider as sale)
that it be so with reference to another
thing certain, or that the determination
B. CASES WHEN PRICE IS
thereof be left to the judgment of a
CONSIDERED CERTAIN
specified person or persons.
1. The parties have fixed or agreed
Should such person or persons be
upon a definite amount
unable or unwilling to fix it, the contract
2. It be certain with reference to
shall be inefficacious, unless the parties
another thing certain
subsequently agree upon the price.
3. The determination of the price is
left to the judgment of a specified
If the third person or persons acted
person or persons and even before
in bad faith or by mistake, the courts may
such determination.
fix the price.
(applicable when there is no
specific amt ascertained then a
Where such third person or persons are
specific person or persons will fix
prevented from fixing the price or terms
it)
by fault of the seller or the buyer, the
4. Fixed by the courts
party not in fault may have such remedies
5. Fixed by reference to a definite
against the party in fault as are allowed
day, particular exchange or market
(art. 1472)

EFFECT WHERE PRICE FIXED BY THIRD

PERSON DESIGNATED

GENERAL RULE: binding upon them

UPDATES IN REGULATORY FRAMEWORKS

EXCEPTIONS: 1. Where low price indicates a

defect in the consent. The
1. When the third person acts in bad inadequacy of price may indicate a
faith or by mistake (art. 1469) but defect in the consent such as when
mere error in judgment cannot serve fraud, mistake, or undue influence is
as a basis for impugning the price present in which case the contract
fixed. may be annulled not because of the
inadequacy of price but because the
2. When the third person disregards consent is vitiated (impaired)
specific instructions or the
procedure marked out by the 2. Where price so low as to be
parties or the data given him, “shocking to conscience” the sale
thereby fixing an arbitrary price may be set aside. (where a man in
his senses and not under a delusion
EFFECTS WHERE PRICE NOT FIXED BY will not accept it)
THIRD PERSON DESIGNATED
3. Where the price is simulated such
A. If the third person designated by the as when the parties intended a
parties to fix the price refuses or donation or some other act or
cannot fix it (without fault of the contract
seller and the buyer), the contract
shall become ineffective, as if no price 4. Where the parties did not intent
had been agreed upon unless, if the to be bond at all, the contract is
parties subsequently agree upon the void and inexistent.
price

B. If such third person is prevented

from fixing the price by the fault of
the seller or the buyer, the party not EFFECT OF GROSS INADEQUACY OF
at fault may obtain redress against the PRICE IN INVOLUNTARY SALES
party at fault which consist of a choice
between rescission or fulfillment with GENERAL RULE: like in a voluntary sale,
damages in either case (art. 1191 and mere inadequacy is not a sufficient ground
1594). for the cancellation of an execution sale if
there is no showing that in the event of a
If the innocent party chooses resale, a better price can be obtained.
fulfillment, the court shall fix the price.
EXCEPTIONS
ART. 1470. Gross inadequacy of price
1. Where price so low as to be
does not affect a contract of sale, except
“shocking to conscience”
as it may indicate a defect in the consent,
2. If in the event of a resale, a better
or that the parties really intended a
price can be obtained.
donation or some other act or contract.
PACTO DE RETRO SALE
EFFECT OF GROSS INADEQUACY OF - The validity of the sale is not
PRICE IN VOLUNTARY SALES (ART. 1470) necessarily affected where the law
gives to the owner the right to
GENERAL RULE: mere inadequacy of the redeem, as when a sale is made at
price does not affect the validity of the public-auction, upon the theory that
sale if fixed in good faith and without fraud the lesser the price, the easier it
is for the owner to effect the
(basta mayroon kang binayad kahit redemption. He may reacquire the
inadequate, consider sya as a valid sale as property or also sell his right to
long as it is in good faith and without fraud) redeem and thus recover the loss he
claims he suffered by reason of the
EXCEPTION:
UPDATES IN REGULATORY FRAMEWORKS
price obtained at the execution of ART. 1472. The price of securities, grain,
sale. liquids, and other things shall also be
- Sale with a right to repurchase considered certain, when the price fixed is
- Ibebenta mo but the buyer will give that which the thing sold would have on a
you a right to repurchase your definite day, or in a particular exchange or
property. market, or when an amount is fixed above
- The lesser the price, the easier for the or below the price on such day, or in such
owner to repurchase the property exchange or market, provided said amount
be certain

EFFECTS WHERE PRICE IS PRICE OF

SECURITIES, GRAINS, LIQUID AND
THINGS CONSIDERED CERTAIN (ART.
1472)
ART. 1471. If the price is simulated, the
sale is void, but the act may be shown to A. When the price fixed is that which the
have been in reality a donation, or some thing would have on a definite day or
other act or contract. in a particular exchange or market.
Example: price ng bigas sa Tanauan
EFFECT WHERE PRICE IS SIMULATED market is 55 (considered certain)
(fictitious price)
- Not a real contract, but a consensual B. When an amount is fixed above or
contract. As a consensual contract, it below the price on such day, or in
becomes binding and valid contract exchange or market, provided said
upon meeting of minds as to price. amount be certain; otherwise, the sale
- If the real price is not stated in the is inefficacious (without force and
contract effect) because the price cannot be
The sale is still valid but subject to determined.
reformation. Example: price ng bigas sa Tanauan
- If there is no meeting of minds as to market is 55 originally but less than 5
the price, because the price stipulated sya nitong certain na araw
in the contract is simulated, then it is (considered certain)
void
- IF THE PRICE IN A CONTRACT OF ART. 1473. The fixing of the price can
SALE IS SIMULATED, THE SALE IS never be left to the discretion of one of the
VOID contracting parties. However, if the price
fixed by one of the parties is accepted by
A. RELATIVE SIMULATION (ART. 1471) the other, the sale is perfected.
- If the price is simulated or false such
as when the vendor really intended to RULES REGARDING FIXING OF PRICE
transfer the thing gratuitously, then (ART. 1473)
the sale is void but the contract shall
be valid as a donation. A. The determination of the price cannot
be left to the discretion of one of
B. ABSOLUTE SIMULATION the contracting parties (based on
- If the contract is not shown to be a the principle of mutuality of contracts
donation or any other act or contract and the other could not have
transferring ownership because the consented to the price). The validity or
parties do not intend to be bound at compliance of the contract cannot be
all, the ownership of The thing is not made to depend upon the will of one
transferred. The contract is void and of the contracting parties.
inexistent (art. 1409). The action or
defense for the declaration of the B. To be just, the price must be
inexistence of a contract does not determined impartially by both
prescribe. parties or left to the judgement of
a specified person or persons
UPDATES IN REGULATORY FRAMEWORKS
willing but not obliged to sell to a man
C. Where the price is fixed by one willing but not obliged to buy.
party is accepted by the other, the
contract is deemed perfected because ART. 1475. The contract of sale is
in this case, there exists a true perfected at the moment there is a
meeting of minds upon the price. meeting of minds upon the thing which is
the object of the contract and upon the
ART. 1474. Where the price cannot be price. From that moment, the parties may
determined in accordance with the reciprocally demand performance, subject
preceding articles, or in any other manner, to the provisions of the law governing the
the contract is inefficacious. However, if form of contracts.
the thing or any part thereof has been
delivered to and appropriated by the PERFECTION OF A CONTRACT OF SALE
buyer, he must pay a reasonable price (ART. 1475)
therefor. What is a reasonable price is a
question of fact dependent on the (STAGES OF A CONTRACT - NEGOTIATION,
circumstances of each particular case. (n) PERFECTION, TERMINATION)
- The contract of sale being consensual,
it is perfected at the moment of
consent.
- From the moment there is a meeting
of minds upon the thing which is the
object of the contract and upon the
price, the reciprocal obligation of the
EFFECT OF FAILURE TO DETERMINE
parties arise even when neither has
PRICE (ART. 1474)
been delivered.
- There is already a reciprocal obligation
GENERAL RULE: when the price cannot be
kapag nagkaroon na ng perfection
determined in accordance with ART. 1469 to
EVEN IF wala pang nadedeliver at
1473, the contract is inefficacious (inability to
nababayad.
produce the effect wanted). Hence the sale is
- Ownership is not yet transferred
void.
unless there is a delivery
There is no obligation on the part of the
Registration of the transfer of
vendor to deliver the thing and on the part of
automobiles and the certificate of license
the vendee to pay. (no price, no sale)
of their use in the Bureau of Land
Transportation constitutes an
EXCEPTION:
administrative proceeding which does
- When delivery has been made or the
not bear any essential relation to the
thing or a part thereof has been
contract of sale
delivered to and appropriated by the
buyer, the latter must pay a
- In case one of the contracting
reasonable price therefor which is
parties should not comply with
generally the market price at that time
what is incumbent upon him, the
and place fixed by the contract or by
injured party may sue for fulfillment or
law for the delivery of the goods
rescission with the payment of
(CONCEPT OF REASONABLE PRICE)
damages in either case
- If there is partial performance where
the seller already delivered a part of
WHEN DEFINITE AGREEMENT ON
the goods and nagamit na ito ng
MANNER OF PAYMENT ESSENTIAL
buyer then he shall pay the market
- A contract of sale becomes binding
price at that time
and valid contract upon meeting of
minds as to price, despite the manner
DETERMINATION OF FAIR MARKET VALUE
of payment or even when there is a
- Offers to sell are not competent
breach of that manner of payment. (it
evidence of fair market value
is not the act of payment that
- Is the reasonable sum which property
determines the validity of a contract
would bring on a fair sale by a man
of sale)
UPDATES IN REGULATORY FRAMEWORKS
- Where the parties, however, still have real or personal, and regardless of the
to meet and agree on how and when price involved
the downpayment and installment
payments are to be made (it cannot D. If the law requires a document or
be said that a contract of sale has special form, the contracting parties
been perfected) may compel each other to observe
that form, once the contract has been
REQUIREMENTS FOR PERFECTION perfected. This right may be exercised
simultaneously with the action upon
A. When parties are face to face, the contract. (art. 1357)
when an offer is accepted without
conditions and without Sale of property in a private
qualifications (may definite offer and instrument is not registrable but in art.
absolute sya since walang 1357 can compel each other to
consideration, even if sa phone nag execute the necessary deed of sale
usap, it shall be considered face to where pwede syang gawing public
face) instrument and maregister

B. When contract is thru

correspondence or thru telegram, EFFECT OF FAILURE TO PAY PRICE
there is perfection if the offeror A. PRICE STIPULATED
receives or has knowledge of the - Non-payment of the purchase price is
acceptance by the offeree. (If the not among the instances where the
buyer accepted the offer of the seller law declares a contract of sale to be
and if the buyer communicates his null and void. Such failure does not
acceptance to the seller and the seller ipso facto resolve the contract in the
has knowledge na naaccept na ni absence of any agreement to that
buyer yung offer nya then the sale is effect.
perfected.) - The vendor’s remedy in such case is
generally to demand specific
If hindi aware si seller na naaccept na performance or rescission with
sya ni buyer then there is no perfected damages in either case under ART.
contract of sale 1191

C. When a sale is made subject to a B. NO PRICE STIPULATED

suspensive condition (suspends a - A contract of sale is null and void
contract if conditions were not met), where the purchase price, which
perfection is had from the appears thereon as paid, has, in fact,
moment the condition is fulfilled never been paid by the buyer to the
seller. In such case, the sale is
FORMALITIES OF PERFECTION (ART. without cause or consideration.
1403) Such sale is non-existent or cannot be
considered consummated. It produces
A. Under the statute of frauds, the sale of no effect whatsoever.
real property (regardless of the - Nakalagay na nagbayad ka but in
amount) must be in writing to be truth and in fact, wala naman
enforceable talagang ibinayad.

B. Under the statute of frauds, personal If the real price is not stated in the contract,
property – if 500 or more must be in the contract is VALID but subject to
writing to be enforceable reformation.

C. Also in writing should be sales which If there is no meeting of minds of the parties
are to be performed only after more as to price, because the price stipulated in
than one year (from the time the the contract is simulated, then the contract is
agreement was entered into) - void.
regardless as to whether the property
UPDATES IN REGULATORY FRAMEWORKS
RIGHT OF OWNER TO FIX HIS OWN PRICE
A. SALES OF SEPARATE LOTS BY
1. The owner of a thing has the right to AUCTION ARE SEPARATE SALES
quote his own price, reasonable or - Where separate lots are subject of
unreasonable. It is up to the separate biddings and are separately
prospective buyer to accept or reject knocked down, there is a separate
it. He may even impose a condition contract in regard to each lot.
hard to fulfill and name a price quite Example:
out of proportion to the real value of o One knife – one lot
the thing offered for sale. o Set of knife, spoon, fork –
one lot
2. He is also well within his right to quote
a small or nominal consideration and B. SALE PERFECTED BY THE FALL OF
such consideration is just as effectual THE HAMMER
and valuable a consideration as a - The sale is perfected only by the fall of
larger sum stipulated or paid. the hammer or in other customary
manner. It follows that the bidder may
AUCTION SALES retract his bid and the auctioneer may
ART. 1476. (1) Where goods are put up withdraw the goods from sale any
for sale by auction in lots, each lot is the time before the hammer falls.
subject of a separate contract of sale. - However, if the sale has been
(2) A sale by auction is perfected announced to be without reserve, the
when the auctioneer announces its auctioneer cannot withdraw the goods
perfection by the fall of the hammer, or in from sale once a bid has been made
other customary manner. Until such and the highest bidder has a right to
announcement is made, any bidder may enforce his bid.
retract his bid; and the auctioneer may - The sale is perfected kapag nagkaroon
withdraw the goods from the sale unless na ng fall of the hammer. If hindi pa
the auction has been announced to be yun nangyayari, pwede pang i-
without reserve. withdraw nung auctioneer yung
(3) A right to bid may be reserved pinapaauction nya as long as it is
expressly by or on behalf of the seller, without reserve (hindi pa narereserve)
unless otherwise provided by law or by
stipulation. C. RIGHT OF SELLER TO BID IN THE
(4) Where notice has not been AUCTION
given that a sale by auction is subject to a - The seller or his agent may bid in
right to bid on behalf of the seller, it shall an auction sale provided:
not be lawful for the seller to bid himself or o (a) such right was reserved
to employ or induce any person to bid at (nilagay nya yung right nya to
reserve the property for
example);
Sale by auction is perfected
o (b) notice was given that the
- A sale by auction is perfected when
the auctioneer announces its sale is subject to a right to bid
perfection by the fall of the hammer or on behalf of the seller (notify
other manner the bidders that the seller is
allowed to bid. The purpose of
this is to prevent puffing or
secret bidding by or on
BEFORE the fall of the hammer behalf of the seller by people
1. Any bidder may retract his bid who are not themselves bound
2. The auctioneer may withdraw the o If the bidders are not notified,
goods from the sale unless the auction the sale can be treated by
has been announced to be without bidders as fraudulent and a
reserve sufficient ground for the buyer
to be relieve from his bid or not
RULES GOVERNING AUCTION SALES the pay yung price na nabid
(ART. 1476) nya) ; and
UPDATES IN REGULATORY FRAMEWORKS
o (c) the right to bid by the seller OWNERSHIP OF THING TRANSFERRED BY
is not prohibited by law or by DELIVERY
stipulation - Ownership is noy transferred by
- It is possible and ang reason why they perfection but by delivery, actual or
are doing this is to increase the price constructive.
of the lot - It is only after the delivery of the thing
sold that the purchases acquires a
D. RIGHT OF SELLER TO EMPLOY real right or ownership over it.
OTHERS TO BID FOR HIM
- The seller may employ others to bid
for him provided he has notified the - In the absence of stipulation to the
public. Without the notice, any sale contrary, the ownership of the thing
contravening the rule may be treated sold passes on the vendee upon
by the buyer as fraudulent. In other delivery thereof. This is true even if
words, the purchaser could be relieved the purchase has been made on
from his bid. (the auctioneer may not credit.
be the owner of the goods and he - Payment of the purchase price is not
entered into a puffing or secret essential to the transfer of ownership,
bidding, and the original seller may as long as it is delivered. Non-
not know or know the transaction, the payment only creates a right to
sale will still be considered fraudulent. demand payment or to rescind the
The knowledge of the seller is contract, or to criminal prosecution in
immaterial in this case.) the case of bouncing checks
- It has been held that the issuance of a
RIGHT OF OWNER TO PRESCRIBE TERMS sales invoice does not prove transfer
OF PUBLIC AUCTION of ownership of the thing sold to the
- The owner of property which is offered buyer, an invoice being nothing more
for sale, either at public or private than a detailed statement of the
auction, has the right to prescribe the nature, quantity, and cost of the thing
manner, conditions, and terms of such sold, and considered not a bill of sale.
sale. He may provide that all of the
purchase price or any portion thereof
should be paid at the time of the sale, EXCEPTION OF ART. 1477
or that time will be given for that ART. 1478. The parties may stipulate that
payment, or that any or all bids may ownership in the thing shall not pass to
be rejected. the purchaser until he has fully paid the
- The conditions of a public sale price.
announced by an auctioneer or by the
owner of the property at the time and 1. CONTRARY STIPULATION. The
place of the sale are binding upon parties may stipulate that despite the
all bidders, whether they knew of delivery, the ownership of the thing
such conditions or not. shall remain with the seller until the
purchaser has fully paid the price. In
ART. 1477. The ownership of the thing other words, non-payment of the
sold shall be transferred to the vendee price, after the thing has been
upon the actual or constructive delivery delivered, prevents the transfer of
thereof. ownership only if such is the
stipulation of the parties. This
TWO ASPECTS OF DELIVERY stipulation is known as pactu
1. The de jure delivery or the execution
of deeds of conveyance; and 2. m reservati dominii or contractual
2. The delivery of the material reservation of title, and is common
possession in sales on the installment plan.

TRANSFER OF OWNERSHIP OF THE 3. CONTRACT TO SELL. In contracts to

THING SOLD sell, where ownership is retained by
the seller and is not to pass until the
full payment of the price, such
UPDATES IN REGULATORY FRAMEWORKS
payment is a positive suspensive OPTION
condition, the failure of which is - Is a contract granting a person the
not a breach, casual or serious, privilege to buy or not to buy certain
but simply an event that prevents the object at any time within the agreed
obligation of the vendor to convey title period at a fixed price or under
from acquiring binding force. To say - Is a preparatory contract, separate
that there is only a casual breach is to from the contract of sale which the
proceed from the assumption that the parties may later on enter into.
contract is one of ab solute sale, - Being a separate contract, an option
where non-payment is a resolutory must have its own cause or
condition, which is not the case. consideration. An option without
consideration is void; the effect is the
4. CONTRACT OF INSURANCE. A same as if there was no option.
perfected contract of sale even
without delivery vests in the vendee
an equitable title, an existing interest
over the goods sufficient to be the
subject of insurance. RIGHT OF FIRST REFUSAL
- Innovative juridical relation
ART. 1479. A promise to buy and sell a - It cannot be deemed a perfected
determinate thing for a price certain is contract of sale
reciprocally demand able. - In a right of refusal, while the object
might be made determinate, the
An accepted unilateral promise to exercise of the right, however, would
buy or to sell a determinate thing for a be dependent not only on the
price certain is binding upon the promissor grantor’s eventual intention to enter
if the promise is supported by a into a binding juridical relation with
consideration distinct from the price. another but also on terms
- Lacked of essential requisites: fixed
period and a determined price
CONTRACT TO SELL
- Bilateral contract KINDS OF PROMISE TREATED IN ARTICLE
- The prospective seller, binds himself 1479
to sell a property upon fulfillment of
the condition agreed upon, that is, full A. ACCEPTED UNILATERAL PROMISE
payment of the purchase price 1. An accepted unilateral promise to
sell in which the promisee
(acceptor) elects to buy; (promise
to sell by the seller and the buyer
may accept this promise without
necessarily promising to buy)

Example: Ibebenta ni seller yung

kotse nya and nag-agree yung
buyer pero hindi ito nangako na
bibilhin nya yung kotse

2. An accepted unilateral promise to

buy in which the promisee
(acceptor) elects to sell; (promise
to buy the property of seller and
the seller may accept this promise
without necessarily promising to
sell the thing)

Example: Bibilhin ni buyer yung

kotse ng seller and nag-agree yung
UPDATES IN REGULATORY FRAMEWORKS
seller pero hindi ito nangako na Even if B accepts the promise
ibebenta nya yung kotse kay buyer of S (this is a case of an accepted
unilateral promise to sell), S is not
3. A bilateral promise to buy and sell bound to sell his car to B because
reciprocally accepted in which there is no promise, in turn, on the
either of the parties chooses to part of B to buy.
exact fulfillment.
(both parties promise to buy and However, if the promise is
sell reciprocally) covered by a consideration dis tinct
from the price of the car, as when B
EFFECT OF UNACCEPTED UNILATERAL paid or promised to pay a sum of
PROMISE money to S for giving him the right to
- A unilateral promise or offer to sell or buy the car if he chooses within an
to buy a thing which is not accepted agreed period at a fixed price, its
creates no juridical effect or legal acceptance produces consent or
bond. Such unaccepted imperfect meeting of the minds. A legally bind
promise or offer is called ing and independent contract of
policitacion. option is deemed perfected.
- A period may be given to the offeree
within which to accept the offer. FULL PAYMENT OF PRICE NOT
NECESSARY FOR EXERCISE OF OPTION
Example: TO BUY.
S offers or promises to sell to B his car - The obligations under an option to buy
at a stated price and B just let the are reciprocal obligations — the
promise go by without accepting it. performance of one obligation is
Neither S nor B is bound by any conditioned upon the simultaneous
contract. Obviously, this is not the fulfillment of the other obligation. (Art.
one contemplated in Article 1479. 1169.)
- In an option to buy, the party who has
EFFECT OF ACCEPTED UNILATERAL an option may validly and effectively
PROMISE exercise his right by merely notifying
- A unilateral promise to sell or to buy a the owner of the former’s decision to
determinate thing for a price certain buy and expressing his readiness to
does not bind the promissor even pay the stipulated price
if accepted and may be withdrawn at - The notice need not be coupled with
any time. actual payment of the purchase price
- It is only if the promise is supported so long as this is delivered to the
by a consideration distinct and owner of the property upon the
separate from the price that its execution and delivery by him of the
acceptance will give rise to a deed of sale.
perfected contract. - In an option to buy, pwedeng i-express
- Only one makes the promise. This ng isang party yung right nya to buy
promise is accepted by the other by simply notifying the owner. With
this, hindi na kailangan pa na
Consideration in an option contract may be magkaroon ng actual payment as long
anything of value, unlike in sale where it must as long as aware lang yung seller of
be the price certain in money or its your intention to buy. Besides, hindi pa
equivalent. Lacking any proof of such naman kasi ito actual contract of
consideration, the option is unenforceable. purchase and sale kasi pinapaalam mo
lang naman and hindi pa naman ito
A contract of option to buy is separate tinatanggap ng seller.
from the contract to sell, and both contracts
need separate and distinct considerations for
validity. B. EFFECT OF BILATERAL PROMISE
TO BUY AND SELL (MUTUAL
Example: PROMISE)
- One party accepts the other’s promise
to buy and the latter, the former’s
UPDATES IN REGULATORY FRAMEWORKS
promise to sell a determinate thing for Should fungible things be sold for a price
a price certain fixed according to weight, number, or
- same effect as a perfected measure, the risk shall not be imputed to
contract of sale since it is the vendee until they have been weighed,
reciprocally demand able. counted, or measured, and delivered, un
- A bilateral promise to buy and sell a less the latter has incurred in delay.
certain thing for a price certain gives
the contracting parties personal rights RISK OF LOSS OR DETERIORATION
in that each has the right to demand
from the other the fulfillment of SELLER BEARS THE LOSS
obligations. A. If the thing is lost before perfection,
- Wala pang transfer of title since wala the seller and not the one who intends
pang delivery but both parties has the to purchase it bears the loss in
right to demand fulfillment of accordance with the principle that the
obligations or rescission of the thing perishes with the owner
contract plus damages (res perit domino – the owner
bears the loss)
Example:
S promised to sell his car to B and B B. If the thing is lost at the time of
promised to buy the said car for perfection, the contract is void or
P100,000.00. The parties are bound by inexistent. (Art. 1409[3].) The legal
their con tract so that in case one of effect is the same as when the object
them should not comply with what is is lost before the perfection of the
incumbent upon him, the other has contract of sale (The seller or the
the right to choose be tween the owner will bears the risk of loss, same
fulfillment and the recission of the effect of lost before perfection)
obligation, with the payment of
damages in either case.
BUYER BEARS THE LOSS
OBLIGATION OF THE OFFEROR IN A C. If the thing is lost after perfection
VALID (PAID) OPTION CONTRACT but before its delivery, that is, even
before the ownership is transferred to
A. Not to offer to any third party the sale the buyer, the risk of loss is shifted to
of the object of the option during the the buyer as an exception to the rule
option period of res perit domino (wala pang
transfer of ownership since wala pang
B. Not to withdraw the offer or option delivery but the risk of loss is
during the option period transferred to the buyer even if the
reason is a fortuitous event the same
C. To hold the subject matter for sale and thing with the improvement of the
to transfer it to the offeree in the thing where the buyer will have the
event that he exercises his option benefit)
during the option period.

ART. 1480. Any injury to or benefit from

the thing sold, after the contract has been
perfected, from the moment of the
perfection of the contract to the time of FUNGIBLE GOODS/INTERCHANGEABLE
delivery, shall be governed by articles GOODS
1163 to 1165, and 1262. - Replaceable of equal quality and
quantity of goods without loss of value
This rule shall apply to the sale of
fungible things, made independently and
for a single price, or without consideration
UPDATES IN REGULATORY FRAMEWORKS

ART. 1481. In the contract of sale of

EXCEPTIONS: goods by de scription or by sample, the
contract may be rescinded if the bulk of
1. If the object sold consists of fungibles the goods delivered do not correspond
(goods that are easily replaceable) with the description or the sample, and if
sold for a price fixed according to the contract be by sample as well as by
weight, number or measure. description, it is not sufficient that the bulk
- Paragraph 3 is an exception to the rule of goods correspond with the sample if
that the vendee (buyer) bears the loss they do not also correspond with the
after the perfection of the contract description.
and before delivery. The buyer shall have a reasonable
opportunity of comparing the bulk with the

- If there is no delivery yet, the seller

bears the loss SALE OF GOODS BY DESCRIPTION
AND/OR SAMPLE
Example: B already paid a portion for - Sample ng mga goods from the bulk of
the sugar he wants to buy to S. The goods which is a whole body.
sugar which the seller intended to
deliver was destroyed by flood. A. SALE BY SAMPLE
However, the written contract did not - The seller warrants that the bulk (not
specify that the sugar to come from the major part of the majority pf the
the crop on S’s land which was goods but the goods themselves) of
destroyed by a flood. S claimed that the goods shall correspond with the
the fortuitous cause excused non- sample in kind, quality, and character.
performance by him of the contract. In Only the sample is exhibited. The bulk
return, S promised to deliver a generic is not present, and so there is no
thing. But B did not accepted opportunity to examine or inspect it
therefore the sale was not perfected - Whether a sale is by sample is
and the loss of the crop even through determined by the intent of the
force majeure, did not extinguish S’s parties as shown by the terms of the
obligation to deliver the sugar. contract and the circumstances
surrounding the transaction
2. If the seller is guilty of fraud, - The mere exhibition of the sample
negligence, default, or violation of does not necessarily make it a sale by
contractual term. sample. This exhibition must have
been the sole basis or inducement of
3. When the object sold is generic the sale.
because genus does not perish - In a sale by sample, the vendor
(geneus nunquam perit) warrants that the thing sold and to be
de livered by him shall conform with
the sample in kind, character, and
D. If the thing is lost after delivery, the
quality.
buyer bears the risk of loss following
the general rule of res perit domino
B. SALE BY DESCRIPTION
- Sale by description occurs where a
seller sells things as being of a
particular kind, the buyer not knowing
whether the seller’s representations
are true or false, but relying on them
as true;
- or, as otherwise stated, where the
purchaser has not seen the article sold
and relies on the description given
him by the vendor, or has seen the
goods but the want of identity is not
apparent on inspection.
UPDATES IN REGULATORY FRAMEWORKS
- Hindi pa nakikita ng buyer yung correspond substantially with the
product since dinescribe lang ng seller sample and description.
yung characteristics nito or if nakita - The buyer is given a reasonable
naman pero may hindi sya nakita dun opportunity of comparing the bulk
sa inspection na based dun sa with the description or the example.
description ng seller ART. 1482. Whenever earnest money is
given in a contract of sale, it shall be
What will happen if the bulk of considered as part of the price and as
goods delivered does not proof of the perfection of the contract.
correspond with the description? (1454a)
the contract may be rescinded.
EARNEST MONEY
- But if the thing delivered is as - Called “arras”
described, the fact that the buyer - is something of value given by the
cannot use the thing sold for the buyer to the seller to show that the
purpose for which it was intended buyer is really in earnest, and to bind
without the seller’s fault does not the bargain.
exempt the buyer from paying the - *constitutes an advance payment, it
purchase price agreed upon. (if same must be deducted from the total price.
dun sa dinescribe ng seller yung
product, then the buyer must pay the SIGNIFICANCE OF EARNEST MONEY
purchase price agreed upon.) A. it is part of the purchase price
- it must be deducted from the total
What if hindi magamit yung thing price.
but same with the description
mentioned by the seller? The buyer B. It is a proof of the perfection of
still has to pay since same description the contract.
was mentioned. It’s not the seller’s
fault na hindi mo sya magamit sa *Hence, it cannot be forfeited in case the
kung saan mo man sya gustong buyer should fail to pay the balance of the
gamitin. price, especially in the absence of a clear and
express agreement thereon. In a case, by
C. SALE BY DESCIPTION AND SAMPLE reason of its failure to make payment,
- the goods must satisfy all the petitioner, through its agent, informed
warranties appropriate to either kind private respondents that it would no longer
of sale, and it is not sufficient that the push through with the sale.
bulk of the goods correspond with the
sample if they do not also correspond Note: By agreement of the parties, the
with the description, and vice versa. amount given may be merely a deposit of
- Dapat yung bulk of goods will what would eventually become earnest
correspond with the description and money or downpayment should a contract of
the sample exhibited. Kung paano sya sale be made by them, not as a part of the
i-describe, dapat ganun din ang itsura purchase price and as proof of the perfection
nya pag piniresent. of the contract of sale but only as a
guarantee that the buyer would not
REMEDY: ANNULMENT NOT RESCISSION. On back out of the sale.
the ground of substantial mistake or fraud
The earnest money forms part of the
BULK OF GOODS consideration only if the sale is consummated
- is not used to desig nate the greater upon full payment of the purchase price
portion of the goods. Rather, it is used
to denote the goods as distinguished EARNEST MONEY AND OPTION MONEY
from the sample with which they must DISTINGUISHED
correspond. The word “goods” in the
phrase is an oppositional genitive EARNEST MONEY OPTION MONEY
defining “bulk.” In other words “bulk Part of the purchase is the money given
of goods” mean the same as “goods” price as distinct con
which, as a whole body, must sideration for an
UPDATES IN REGULATORY FRAMEWORKS
option contract A. Sale of real property or an interest
given only where applies to a sale not therein regardless of the price
there is already a yet perfected involved; and (shall be written
sale regardless of amt)
the buyer is bound the would-be buyer B. Sale of personal property at a price
to pay the balance who gives option not less than P500.00;
money is not C. Sale of property not to be performed
required to buy. within a year from the date thereof
regardless of the nature of the
Option money may become earnest
property and the price involved (if
money if the parties so agree.
after one year pa mapeperform then
ART. 1483. Subject to the provisions of need to be in writing regardless of the
the Stat ute of Frauds and of any other nature of the property and its price)
applicable statute, a contract of sale may
be made in writing, or by word of mouth, The purpose of the Statute of Frauds is to
or partly in writing and partly by word of prevent fraud and perjury in the enforcement
mouth, or may be inferred from the of obligations depending for their evidence
conduct of the parties. upon the unassisted memory of witnesses by
requiring certain enumerated contracts and
RULES REGARDING FORM OF CONTRACT transactions to be evidenced in writing.
OF SALE
The Statute of Frauds refers to specific
GENERAL RULE: a contract may be entered kinds of transactions and cannot apply to any
into in any form provided all the essential other transaction that is not enumerated
requisites for its validity are present. (Art. therein. The application of the Statute
1356.) It may be in writing; it may be oral; it presupposes the existence of a perfected
may be partly in writing and partly oral. It contract. A right of first refusal is not among
may even be inferred from the conduct of the those listed as unenforceable under the
parties. Sale is a consensual contract and statute. At best, it is a contractual grant not
is perfected by mere consent. of the sale of the property involved, but of
the right of first refusal over the property
EXCEPTIONS: when a sale of a piece of land sought to be sold. Hence, a right of first
or any interest therein through an agent, the refusal need not be written to be enforceable
authority of the latter shall be in writing, and may be proven by oral evidence.
otherwise, the sale shall be void
WHERE FORM IS REQUIRED IN ORDER
WHERE FORM IS REQUIRED IN ORDER THAT A CONTRACT MAY BE VALID.
THAT A CONTRACT MAY BE - Where the “applicable statute”
ENFORCEABLE requires that the contract of sale be in
- In case the contract of sale should be a certain form for its validity, the
covered by the Statute of Frauds, the required form must be observed in
law requires that the agreement (or order that the contract may be both
some note or memorandum thereof) valid and enforce able.
be in writing subscribed by the party - To be valid (Must have an offer,
charged, or by his agent; otherwise, acceptance, and consideration. All
the contract cannot be en forced by essential elements are present), it has
action. to be in writing
- To be enforceable (Can be enforced in
court of law. The law allows for WHERE FORM IS REQUIRED ONLY FOR
enforcement), must be in writing THE CONVENIENCE OF THE PARTIES
- the contract of sale cant be enforced if - In certain cases, a certain form (e.g.,
hindi sya nag follow sa memorandum public instrument) is required for the
ng statute of frauds especially if the convenience of the parties in order
contract is covered by this. that the sale may be registered in the
Registry of Deeds to make effective as
CONTRACTS COVERED UNDER against third persons the right
STATUTE OF FRAUDS (ART. 1403) acquired under such sale.
UPDATES IN REGULATORY FRAMEWORKS
- As between the contracting parties, the province or city where the
the form is not indispensable property is located. The sale must be
(essential) since they are allowed by in a public document (e.g.,
law to compel each other to observe acknowledged before a notary public
that form. (art. 1357, 1358) or any public officer authorized by law
- Form is required para maregister yung to administer oath) for otherwise, the
sale. ie. registry of deeds in case of registration will be refused.
land. A sale of land is valid regard less
of the form it may have been entered C. The real purpose of registration of a
into as long as the req uisites for a contract of sale being to give notice
valid contract of sale are present. to third persons and to protect the
buyer against claims of third
persons arising from subsequent
alienations by the vendor, it is
certainly not necessary to give
efficacy to the deed of sale, as
between the parties to the contract.
(valid sale but unenforceable since
required to be in writing to be
enforceable)

D. The sale of land in a private

On the other hand, the fact that a deed of instrument is valid and binding
sale is a notarized document does not upon the parties (not as against third
necessarily justify the conclusion that the persons since dapat may notice and
said sale is a true conveyance to which the registered in the registry of property),
parties thereto are irrevocably bound. Though for the time-honored rule is that even
its notarization vests in its favor the a verbal contract of sale of real estate
presumption of regularity and due execution, produces legal effects between the
it is not the function of the notary public to parties
validate and make binding an instrument
never intended by the parties to have any E. The fact that the notarization of a
binding legal effect upon them. The deed of sale of real property is false is
intention of the parties still and always of no consequence, for it need not be
is the primary con sideration in notarized; it is enough that it be in
determining the true nature of the writing.
contract.

An invalidly notarized deed of sale must MODES OF SATISFACTION OF THE

be considered merely as a private STATUTE OF FRAUDS
document. Even if validly notarized, the
deed would still be classified as a private The statute specifies three ways in
document if it is merely subscribed and sworn which contracts of sales of goods within
to by way of jurat but was not properly its terms may be made binding, namely:
acknowledged.
1. the giving of a memorandum;
SALE OF REAL PROPERTY OR AN 2. acceptance and receipt of part of the
INTEREST THEREIN. goods (or things in action) sold and
actual receipt of the same (see Art.
A. A sale of a piece of land or interest 1585.); and
therein when made through an agent 3. payment or acceptance at the time
is void unless the agent’s authority is some part of the purchase price.
in writing.
The requirement of a memorandum is
B. For the sale of real property to be obviously suitable ei ther for a contract to sell
effective against third persons, the or a sale. The other two modes of satis
sale must be registered in the faction seem more naturally to apply to sales
Registry of Deeds (or Property) of than to executory contracts.
UPDATES IN REGULATORY FRAMEWORKS
document but is merely incorporated
The Statute of Frauds applies not only to by reference therein.
goods but to things in action as well. (see Art.
1403[2, d].) Thus, an assignment of credit 3. WRITING
(Art. 1624.) at a price not less than P500.00 is - Where the law requires a document to
within the operation of the Statute. be in writing, or obliges the parties to
conform to a writing, or provides
consequences in the event
APPLICABILITY OF STATUTE OF FRAUDS information is not presented or
AND PERJURIES retained in its original form,
- Is applicable only to executory
contracts (no performance ie. No 4. ORIGINAL
delivery and payment) and not to - Where the law requires that a
contracts which are totally or partially document be presented or retained in
performed. its original form
- Partial performance, like the writing,
furnishes reliable evidence of the 5. SOLEMN CONTRACTS
intention of the parties or the - No provision of the R.A. No. 8792 shall
existence of the contract. apply to vary any and all requirements
- Need to be in writing to serve as a of existing laws and relevant judicial
reliable evidence and to acknowledge pronouncements respecting
the existence of the contract formalities required in the execution of
- A contrary rule would result in documents for their validity. Hence,
injustice or unfairness to the party when the law requires that a contract
who has per formed his obligation, be in some form in order that it may
and would promote fraud or bad faith be valid or enforceable, or that a
on the part of the party who has not contract is proved in a certain way,
performed his obligation, for it would that requirement is absolute and
enable him to keep the benefits indispensable
already derived by him from the
transaction and at the same time,
evade the responsi bilities or liabilities
assumed or contracted by him. ART. 1484. In a contract of sale of
- Hindi covered dito yung mga contracts personal property the price of which is
na totally or partially performed payable in installments, the vendor
may exercise any of the following
LEGAL RECOGNITION OF ELECTRONIC remedies.
DATA MESSAGES AND ELECTRONIC
DOCUMENTS (1) Exact fulfillment of the
obligation, should the vendee
1. VALIDITY AND ENFORCEABILITY fail to pay;
- Information shall not be denied (2) Cancel the sale, should the
validity or enforceability solely on the vendee’s failure to pay cover
ground that it is in the form of an two or more installments;
electronic data message or electronic (3) Foreclose the chattel mortgage
document, purporting to give rise to on the thing sold; if one has
such legal effect. Electronic data been constituted, should the
messages or electronic documents vendee’s failure to pay cover
shall have the legal effect, validity or two or more installments. In this
enforceability as any other document case, he shall have no further
or legal writing. action against the pur chaser to
recover any unpaid balance of
2. INCORPORATION BY REFERENCE
- Information shall not be denied REMEDIES OF VENDOR IN SALE OF
validity or enforceability solely on the PERSONAL PROPERTY PAYABLE IN
ground that it is not contained in an INSTALLMENTS.
electronic data message or electronic
UPDATES IN REGULATORY FRAMEWORKS
The vendor of personal property payable and personal properties of the
in installments may exercise any of the purchaser not exempt by law from
following remedies: attachment or execution.
- Kapag mayroon ng judgment ang
1. Elect fulfillment upon the vendee’s court na kailangan na magbayad ni
failure to pay; or Pwede mong kuhanin buyer but wala syang pambayad, then
yung buong amount if there is an magkakaroon ng attachment or
acceleration clause in the installment execute doon sa real and personal
sale. The acceleration clause will make properties ng buyer
the entire amount due and
demandable upon default in one
installment B. REMEDY OF CANCELLATION
- If the vendor chooses rescission or
2. Cancel the sale, if the vendee (buyer) cancellation of the contract upon the
shall have failed to pay two or more vendee’s failure to pay two or more
installments; or installments, the latter can demand
the return of payments already made
3. Foreclose the chattel mortgage (for unless there is a stipulation about
personal property only, pwede mong forfeiture.
gamitin habang nakasanla sya sa - The buyer can demand the return of
creditor), if one has been constituted, payments na binayad nya unless may
if the vendee shall have failed to pay stipulation regarding forfeiture
two or more installments.
(INSTALLMENT SALES LAW OR RECTO Example:
LAW)
For failure of the buyer to pay two or more
Note: installments, the vendor-mortgagee (or
These remedies are alternative and his assignee) re possessed the car. The
are not to be exercised cumulatively receipt issued by the vendor’s assignee to
or successively and the election of one the vendee when it took possession of the
is a waiver of the right to resort to the vehicle states that the vehicle could be
others. (mamili lang ng isa sa redeemed within 15 days, meaning that
remedies na ito. Hindi pwedeng two or should the vendee fail to redeem within
more) the said period by paying the balance of
the purchase price, the assignee would
retain permanent possession of the
vehicle as it did in fact.

C. REMEDY OF FORECLOSURE
- If the vendor has chosen the third
remedy of foreclosure of the chattel
mortgage if one has been given on the
property, he is not obliged to
RIGHT OF VENDOR TO RECOVER UNPAID return to the vendee the amount
BALANCE OF PURCHASE PRICE of the installments already paid
should there be an agreement to that
A. REMEDY OF SPECIFIC effect.
PERFORMANCE - But he shall have no further action
- The vendor who has chosen to exact against the vendee for the recovery of
the fulfillment of the obligation is not any unpaid balance of the price
limited to the proceeds of the sale of remaining after the foreclosure and
the mortgaged goods. He may still actual sale of the mort gaged chattel,
recover from the purchaser the unpaid and any agreement to the
balance of the price, if any on the real contrary is void.
UPDATES IN REGULATORY FRAMEWORKS
- Pwedeng i-forclose yung chattel Not subject of the sale: there is
mortgage and hindi na kailangan recovery of balance
ibalik ung installment price na binayad
ng buyer and also can’t recover yung B. PURPOSE OF PROVISION
unpaid balance of the price remaining - prevent vendors from resorting to this
after foreclosure form of contract which usually is in
reality contract of sale of personal
RECOVERY OF DEFICIENCY AFTER property payable in installments in
FORECLOSURE PROHIBITED contravention of the provisions of
- The principal object of Article 1484 (3) Article 1484
is to remedy the abuses committed in
connection with foreclosure of chattel C. REPOSSESSION BY LESSOR NEED
mortgages. NOT BE THROUGH COURT ACTION
- This amendment prevents mortgagees - Even where the lessee voluntarily
from seizing the mortgaged property, delivers the property to the lessor, the
buying it at foreclosure sale for a low case is not taken out of the purview of
price and then bringing suit against Article 1485 if he does so in obedience
the mortgagor for a deficiency to the lessor’s demands.
judgment.
ART. 1486. In the cases referred to in the
ART. 1485. The preceding article shall be two pre ceding articles, a stipulation that
applied to contracts purporting to be the installments or rents paid shall not be
leases of personal prop erty with option to returned to the vendee or les see shall be
buy, when the lessor has deprived the valid insofar as the same may not be un
lessee of the possession or enjoyment of conscionable under the circumstances.
the thing. (1454-A-a)
STIPULATION AUTHORIZING THE
FORFEITURE OF INSTALLMENTS OR
LEASE OF PERSONAL PROPERTY WITH RENTS PAID
OPTION TO BUY - In sales of personal property by
installments or leases of per sonal
A. NATURE OF TRANSACTION property with option to buy, the
- Leases of personal property with parties may stipulate that the
option to buy on the part of the lessee installments or rents paid are not to
who takes possession or enjoyment of be returned. Such a stipulation is
the property leased are really sales of valid “insofar as the same may not be
personalty payable in installments. unconscionable under the
circumstances’’; otherwise, the court
Example: bumili ka ng kotse na has the power to order the return of a
installment per month. If hindi mo portion of the total amount paid in
mabayaran, sisingilin ka ng seller at installments or rents.
dadalhin ito sa court. And obviously,
yung creditor ung mananalo since REALTY INSTALLMENT BUYER ACT OR
ikaw yung hindi nagbayad then the MACEDA LAW (REPUBLIC ACT NO. 6552,
court has the right na kuhanin yung SEPT 14, 1972)
property mo as a form of payment sa
balance mo. OBJECTIVE
- To protect buyers of real estate on
What if two cars yung sinangla na installment payments against onerous
object? Yung isa is subject of the and oppressive conditions (because
sale and the other is not. there are instances where Nawala na
yung property nila tapos na forfeit
Subject of the sale: the balance lahat ng pera and mayroon pa silang
can’t be recovered according to recto utang. This shows how oppressive real
law estate sales are kaya ginawa itong law
na ito)
UPDATES IN REGULATORY FRAMEWORKS
APPLICATION every year but not to
- Sale or financing of real estate on exceed 90% of the total
installment payments, including payments made.
residential condominium
apartments. It applies to sale of real
estate on installments, whether the
contract be one of sale or contract to
sell
- The application of the law is 5 years below 50%
mandatory, any stipulation of the 6 years 55%
parties contrary to the foregoing rules 7 years 60%
shall be null and void. 8 years 65%
So on
TRANSACTIONS NOT COVERED
2. RIGHTS OF SELLER
A. Sale of industrial lots o Seller has the right to cancel
B. Sale of commercial buildings the contract after the grace
C. Sale of urban land covered by Urban period
Land Reform and agricultural land
under Agrarian Reform Law REQUISITES FOR VALIDITY OF
D. Sale of lands payable in straight CANCELLATION
terms.
A. Receipt by the buyer of the
RIGHTS OF BUYER AND SELLER notice of cancellation or
demand for rescission of
A. IF BUYER HAS PAID AT LEAST TWO contract by notarial act.
YEARS OF INSTALLMENTS B. Full payment of the cash
surrender value (kailangan
1. RIGHTS OF BUYER muna bayaran yung CSV para
A. Buyer is entitled to a grace macancel)
period within which to pay
unpaid installments, without Actual Cancellation: after 30 days
additional interest: from receipt by the buyer of the notice
 Grace period is at the of cancellation
fixed rate of one
month grace period Defaulting buyer has paid less
for every one year of than 2 years of installments:
installment paid.
 This right can only be Grace period: not less than 60 days
exercised by buyer only from the date the installment became
once every five years due.
of life of the contract
and its extensions, if Failure to pay after grace period:
any cancel the contract after 30 days from
B. Buyer is entitled to a refund of receipt by the buyer of the notice of
the cash surrender value cancellation
(ibabalik yung installment
payments para ma-cancel yung B. IF BUYER HAS PAID LESS THAN TWO
sale) in case the seller cancels YEARS OF INSTALLMENTS
the contract. Cash surrender
value is equivalent to 50% RIGHT OF BUYER
of total payments made - Buyer is entitled to pay unpaid
(incl. earnest money or installments within a period of not
downpayment and option less than 60 days from the date of
money). After five years of installments became due. Within the
paying installments, there is an grace period, buyer also has the right
additional cash surrender to assign his right. (Within the grace
value equivalent to 5% period, pwede i-assign ni buyer yung
UPDATES IN REGULATORY FRAMEWORKS
right nya sa iba para sila na magtuloy LOT 660,000
ng kanyang amortization) DP (12,000)
payable 648,000

RIGHT OF SELLER
monthlypayment 3,600 (648k/180)
- After the grace period, the seller may total 180mons
cancel the contract after 30 days total mons. Paid 100
from receipt of the buyer of notice of default 101st and so on
cancellation or demand for rescission Grace period 8 (100/12)
by a notarial act (no cash surrender
value if hindi ka nakapagbayad within CSVshall be returned 360,000 (100mons.*3600)
DP 12,000
23 months)
372,000
*50+5+5+5% since 8th year *65%
C. ADDITTIONAL RUGHTS OF THE BUYER 241,800

1. To sell his rights to another by notarial THE SUBDIVISION AND CONDOMINIUM

act BUYERS’ PROTECTIVE DECREE
2. Buyer may also assign his right by (PRESIDENTIAL DECREE NO. 957, JULY
notarial act during the grace period 12, 1976)
3. To reinstate the contract by updating
the account TRANSACTIONS COVERED BY SALE/SELL
4. To pay in advance any installment or
the full unpaid balance any time A. Every disposition, or attempt to
without interest dispose, for a valuable consideration,
5. To ask for the annotation of the full of a subdivision lot, including the
payment of the purchase price in the building and other improvements
title of the property. there on, if any, in a subdivision
project or a condominium unit in a
Example 1: condominium project.

MORE THAN2YEARS
B. Contract to sell, contract of purchase
LOT 660,000
and sale, exchange, attempt to sell,
DP (12,000) option of sale or purchase, a
payable 648,000 solicitation of sale, or an offer to sell,
directly or by an agent, or by circular,
monthlypayment 3,600 (648k/180) letter, advertisement or otherwise.
total 180mons
total mons. Paid 50
RIGHTS OF BUYER IN CASE OF DEFAULT
default 51st and so on
- The rights of the buyer in the event of
Grace period 4mons (50/12)
his failure to pay the installments due
CSVshall be returned 180,000 (50mons.*3600) for reasons other than the failure of
DP 12,000 the owner or developer to develop the
192,000 project shall be governed by the
*50%since below 5yrs *50% Maceda Law. (if hindi nakapagbayad
96,000
si buyer ng installment and ang
reason is not because of the failure ng
Example 2: owner or ng developer na madevelop
yung project ay covered ng Maceda
Law)

- No installment payment made by the

buyer shall be forfeited in favor of the
owner or developer, desist from
further payment due to failure of the
owner or developer to develop the
subdivision or condominium project
according to the approved plans
and within the time limit of
UPDATES IN REGULATORY FRAMEWORKS
complying with the same. Such EXPROPRIATION OF PROPERTY FOR
buyer may, at his option, be PUBLIC USE
reimbursed the total amount paid - The procedure for the exercise of the
including amortization interests but power of eminent domain is provided
excluding delinquency interests, with for in Rule 67 of the Rules of Court.
interest thereon at the legal rate Expropriation must be decreed by
(pwedeng i-cancel ng buyer yung sale competent authority and for public
kapag hindi sumunod ang owner or use and always upon payment of just
developer na gawin yung project compensation.
according to the approved plans and
within the time limit, after due notice POWER OF EMINENT DOMAIN - power
to developer. The buyer will be then of the government to buy a property of a
excuse to make further payments and private individual for the public use or
installment payments will not be purpose upon payment of just
forfeited in favor of the seller. Instead, compensation; right given to the estate
marereimburse ito ng buyer including
the amortization interest.) JUST COMPENSATION – is the market
value (the price which the property will
MISCELLANEOUS PROVISION bring when it is offered for sale by one
ART. 1487. The expenses for the who desires but is not obliged to sell it,
execution and registration of the sale shall and is bought by one who is under no
be borne by the vendor, unless there is a necessity of having it) PLUS the
stipulation to the contrary. consequential damages, if any, MINUS the
consequential benefits, if any

ESSENTIAL REQUISITES FOR

GENERAL RULE: the expenses for the EXPROPRIATION (TADPUC)
execution and registration of the sale shall be
borne by the vendor A. Taking by competent authority
B. Observance of due process of law
EXCEPTION: contrary stipulations C. Taking for public use
D. Payment of just compensation

EXPENSES FOR EXECUTION AND

REGISTRATION
- Under this article, the vendor has the
duty to pay not only the expenses for
the execution of the sale but also for
the registration of the same in the
absence of any agreement between
the parties to the contrary CAPACITY TO BUY OR SELL
- By law, it is the seller who has to pay
for the expenses of sale (registration GENERAL RULE: All persons who can bind
of sale, taxes), unless there is a themselves also have legal capacity to buy
stipulation to the contrary. and sell.

ART. 1488. The expropriation of property EXCEPTIONS:

for public use is governed by special laws. 1. Absolute incapacity (minors,
demented persons, imbeciles, deaf
and dumb, prodigals, civil interdictees)
EXPROPRIATION – party cannot bind themselves in any
- Governmental taking or modification case.
of an individual’s property rights
(eminent domain) PURCHASE BY MINORS: Contract is
- (a process to acquire a private generally voidable but in case of necessaries,
property) “where necessaries are sold and delivered to
a minor or other person without capacity to
UPDATES IN REGULATORY FRAMEWORKS
act, he must pay a reasonable price C. The officer holding the execution, or
therefore. Necessaries are those in Art. 290.” his deputy.

2. Relative incapacity – incapacity NOTE: While those disqualified under Arts.

exists only with reference to certain 1490 and 1491 may not become lessees (Art.
persons or a certain class of property 1646), still aliens may become lessees even
if they cannot buy lands
RELATIVE INCAPACITY
1. Husband and wife (Art. 1490): EFFECTS OF VIOLATION:
Generally, a sale by one spouse to  VOIDABLE
another is void A. GUARDIAN TO WARD
- This influence is presumed to
The husband and wife cannot sell last while the guardian’s
property to each other except: functions are to any extent still
1. When a separation of property was unperformed, while the
agreed upon by the spouses property is still under his
2. When there has been a judicial control and until the accounts
separation of property under Article have been finally settled
134 and 135 of the Family Code - may be “ratified” by means
of and in the form of a new
B. Incapacity by reason of relation to contract, in which case its
property validity shall be determined
only by the circumstances at
1. the guardian, with respect to the the time of execution of such
property of his ward; VOIDABLE new contract
2. agents, with respect to the
property whose administration or B. AGENTS AND PRINCIPAL
sale may have been entrusted to - The incapacity of the agent is
them, unless the consent of the only against buying the
principal has been given; property he is required to sell
VOIDABLE during the existence of the
3. executor or administrator, with relationship. Therefore, an
respect to the property of the agent can buy for himself the
estate under administration; property after the termination
VOIDABLE of the agency
4. public officers and employees, - the agent may buy property
with respect to the properties of placed in his hands for sale or
the government, its political administration if the principal
subdivisions, or GOCCs, that are gives his consent thereto
entrusted to them; C. EXECUTOR OR ADMINISTRATOR
5. judges, justices, prosecuting - does not apply to a purchase
attorneys, clerks of courts, etc., by an executor of such
with respect to the property in hereditary rights
custogia legis; and
6. any other person specially REASON: only private rights, which are
disqualified by law. subject to ratification are violated

EXAMPLES OF PERSONS ESPECIALLY  NULL AND VOID

DISQUALIFIED BY LAW: A. PUBLIC OFFICERS AND
EMPLOYEES
A. Aliens who are disqualified to - definite and permanent and
purchase agricultural lands cannot be cured by ratification.
B. An unpaid seller having a right of lien B. JUDGES, JUSTICES,
or having stopped the goods in PROSECUTING ATTORNEYS,
transitu, who is prohibited from buying CLERKS OF COURTS, ETC
the goods either directly or indirectly - applies only to the sale or
in the resale of the same, at public or assignment of property which
private sale which he may make is the subject of litigation to
UPDATES IN REGULATORY FRAMEWORKS
the persons disqualified sale for lack of object. S, as owner, bears the
therein. loss and B does not have to pay for the price
C. ANY OTHER PERSON SPECIALLY
DISQUALIFIED BY LAW. PARTIALLY LOST: If the car sold is only
partially destroyed, there still remains of the
REASON: violation of public policy cannot be object. However, since it is not of the
subject to ratification character or in the condition contemplated by
the parties, the buyer may withdraw from the
1. The relative incapacity provided in contract or demand the delivery of the car,
Articles 1490 and 1491 applies also to paying its proportionate price.
sales by virtue of legal redemption
(see Art. 1619.), compromises, and EFFECT OF LOSS IN CASE OF SPECIFIC
renunciations. GOODS
2. The persons disqualified to buy  which means “goods identified and
referred to in Articles 1490 and 1491 agreed upon at the time a contract of
are also disqualified to become sale is made.”
lessees of the things mentioned
therein REMEDIES OF THE BUYER
1. RESCIND OR WITHDRAW FROM THE
EFFECTS OF THE CONTRACT WHEN THE CONTRACT – divisible only
THING SOLD HAS BEEN LOST 2. PAY THE PROPORTIONATE PRICE OF
THE REMAINING OBJECT
RES PERIT DOMINO
SALE DIVISIBLE
The concept that owner bears risk of loss and  A contract is divisible when its
deterioration because ownership is not consideration is made up of several
transferred until delivery. parts.

RULES ON RISK OF LOSS AND SALE INDIVISIBLE

DETERIORATION  Suppose the sale is not divisible, what
price is the buyer to pay for the
 Before Perfection: Seller bears the remaining goods if he elects to
risk continue with the sale? It is believed
 At the time of perfection: Contract that the buyer should be made to pay
is VOID or inexistence only the proportionate price of the
 At the time of sale: if entirely lost, remaining goods as provided for in
contract is VOID or inexistence. If paragraph 2 of the preceding article
partially lost, vendee may elect  If the sale is indivisible, the object
between withdrawing or demanding thereof may be considered as a
the remaining part. specific thing.
 After perfection but before
delivery: risk of loss is shifted to the OBLIGATIONS OF THE VENDOR
buyer but stipulations in the contract
will govern. 1. Transfer ownership (cannot be waived)
 After delivery: buyer bears the risk.
Unless delivery was delayed through 2. Deliver the thing sold (cannot be
the fault of either parties, the risk is waived)
with the party in fault; and when the
ownership of the goods has been 3. Warrant against eviction and against
retained by the seller. hidden defects (can be waived or
modified if there’s a stipulation since
EXAMPLES: they are natural elements and
warranty is not an essential
ENTIRELY LOST: (1) S sold his car to B. element of the contract of sale)
Unknown to both of them, the car has been
totally destroyed before they agreed on the 4. Take care of the thing, pending
sale. In this case, there is no valid contract of delivery, with proper diligence (Article
1163)
UPDATES IN REGULATORY FRAMEWORKS
E. traditio constitutum possessorium –
5. Pay for the expenses of the deed of seller continues in possession but under a
sale, unless there is stipulation to the different title other than ownership.
contrary (general rule, seller will pay)
3. QUASI-TRADITION - delivery of
rights, credits or incorporeal property,
made by:

a. placing titles of ownership in

the hands of buyer
DELIVERY b. allowing buyer to make use of
 Is a mode of acquiring ownership, as a rights
consequence of certain contracts such
as sale, by virtue of which, actually or 4. Tradition by operation of law
constructively, the object is placed in
the control and possession of the CONSTRUCTIVE DELIVERY REQUIRES
vendee. THREE THINGS BEFORE OWNERSHIP MAY
 Delivery of the thing together with the BE TRANSFERRED:
payment of the price, marks the
consummation of the contract of sale 1. The seller must have control over the
 In all forms of delivery, it is necessary thing
that the act of delivery be coupled 2. The buyer must be put under control
with the intention of delivering the 3. There must be the intention to deliver
thing. The act without the intention is the thing for purposes of ownership
insufficient.
WHEN IS THE VENDOR NOT BOUND TO
KINDS OF DELIVERY DELIVER THE THING SOLD

1. Actual or real – placing the thing 1. If the vendee has not paid him the
under the control and possession of price
the buyer. 2. If no period for payment has been
fixed in the contract
2. Legal or constructive – delivery is 3. Even if a period for payment has been
represented by other signs or acts fixed in the contract, if the vendee has
indicative thereof lost the right to make use of the same.

A. delivery by the execution of a public SALE OR RETURN

instrument  Property is sold, but the buyer, who
becomes the owner of the property on
NOTE: Gives rise only to a prima facie delivery, has the option to return the
presumption of delivery which is destroyed same to the seller instead of paying
when actual delivery is not effected because the price.
of a legal impediment
NOTES:
B. traditio symbolica – to effect delivery,  It is a kind of sale with a condition
the parties make use of a token or symbol to subsequent.
represent the thing delivered  The buyer must comply with the
express or implied conditions
C. traditio longa manu - buyer simply attached to the return privilege;
continues in possession of the thing but otherwise, the sale becomes absolute
under title of ownership.  Buyer, being the owner, bears the risk
of loss

D. traditio brevi manu - buyer simply

continues in possession of the thing but
under title of ownership. SALE ON TRIAL, APPROVAL OR
SATISFACTION
UPDATES IN REGULATORY FRAMEWORKS
 A contract in the nature of an option 1. To enter on behalf of buyer into such
to purchase if the goods prove to be contract reasonable under the
satisfactory, the approval of the buyer circumstances
being a condition precedent 2. To give notice to buyer regarding
necessity of insuring the goods.
RULES:
INSTANCES WHERE SELLER IS STILL THE
1. title remains in the seller OWNER DESPITE DELIVERY
2. risk of loss remains with seller except 1. Sale on trial, approval or satisfaction
when the buyer is at fault or has 2. Contrary intention appears by the
agreed to bear the loss terms of the contract
3. buyer must give goods a trial, except 3. Implied reservation of ownership
where it is evident that it cannot a. Goods are shipped, but by the
perform the work bill of landing goods are
4. period within which buyer must signify delivered to seller or his agent
his acceptance runs only when all the or their order
parts essential for the operation of the b. Bill of landing is kept by the
object have been delivered. seller or his agent
5. if it is stipulated that a third person c. When the buyer does not honor
must satisfy approval or satisfaction, the bill of exchange by
the provision is valid, but the third returning the bill of landing to
person must be in good faith. If refusal seller.
to accept is not justified, seller may
still sue. SALE BY ONE HAVING A VOIDABLE TITLE
6. Generally, the sale and delivery to a
buyer who is an expert on the object  If the seller has only a voidable title,
purchased is not a sale on approval, buyer acquires a good title to the
trial, or satisfaction. goods provided he buys them:
o Before the title of the seller has
SALE OR RETURN SALE ON TRIAL been avoided
Subject to a Subject to a o In good faith for value
resolutory condition suspensive conditon o Without notice of the seller’s
Depends on the will Depends on the defect of title
of the buyer character or quality
of the goods SALE OF GOODS BY A NON-OWNER
Ownership passes to Ownership remains
buyer on delivery in the seller until GENERAL RULE: Buyer acquires no title
buyer signifies his even if in good faith or for value. Nemo dat
approval (meeting quid non habet (“You cannot give what you
of the minds) do not have”).
Risk of loss or injury Risk of loss and
rest with the buyer injury remains with EXCEPTIONS:
seller 1. Owner is estopped or precluded by his
conduct
GOODS DELIVERED THROUGH CARRIER 2. Sale is made by the registered owner
or apparent owner
GENERAL RULE: Delivery to carrier is 3. Sales sanctioned by judicial or
deemed to be delivery to the buyer. statutory authority
4. Purchase in a merchant’s store, fairs
EXCEPTION: Where the right of possession or markets (art. 559)
or ownership of specific goods sold is 5. When a person who is not the owner
reserved. sells and delivers a thing,
subsequently acquires title thereto.
SELLER’S DUTY AFTER DELIVERY TO 6. When the seller has a voidable title
CARRIER which has not been avoided at the
time of sale.
UPDATES IN REGULATORY FRAMEWORKS
PLACE OF DELIVERY  Vendee has the right to the fruits of
1. Where there is an agreement: the thing sold from the time obligation
Place specified to deliver arises. Generally at time of
2. Where there is no agreement: perfection, however parties may
Place of delivery determined by usage modify it by agreement.
of trade
3. Where there is no agreement and
no prevalent usage: seller’s place of
business
4. In any other case: seller’s residence
5. In case of specific goods, which to DOCUMENT OF TITLE
the knowledge of the parties at the
time the contract was made were in  A document of title in which is stated
some other place, that place is the that the goods referred to therein will
place of delivery, in the absence of be delivered to the bearer, or to order
agreement or usage of trade to the of any person named in such
contrary document is a negotiable instrument
of title.
PAYMENT OF THE PURCHASE PRICE
DOCUMENT IS NEGOTIABLE IF:
GENERAL RULE: Seller is not bound to 1. Goods are deliverable to bearer
deliver unless the purchase price has been 2. Goods are deliverable to the order of a
paid. certain person

EXCEPTION: The Seller is bound to deliver

even if the price has not been paid, is a COMMON FORMS OF DOCUMENT OF
period of payments has been fixed. TITLE

GOODS DELIVERED LESS THAN A. Bill of Landing- contract or receipt

QUANTITY AGREED for the transport of goods and their
1. Buyer may reject; or delivery to the person named therein,
2. Buyer may accept and pay at the to order or bearer.
contract rate B. Dock Warrant- given by dock owners
to an importer of goods recognizing
QUANTITY MORE THAN AGREED UPON the latter’s title of the said goods
1. Buyer may reject all; or C. Warehouse Receipt- contract or
2. Buyer may accept the goods agreed receipt for goods deposited with a
upon and reject the rest; or warehouseman containing the latter’s
3. Buyer may accept all and must pay for undertaking to hold and deliver the
them at the contract rate said goods to a specified person, to
order or bearer.
GOODS MIXED WITH GOODS OF
DIFFERENT DESCRIPTION CLASSES OF DOCUMENTS OF TITLE
 Buyer may accept the goods which
are in accordance with the contract A. Negotiable Documents of title-
and reject the rest. stated that goods can be delivered to
bearer, or to the order of a person.
INDIVISIBLE GOODS B. Non-negotiable Instrument of
 If the subject is indivisible, in case of Title - stated that goods are to be
delivery of a large quantity of goods or delivered to a specified person.
a mixed goods, the buyer may reject
the whole of the goods. NEGOTIATION OF NEGOTIABLE
 Right of rejecting the whole of the DOCUMENT OF TITLE
goods delivered is given only if the 1. By Delivery
subject matter is indivisible. 2. By Indorsement plus Delivery

RIGHTS OF VENDEE TO THE FRUITS FORMS OF INDORSEMENT

UPDATES IN REGULATORY FRAMEWORKS
a. Blank Indorsement- consist of NOTE: Mere transfer foes not acquire directly
signature of the indorser without the obligation of the bailee. To acquire it, he
specifying the name of the indorsee. must notify the bailee.
b. To bearer- where the indorsement
states that the goods are deliverable RIGHTS OF THE TRANSFEREE
to bearer.
c. Special Indorsement- name of The rights of a transferee, tot whom a
indorsee is specified. document is transferred but not negotiated,
are not absolute as it is subjected to the
terms of the agreement.

1. Title of the goods as against the

transferor;
NEGOTIABLE DOCUMENT OF TITLE 2. Right to notify the bailee of the
MARKED “NON-NEGOTIABLE” transfer thereof;
3. Right, thereafter, to acquire the
Such mark will have no effect on the obligation of the bailee to hold goods
instrument and remains to be negotiable. for him.

WHO MAY NEGOTIATE NEGOTIABLE TRANSFER FOR VALUE OF DELIVERY

DOCUMENT OF TITLE
1. By the owner If a negotiable document of title is transferred
2. By the person to whom the possession for value by delivery, and indorsement is
or custody of the document has been essential for negotiation, The right of the
entrusted by the owner, if by the transferee are:
terms of the document the bailee 1. Right to the goods as against the
issuing the document undertakes to transferor;
deliver the goods to the order of the 2. Right to compel the transferor to
person to whom the possession or indorse
custody of the document has been
entrusted or if at the time of such Negotiation shall take effect as to the time
entrusting the document in such form when indorsement is actually made.
that it may be negotiated by delivery.
WARRANTIES ON SALE OF DOCUMENT
NOTE: If the holder of a negotiable 1. Document is genuine
document of title (deliverable to bearer) 2. He has a legal right to negotiate or
entrusts the document to a friend for deposit, transfer it
but the friend betrays the trust and 3. He has knowledge of no fact which
negotiates the document by delivering it to would impair the validity or worth of
another who is in good faith, the said owner the document
cannot impugn the validity of the negotiation. 4. He has the right to transfer the title to
As between two innocent persons, he who the goods and that goods are
made the loss possible shall bear the loss, merchantable or fit for a particular
without prejudice to his right to recover from purpose
the wrongdoer.
BAILEE
RIGHTS OF THE HOLDER  The bailee has the direct obligation to
1. Title of the person negotiating the hold possession of the goods for the
document, over the goods covered by original owner. The goods cannot be
the document; attached or levied and bailee cannot
2. Title of the person to whose order by be compelled to deliver the goods
the terms of the document the goods unless the document be first
were to be delivered, over such goods; surrendered or its negotiation
3. The direct obligation of the bailee to prohibited by court.
hold possession of the goods for him,
as if the bailee had contracted to him FAILURE OF BAILEE OR PREVIOUS
directly. INDOSERS TO FULFILL THEIR
OBLIGATIONS
UPDATES IN REGULATORY FRAMEWORKS
 Indorser hall not be liable for any 2. Buyer or his agent lawfully obtains
failure on the part of the bailee or possession of the goods;
previous indorsers to fulfill their 3. By waiver thereof
respective obligation.
NOTE: Possessory lien is lost after the
EFFECT OF TYPOGRAPHICAL OR seller loses possession but his lien as an
GRAMMATICAL ERROR unpaid seller remains; hence he is still an
 It does not destroy the negotiability of unpaid creditor with respect to the price of
the document of title, for what should specific goods sold. His preference can only
be considered is the intent. be defeated by the governments claim to the
specific tax on the goods themselves (Arts.
UNPAID SELLER 2247 and 2241).

 Unpaid seller is one who has not been The bringing of an action to recover the
paid the whole amount of the price or purchase price is not one of the ways of
one who received a negotiable losing the possessory lien. An unpaid seller
instrument and it has been does not lose his lien by reason that he has
dishonored, buyer is insolvent, or obtained a money judgement or decree for
otherwise. the price of goods

RIGHTS OF THE UNPAID SELLER

 Right to lien of goods or the rights to
retain them for the price while he is in RIGHT OF STOPPAGE IN TRANSITU
possession of them  An extension of the lien for the price;
 Right of stoppage in transit after he entitles unpaid seller to resume
has parted with the possession of the possession of the goods while they are
goods and the buyer becomes in transit before the goods come in
insolvent possession of the vendee
 Special Right of resale
 Special Right to rescind the sale A. WHEN AVAILABLE:
1. Buyer must be insolvent;
RIGHT TO LIEN 2. Seller must be unpaid
 Right to retain possession of goods 3. Goods are in transit
until payment or tender of the whole 4. Seller must actually take possession of
price, or unless he agrees to sell on the goods sold or give notice of his
credit claim to the carrier or other person in
possession.
A. WHEN AVAILABLE: 5. Seller must surrender the document of
1. Goods sold without stipulation as to title, if any, issues by the carrier or
credit bailee;
2. Goods are sold on credit, but credit 6. Seller must bear the expenses of
term has expired delivery after the exercise of the right
3. Buyer becomes insolvent
B. WHEN GOODS ARE CONSIDERED IN
B. LIEN ON PARTIAL DELIVERY TRANSIT:
 When unpaid seller made partial 1. After delivery to carrier or other bailee
delivery of the goods, he may exercise and before the buyer or his agent
his lien on the remainder, unless such takes delivery of them;
part delivery shows an intent to waive 2. Goods are rejected by buyer, and
the lien or right of retention. carrier or bailee continues to be in
possession of them, even if seller
C. WHEN LIEN IS LOST: refused to received them back
1. Delivers the goods to a carrier or other
bailee for the purpose of transmission C. HOW TO EXERCISE:
to the buyer without reserving the 1. By obtaining actual possession of the
ownership in the goods or the right of goods.
possession thereof; 2. By giving notice of his claim to the
carrier or bailee.
UPDATES IN REGULATORY FRAMEWORKS
right to recover damages for breach of
Such notice may be given in to the person in contract
actual possession or to his principal. But if
given to the principal, it must be given at A. WHEN AVAILABLE:
such time and under such circumstances to 1. Seller has the right to lien or stoppage
be effectual so the principal can prevent in transit
delivery. 2. Under either of the 2 situations:
a. Right to rescind is expressly
D. EFFECTS OF EXERCISE: reserved
1. Goods are no longer in transit b. When buyer delays in the
2. Carrier shall be liable as depositary or payment of the price for an
other bailee. unreasonable time.
3. Carrier must redeliver the goods to, or
according to the instructions of the B. EFFECTS OF RESCISSION:
seller 1. Seller resumes ownership of the goods
2. Seller shall not be liable to the buyer
E. WHEN GOODS ARE NO LONGER IN upon the contract
TRANSIT 3. Buyer may be held liable to the seller
1. After delivery to the buyer or his agent for damages for any loss occasioned
in that behalf; by the breach of contract
2. Buyer obtains delivery of the goods
before arrival at the appointed C. HOW SELLER MAY RESCIND:
destination 1. by notice to the buyer or by some
3. Carrier or bailee acknowledges to hold overt act showing an intention to
the goods on behalf of the buyer rescind.
4. Carrier or other bailee wrongfully
refuses to deliver the goods to the Communication to buyer of rescission is not
buyer or his agent. always necessary but giving/failure to give
notice is relevant in determining
RIGHT OF RESALE reasonableness of time given to the buyer to
make good his obligation under contract.
A. WHEN AVAILABLE:
May be exercised only when the unpaid seller EFFECT IF BUYER SOLD THE GOODS
has either a right of lien OR goods in
transitu AND under ANY of the following GENERAL RULE: the unpaid seller's right of
conditions lien or stopage in transitu remains even if the
buyer has sold or otherwise disposed of the
1. Seller has the right to lien or stoppage goods.
in transitu.
2. Under the following cases: EXCEPTIONS:
a. Goods are perishable by nature 1. Seller has given his consent
b. Right to resell is expressly 2. When purchaser or buyer is a
reserved purchaser for value in good faith of a
c. Buyer delays in payment for an negotiable document of title.
unreasonable time
SALE OF REAL ESTATE
B. EFFECTS OF RESALE
1. Seller is not liable to the buyer for any UNIT PRICE CONTRACT
profit  Payment will be made only on the
2. If sells for less than the price, seller basis of contractual items actually
has right to sue for the balance from performed. The amount agreed upon
buyer is merely an estimate. Price is
3. New buyer acquires good title as depending upon the quantities
against the original buyer performed multiplied by the unit
prices previously agreed upon.
RIGHT TO RESCIND THE SALE
 Return of the title over the SALE OF REAL ESTATE BY THE UNIT
undelivered goods to the seller, and
UPDATES IN REGULATORY FRAMEWORKS
 The vendor must deliver the entire deliver all that is included within the
property agreed upon. The immovable said boundaries. The area of which,
property must be of the quality even if lesser or grater than what is
specified in the contract. stipulated, is immaterial.
 If the entire area could not be
delivered, then the object of the REAL PROPERTY NOT IN VENDOR’S
contract is not delivered. Hence the POSSESSION
vendee is entitled to rescind it. But he  The failure of a person to take the
may, however, enforce the contract ordinary precautions, specially in
with the corresponding decrease in buying a piece of land in the actual,
price. visible and public possession of
another person, other than the
WHEN THE VENDEE IS ENTITLED TO vendor, constitutes gross negligence
RESCIND SALE OF REAL PROPERTY amounting to bad faith. One who
1. If the lack of area is at least 1/10th purchases real property which is in the
than that stated or stipulated. actual possession of another should,
2. If the deficiency in the quality at least make some inquiry concerning
specified in the contract exceeds the right of those in possession. He
1/10th of the price agreed upon can scarely, in the absence of such
3. If the vendee would not have bought inquiry, be regarded as a bona fide
the immovable had he known of its purchaser as against such possessors.
smaller area or inferior quality.
PRESCRIPTION OF ACTION
WHEN IMMOVABLE OF A GREATER AREA  The action for either recission of the or
OR NUMBER reduction of the price must be brought
 Vendee may accept the area included 6 months from the day of delivery.
in the contract and reject the rest. The
vendee may not withdraw from the DOUBLE SALE
contract.
REQUISITES OF DOUBLE SALE
1. Two or more valid contract of sale;
2. Two or more buyers ;
LUMP SUM SALE (A CUERPO CIERTO) 3. They must pertain exactly to the same
 Sates the full purchase price based on object; and
the estimate or where both area and 4. They must be bought from the same
boundaries are stated. seller.
 Vendor is obligated to deliver all the
land included within the boundaries, RULES OF PREFERENCE
regardless of whether the real area
should be greater or smaller 1. Two or more valid contract of sale;
 Ordinarily, there can be no rescission 2. Two or more buyers ;
or reduction or increase whether the 3. They must pertain exactly to the same
area be greater or lesser, unless there object; and
is gross mistake 4. They must be bought from the same
seller.
NOTE: The Civil Code presumes that the
purchaser had in mind a particular piece of RULES OF PREFERENCE
land and that he ascertained its area and
quality before the contract of sale was 1. DOUBLE SALE OF
perfected. If he did not do so, or if having MOVABLES/PERSONAL PROPERTY
done so he made no objection and consented - who first takes possession in
to the transaction, he can blame no one but good faith
himself 2. DOUBLE SALE OF REAL PROPERTY
a. First registrant in good faith
BOUNDERIES b. First possessor in good faith
 Mentioning the boundaries of the land c. Person with oldest title in good
is indispensable in every conveyance faith
of real estate. The vendor is bound to
UPDATES IN REGULATORY FRAMEWORKS
NOTE: condition is not fulfilled, such party
 Purchaser in Good Faith – one who may;
buys the property of another without a. Refuse to proceed with the
notice that some other person has a contract
right to or interest in such property b. Proceed the contract, waiving
and pays a full and fair price for the the performance of the
same at the time of such purchase or condition
before he has notice of the claim or
interest of some other person in the 2. If condition is in nature a promise that
property (Veloso vs. CA) it should happen, the non
performance of such condition may be
 Registration requires actual treated by the other party as a breach
recording; if the property was never of warranty.
really registered as when the registrar
forgot to do so although he has been NOTE: A distinction must be made between
handed the document, there is no a condition imposed on the perfection of a
registration. contract and a condition imposed merely on
the performance of an obligation. The failure
 Possession is either actual or to comply with the first condition would
constructive since the law made no prevent the juridical relation itself from
distinction coming into existence, while failure to
comply with the second merely gives the
 Possession in Art.1544 includes not option either to refuse or proceed with the
only material but also symbolic sale or to waive the condition.
possession
The mere fact that the second contract of
 Title means title because of sale, and sale was perfected in good faith is not
not any other title or mode of sufficient if, before title passes, the second
acquiring property vendee acquires knowledge of the first
transaction. The good faith or innocence of
 Hernandez vs. Katigbak Rule: the posterior vendee needs to continue until
When the property sold on execution his contract ripens into ownership by
is registered under Torrens, tradition or registration.
registration is the operative act that
gives validity to the transfer or
creates a lien on the land, and a WARRANTIES
purchaser on execution sale is not
required to go behind the registry to  It is a promise that a fact is true. In a
determine the conditions of the sale, it is a statement of fact abut the
property. Exception: Where the quality or character of the goods sold
purchaser had knowledge, prior to or to induce the sale relied upon by the
at the time of the levy, of such buyer. Breach or violation of it gives
previous lien or encumbrance, his rise to a suit for damages. Warranty is
knowledge is equivalent to enforceable only against the
registration immediate vendor of the party
dispossessed.
CONDITIONS
WARRANTY CONDITION
An uncertain event or contingency on the Goes into the Affects the
happening. Conditions may be: performance of an existence of the
1. Waived; or obligation and may, obligation
2. Considered as warranties in itself, be an
obligation
EFFECT OF NON-FULFILLMENT OF Stipulation or Must be stipulated
CONDITION operation of law
1. If the obligation of either party is Non-fulfillment Non-happening does
subjected to any condition and such constitutes breach not breach the
UPDATES IN REGULATORY FRAMEWORKS
of contract contract workable condition of the goods, and
May attach to the Always relate to the that the vendee takes them in the
seller’s duty to subject matter or condition in which they are found and
deliver or some the seller’s from the place where they are located.
other circumstances obligations 2. Sale of secondhand articles
3. Sale by virtue of authority in fact or
KINDS OF WARRANTIES law
1. Express Warranty
2. Implied Warranty
SUBSECTION 1
WARRANTY AGAINST EVICTION
EXPRESS OF OPINION
A mere expression of opinion by the seller EVICTION
does not import a warranty unless:  Vendee is deprived of the whole or
1. Seller is an expert; and part of the thing purchased.
2. Opinion was relied upon by the buyer
WARRANTY AGAINST EVICTION
Not every false representation voids the  Seller guarantees that he has the right
contract, only those matters substantially to sell the thing sold and to transfer
affecting the buyer’s interest ownership to the buyer who shall not
be disturbed in his legal and peaceful
EXPRESS WARRANTY possession thereof. If evicted, vendor
 It is an affirmation of fact or any is liable thereof.
promise by the seller about the
subject matter where the natural ELEMENTS OF WARRANTY AGAINST
tendency of it is to induce the buyer to EVICTION
purchase the thing and the buyer 1. Vendee has been deprived in whole or
purchases the thing relying on such in part of the thing purchased
affirmation or promise. 2. Deprived by virtue of final judgement
 An express warranty can be made by 3. Judgement is based on right prior to
and also be binding on the seller even the sale or act imputable to the
in the sale of a second hand article. vendor
4. Vendor was summoned in the suit for
IMPLIED WARRANTY eviction at the instance of the vendee
 It is a natural, not an essential 5. There is no waiver on the part of the
element of a contract, and is deemed vendee
incorporated in the contract of sale. It
is inherent. WHY IS RESCISSION NOT A REMEDY IN
 Its reason is to protect naïve and CASE OF TOTAL EVICTION
unsuspecting buyers from scrupulous
sellers from running away from their NOTE: Rescission is not a remedy against
wrongful doings. total eviction. Rescission contemplates that
 It may be modified or suppressed by the one demanding it is able to return
agreement of the parties. Unless whatever he has received under the contract.
waived, the warranties stay. Since the buyer can no longer return the
thing sold to the seller, rescission cannot be
IMPLIED WARRANTIES IN SALE carried out.
1. Warranty as to seller’s title / Warranty
against eviction
2. Warrant against hidden defects PRESCRIPTION
3. Warranty as to fitness or  Where one acquires ownership and
merchantability other real right through the lapse of
time in the manner and conditions
WHEN IMPLIED WARRANTY NOT prescribed by law.
APPLICABLE
1. “As is and where is” sale - vendor A. Completed before sale- vendee can
makes no warranty as to the quality or enforce warranty against eviction
UPDATES IN REGULATORY FRAMEWORKS
B. Completed after sale- vendor is not WARRANTY AGAINST HIDDEN DEFECTS
liable for eviction. (art. 1550) OF, OR ENCUMBRANCES UPON, THE
THING SOLD
EFFECTS OF WAIVING WARRANTY IN BAD
FAITH REQUISITES FOR WARRANTY AGAINST
HIDDEN DEFECTS
A. Vendor in bad faith- cannot be 1. Defect must be important or serious;
exempted from warranty. Because he 2. Must be hidden
has knowledge beforehand of a 3. Must exist at the time of sale
presence of a fact giving rise to 4. Vendee must give notice of defect to
eviction. (art. 1553) vendor within reasonable time
B. Vendee in bad faith- not entitled to 5. Action for rescission or reduction in
warranty against eviction nor right to price must be brought within 6 months
recover damages. He proceeded to from delivery or 40 days in case of
the sale with the assumption of the animals
risk of eviction. (art. 1554) 6. No waiver of warranty on the part of
vendee
KINDS OF WAIVER
WHEN DEFECT IMPORTANT
1. CONSCIENTE A. Renders the thing sold unfit for its
a. voluntarily made by the intended use;
vendee without the knowledge B. Diminishes its fitness for such use
and assumption of the risks of
eviction. NOTE: The use contemplated must be that
b. Vendor shall only pay the value which is stipulated, and in absence of
of the thing sold at the time of stipulation, that which is adopted to the
eviction nature of the thing, and to the business of
the buyer.
EVICTION IN PART
Buyer may either enforce vendor’s liability for IMPLIED WARRANTY OF FITNESS
eviction or he may demand rescission of the Generally, there is no implied warranty of
contract provided in article 1556, if the buyer fitness for any particular purpose except
lose, by eviction, a part of the thing sold of under the following:
such importance that he would not have A. Buyer expressly or impliedly manifest
bought it without said part. to the seller the particular purpose of
the goods acquired
2. INTENCIONADA B. Buyer relies upon the seller’s skill or
a. Made by vendee with judgement
knowledge of risk of eviction
and assumption of its There is an implied warranty that the goods
consequences are reasonably fit for such special purpose.
b. Vendor not liable unless acted
in bad faith IMPLIED WARRANT OF
MERCHANTABILITY
RIGHTS AND LIABILITIES  It’s a warranty that goods are
In case eviction occurs, the vendee shall have reasonably fit for the general purpose
the right to demand of the vendor the for which the same are sold.
following:  It requires identity between what is
1. Return of value of thing described in the contract AND that the
2. Income or fruits of thing latter is of such quality to have some
3. Cost of the suit value
4. Expenses of the contract
5. Damages and interest, and IGNORANCE OF VENDOR OF HIDDEN
ornamental expenses, if sale is made DEFECTS
in bad faith. (art. 1555)  Ignorance does not relieve the vendor
from liability. Good faith cannot be
SUBSECTION 2 availed of as a defense by the vendor.
UPDATES IN REGULATORY FRAMEWORKS
o DOCTRINE OF CAVEAT 2. Must be of such nature that
VENDITOR expert knowledge is not
(“Let the seller beware”) sufficient to discover it
Vendor is still liable even is he is not aware
due to this doctrine. It is based on the Veterinarian is liable if he fails to discover
principle that a sound price warrants a sound or disclose the hidden defect through
article. ignorance or bad faith. (art. 1576)

CAVEAT EMPTOR (“Let the buyer Seller liable if animal dies within 3 days after
beware”) requires the purchaser to be its purchase due to a disease that existed at
aware of the supposed title of the vendor and the time of sale.
one who buys without checking the vendor’s
title takes all the risks and losses consequent Limitation of the action: Redhibitory action
to such failure. must be brought 40 days from the date of
their delivery to the vendee. (art. 1577)
ALTERNATIVE REMEDIES OF THE BUYER
NO WARRANTY AGAINST HIDDEN
VENDEE HAS THE OPTION TO EITHER: DEFECTS
1. Accion redhibitoria (withdraw from 1. Animals sold at public fairs or
the contract) public auctions.
2. Accion quanti minoris (reduction in 2. Livestock sold as condemned
price)
VOID SALE OF ANIMALS
EFFECTS OF THING LOSS DUE TO HIDDEN A. animals sold are suffering from
DEFECTS contagious disease; or
A. Vendor aware of hidden defect - B. found unfit for the use or service
he shall bear the lost due to bad faith. stated in the contract.
Vendee may recover:
i. Price paid ANIMAL DIED WITH VICES
ii. Expenses of the If loss is caused for fortuitous event or by
contract fault of vendee and animal has vices, the
iii. Damages buyer may either:
B. Vendor is not aware - since he 1. withdraw from the contract; or
acted in good faith, he shall be obliged 2. demand a reduction in price.
only to return:
i. Price EASE OR SERVITUDE
ii. Interest
iii. Expenses of the  Easement or servitude is an
contract paid by vendee encumbrance imposed upon an
immovable for the benefit of another
LOST DUE TO FAULT OF VENDEE immovable owned by a different
 If the thing sold had any hidden person.
defects at the time of sale, and it is
lost through the fault of the vendee, KINDS OF EASEMENT OR SERVITUDE
vendor shall be liable for the price A. Apparent easement- expressly
paid less value of the thing had when made
it was lost. (art. 1569) B. Non-apparent easement- no
external indication of its existence
RULES
IN CASE OF SALE OF ANIMALS REQUISITES FOR VENDOR’S LIABILITY
FOR IMMOVABLE SOLD WITH EASEMENT
REDHIBITORY VICE OR DEFECT 1. Must be non-apparent
 A defect which the seller is bound to 2. Not indicated in the agreement
warrant in animals, the following 3. Must be of such nature that the
special rules shall apply: vendee would not have acquired the
1. Defect must be hidden immovable had he been aware
thereof.
UPDATES IN REGULATORY FRAMEWORKS
REMEDIES AND RIGHT OF VENDEE 3. To pay interest for the period between
1. Within 1 year from execution of the delivery of the thing and the payment
deed of sale: of the price in the following cases:
a. Rescission; or a. Should it have been stipulated
b. Damages. b. Should the thing sold and
2. After one (1) year from of execution of delivered produce fruits or
deed of sale: income
a. Damages, within a period of c. Should he be in default, from
one (1) year from discovery of the time of judicial or extra-
easement or servitude judicial demand for the
payment of the price
WHEN VENDEE’S RIGHTS CAN’T BE
EXERCISED PERTINENT RULES:
1. When servitude is apparent 1. Vendor not required to deliver the
2. If non-apparent servitude is registered thing sold until the price is paid nor
3. If vendee has knowledge of the the vendee to pay the price before the
encumbrance, registered or not thing is delivered in the absence of an
agreement to the contrary; (art. 1524)
OBLIGATIONS OF THE VENDEE 2. If stipulated, vendee is bound to
accept delivery and to pay the price at
PRINCIPAL OBLIGATIONS OF THE VENDEE the time and place designated;
1. Accept delivery 3. If there is no stipulation as to the time
2. Pay the price and place of payment and delivery,
3. Bear expenses for the execution and the vendee is bound to pay at the
registration of the sale and putting the time and place of delivery;
goods in a deliverable state, if such is 4. In the absence of stipulation as to the
the stipulation place of delivery, it shall be made
wherever the thing might be at the
NOTE: A grace period granted the vendee perfection of the contract (art. 1251);
in case of failure to pay the amount/s due is a and
right not an obligation. The grace period 5. If only the time for delivery has been
must not be likened to an obligation, the non- fixed the vendee is required to pay
payment of which, under Article 1169 of the even before the thing is delivered to
Civil Code, would still generally require him; (art. 1524)
judicial or extra-judicial demand before
“default” can be said to arise DELIVERY IN INSTALLMENT (ART. 1583)

OTHER OBLIGATIONS GENERAL RULE: Buyer is not bound to

1. To take care of the goods without the accept delivery or pay the price thereof by
obligation to return, where the goods installments.
are delivered to the buyer and he
rightfully refuses to accept EXCEPTION: If there is a stipulation

NOTE: The buyer in such a case is in the RIGHT OF BUYER TO EXAMINE GOODS
position of a bailee who has had goods thrust
upon him without his assent. He has the GENERAL RULE: Buyer has the right to a
obligation to take reasonable care of the reasonable opportunity to examine the goods
goods but nothing more can be demanded of before accepting them. (art. 1584)
him.
EXCEPTION:
The goods in the buyer’s possession under 1. When there is an agreement;
these circumstances are at the seller’s risk 2. stipulation that the goods shall not be
delivered to buyer until he paid the
2. To be liable as a depositary if he price (C.O.D.).
voluntarily constituted himself as such
If seller refused to allow an opportunity for
inspection, buyer may recind or recover the
price paid.
UPDATES IN REGULATORY FRAMEWORKS
o Not be obliged to pay the price
NOTE: the right to examine the goods is a o If he constitute himself as a
condition precedent to the transfer of depositary, he shall be liable as
ownership. such
o Obligation to notify the seller of
WHEN THERE IS ACCEPTANCE OF GOODS such refusal (art. 1587)
1. Express acceptance
2. Implied acceptance 2. BUYER UNJUSTIFIABLY REFUSES
a. Buyer does an act which only o Title passes to the buyer,
an owner can do unless there is stipulation and
b. Failure to return after seller reserved the ownership
reasonable lapse of time o Obliged to pay the price (art.
1588)
NOTES:
o The retention of goods is TIME AND PLACE FOR PAYMENT OF
strong evidence that the buyer PRICE
has accepted ownership of the A. Time and place stipulated
goods B. Time and place of delivery of thing, in
o Delivery and acceptance are absence of stipulation
two separate and distinct acts
of different parties WHEN VENDEE IS LIABLE FOR INTEREST
o Delivery is an act of the Buyer shall pay interest for the period
vendor and one of the vendor’s between delivery and payment of price in the
obligations; vendee has following cases:
nothing to do with the act of 1. If there is stipulation
delivery by the vendor 2. Thing sold produces fruits or income
o Acceptance is an obligation of 3. If he is in default, from the time
the vendee; acceptance cannot judicial or extrajudicial demand for
be regarded as a condition to payment of price. (art. 1589)
complete delivery
o seller must comply with the SUSPENSION OF PAYMENT (Art. 1590)
obligation to deliver although
there is no acceptance yet by 1. When buyer may suspend
the buyer payment
a. If he is disturbed in the
EFFECT OF ACCEPTANCE ON VENDOR’S possession or ownership of
LIABILITY FOR BREACH OF WARRANTY thing bought; or
b. If he has a well-grounded fear
GENERAL RULE: Seller is not discharged that his possession or
from liability for breach of warranty by the ownership would be disturbed
acceptance of the goods by a vindicatory action or
foreclosure of mortgage.
EXCEPTION: NOTE:
1. If there is an agreement, express or o If the thing sold is in the
implied; possession of the vendee and
2. if buyer fails to give notice to seller of the price is already in the
breach of warranty within a hands of the vendor, the sale is
reasonable time after buyer knows of a consummated contract and
such breach. (art. 1586) Article 1590 is no longer
applicable. Article 1590,
EFFECT IF BUYER REFUSES TO ACCEPT presupposes that the price or
DELIVERY any part thereof has not yet
been paid and the contract is
1. BUYER JUSTIFIABLY REFUSES not yet consummated.
o Buyer has no duty to return the o Under Article 1590, the vendee
goods has no cause of action for
o Title does not pass rescission before final
UPDATES IN REGULATORY FRAMEWORKS
judgement, otherwise the 1. Action for payment of price
vendor might become a victim a. Ownership has passed to buyer
of machinations between the and he wrongfully neglects or
vendee and the third person refuses to pay the price;
o Disturbance must be in b. Price is payable on a certain
possession and ownership of day and buyer did not pay,
the thing acquired even if there is no transfer of
o If the disturbance is caused by title; or
the existence of non-apparent c. If the goods can’t be readily be
servitude, the remedy of the resold for a reasonable price
buyer is rescission, not and buyer wrongfully refuses to
suspension of payment accept them before ownership
has passed.
2. When buyer may NOT suspend 2. Action for damages
payment 3. Action for rescission
a. Vendor give security for the a. When buyer repudiated the
return of the price; contract of sale;
b. It has been stipulated; b. When buyer manifested his
c. Vendor has caused the inability to perform his
disturbance or danger to obligation; and
cease; c. When buyer has committed a
d. Disturbance is a mere act of breach in the contract.
trespass; e. Vendee has fully
paid the price. ACTION BY THE BUYER
1. Bring an action for specific
WHEN VENDOR MAY RESCIND THE SALE performance, if the seller has broken
1. Sale of immovable- seller must have the contract to deliver specific or
a reasonable ground to fear the: ascertained goods.
a. Loss of the immovable 2. In case of breach of warranty by seller:
property; AND a. Accept the goods and ask to
b. Loss of the price. reduce or extinguish the price
b. Accept goods and maintain an
If one or both grounds do not exist, the action for damages
vendor may choose between: c. Refuse to accept the goods and
a. Fulfillment with damages; maintain an action for
b. Rescission with damages. damages
d. Rescind the contract by the
NOTE: Rescission of real property is not return of goods and recover of
automatic. Demand is needed before price
rescission may take place. Demand is for the
rescission and not for the payment of the NOTE: these are alternative remedies
price.
WHEN RESCISSION BY BUYER NOT
2. Sale of Movables- rescission of the ALLOWED
sale of movable shall take place at the 1. If buyer accepted the goods knowing
option of the vendor, if at the time of the breach of warranty without
fixed for the delivery of the thing, the protest;
vendee: 2. If he fails to notify the seller within a
a. does not accept delivery reasonable time
b. does not pay the price, unless 3. Fails to return or offer to return the
a longer period of payment is goods to the seller in substantially as
stipulated good condition as they were in the
time of delivery
BREACH OF CONTRACT OF SALE OF
GOODS RIGHTS AND OBLIGATION IN RESCISSION
1. BUYER
ACTIONS BY THE SELLER
UPDATES IN REGULATORY FRAMEWORKS
a. Obliged to return the goods, A. CONVENTIONAL REDEMPTION
and cease to be liable for the Also called the right to redeem or repurchase,
price; takes place when the vendor eserved the
b. If paid the price or any part right to reacquire the thing sold, provided
thereof, he may recover it; that he:
c. Right to hold the goods as 1. Return to the vendee:
bailee if the seller refuse the a. The price paid
return of goods; b. Expenses of the
d. Right to have a lien of the contract and other
goods for any portion of price legitimate payments
paid, as if he were an unpaid made thereof
seller. c. Necessary and useful
expenses made on the
2. SELLER thing sold.
When seller may rescind before delivery 2. Comply with other stipulations
a. When the buyer repudiated the
contract of sale; NOTE: the seller a retro must pay for useful
b. When buyer manifested his improvements introduced by the buyer a
inability to perform his retro; otherwise, the latter may retain
obligation possession of the land until reimbursement is
c. When buyer committed a made.
breach of the contract.
PERIOD OF REDEMPTION
EXTINGUISHMENT OF SALE A. No agreement : 4 years from date of
contract
SALES ARE EXTINGUISH BY: B. There is agreement: should not
1. By the same causes as all obligations: exceed 10 years. The time in excess of
a. Payment/performance 10 years shall be null and VOID.
b. Prescription C. Civil Action between the parties:
c. Loss of thing due 30 days after final judgement was
d. Annulment made, provided that the contract was
e. Novation a true sale with a right to repurchase.
f. Condonation/remission
g. Confusion or merger This refers to cases involving a transaction
h. Compensation where one of the parties contests or denies
i. Rescission that the true agreement is one of sale with
j. Resolutory Conditions right to repurchase; not to cases where the
transaction is conclusively a pacto de retro
2. By the various causes of sale.
extinguishment in title VI (sales):
a. Cancellation of sale of personal Example: Where a buyer a retro honestly
property in installments (art. believed that he entered merely into an
1484) Equitable Mortgage, not a pacto de retro
b. Resale of the goods by unpaid transaction, and because of such belief he
seller (art. 1532) had not redeemed within the proper period
c. Rescission of the sale by
unpaid seller (art. 1534) NOTE: Tender of payment is sufficient to
d. Rescission by the buyer in case compel redemption, but is not in itself a
of partial eviction (art. 1556) payment that relieves the vendor from his
e. Rescission by buyer in case of liability to pay the redemption price (Paez vs.
breach of warranty against Magno.)
hidden defect (art. 1567)
f. Rescission by buyer in sale of EFFECT OF FAILURE TO EXERCISE RIGHT
animals with defects (art. OF REPURCHASE
1580)
Ownership shall be consolidated in the
3. By redemption vendee. In case of real property, a judicial
order is required for the purpose of recording
UPDATES IN REGULATORY FRAMEWORKS
the consolidation in the registry of property parties to make the property subject of the
after the vendor has been duly heard. (art. contract as security for a debt.
1607)
A contract may be presumed to be an
equitable mortgage under the following
cases: (applies only to absolute sale)
WHO MAY EXERCISE THE RIGHT TO
REPURCHASE 1. Unusually inadequate purchase price;
2. Vendor remains in possession as
1. VENDOR A RETRO lessee or otherwise;
a. Vendee, who acquired the 3. Extension for period of right to
whole undivided interest, may repurchase;
compel the vendor, who only 4. Purchases retains for himself a part of
sold part thereof, to redeem the purchase price;
the whole property.(art. 1611) 5. Vendor binds himself to pay the taxes
b. Property sold by co-owners of the thing sold;
jointly and in the same 6. When the real intention of the parties
contract may exercise the right is to secure the payment of an
in respect to his share only. obligation.
(art. 1612)
c. In the case above (b), vendee NOTE: in case of doubt, a contract
cannot be compelled to purporting to be a sale with right to
consent to a partial repurchase (pacto de retro sale) shall be
redemption, he may demand construed as an equitable mortgage.
all vendors or co-heirs to agree
to repurchase the whole thing NOTE: Vendor may ask for reformation, or to
sold. (art. 1613) correct the instrument to express the true
intent of the parties.
2. CREDITORS OF THE VENDOR
a. They cannot make use of the
right of redemption until after
they have exhausted the WHEN CAN THERE BE PRESUMPTIOM AS
property of the vendor. (art. TO EQUITABLE MORTGAGE?
1610) 1. Parties must have entered into a
contract denominated as a contract of
RIGHTS OF PARTIES AS TO THE FRUITS sale
OF LAND 2. The intention of the parties was to
1. If there were fruits at the time of sale secure an existing debt by way of
and vendee paid for them, he must be mortgage
reimbursed.
2. If vendee did not pay for the fruits, no NOTE: In the cases referred to in Arts. 1602
reimbursement for those existing at and 1604, the apparent vendor may ask for
the time of redemption. the reformation of the instrument.
3. No fruits at the time of same and
some exist at time of redemption, it is REMEDY OF REFORMATION: To correct the
to be distributed proportionately to instrument so as to make it express the true
the vendor and vendee, giving the intent of the parties
latter a share in proportion to the time
he possessed the property during the 1. LEGAL REDEMPTION
last year counted from the The right to be subrogated, upon the same
anniversary from the date of sale to terms and conditions stipulated in the
compensate the vendee for his contract, in the place of one who acquires a
expenses. (art. 1617) thing by:
a. purchase or
2. EQUITABLE MORTGAGE b. dation in payment, or
One which lacks the proper formalities of a c. by any other transaction
mortgage, but shows the intention of the whereby ownership is
transferred by onerous title.
UPDATES IN REGULATORY FRAMEWORKS
residential purposes. [Fabia vs Intermediate
May be effected against movables or Appellate Court, Nov. 21, 1984]
immovables. It must be exercised within
thirty (30) days from the notice in writing by If two or more adjoining owners desire
the vendor. to exercise the right of redemption
1. Owner of the smaller area shall be
NOTE: Written notice under is mandatory for preferred.
the right of redemption to commence. 2. If both lands have same area, the one
who first requested the redemption
shall be preferred. (art. 1621)

RIGHT OF ADJACENT OWNER OF URBAN

RIGHT OF LEGAL REDEMPTION OF CO- LANDS
OWNERS  The owners may exercise two (2)
The following are the requisites for the right rights, right of pre-emption or right of
to exist: redemption. The following are the
1. There must be co-ownership; requisites in order to exercise such
2. There must be alienation of all or any right:
of the shares of the other co owners; 1. Land must be urban;
3. The sale must be to a third person or 2. One exercising the right must be an
stranger; adjacent owner;
4. The sale must be before partition; 3. The land sold must be so small and so
5. The right must be exercised within the situated that a major portion thereof
period provided; cannot be used for any practical
6. Vendee must be reimbursed for the purpose within a reasonable time;
price of the sale. 4. Such urban land was bought by its
owner merely for speculation; and
AGAINST WHOM THE RIGHT MAY BE 5. It is about to be resold, or that its
EXERCISED resale has been perfected.
 The right of legal redemption is not
granted solely and exclusively to the NOTE: If two or more owner wish to exercise
original co owner but applies to those their rights, the one whose intended use of
who subsequently acquire their the land appears best justified shall be
respective share while the co- preferred. (art. 1622) Co owners are
ownership subsist. In other words, the preferred over adjacent owners. (art. 1623,
right cannot be exercised against par 2)
another co-owner but rather it is
exercised against the buyer who PRE-EMPTION
bought the share.  It is the act of purchasing before
others. If exercised, they will have
LEGAL REDEMPTION OF ADJACENT preference over other potential
OWNERS OF RURAL LANDS buyers.
The following are the requisites for the right
to exist: PRE-EMPTION REDEMPTION
1. The land must be rural; Arises before the Arises after sale
2. Land must be adjacent; sale
3. There must be alienation; No rescission There can be
4. Rural land alienates must not exceed because no sale as rescission of the
1 hectare; yet exist original sale
5. Vendee must already own some rural The action is Action is directed
land; and directed against the against the buyer
6. Rural land sold must not be separated prospective buyer
by brooks, drainage, ravines, roads May attach to the Always relate to the
and other apparent servitudes from seller’s duty to subject matter or
the adjoining lands. deliver or some the seller’s
other circumstances obligations
NOTE: Legal right of redemption of rural land
refers to land used for agriculture rather than
UPDATES IN REGULATORY FRAMEWORKS
PERIOD WHICH RIGHT MAY BE
EXERCISED
 The period shall be exercised within
30 days from the notice in writing by
the prospective vendor, or by the
vendor.
 If notice is not given, the 30-day
period has not even begun to run.
[Vda. De Cangco v. Escudibo]
However, no specific form of written
notice is required.
 The 30-day notice in writing should be
counted from notice, not of the
perfected sale, but of the actual
execution and delivery of the
document of sale. [Doromal v. COA L-
36083, Sept. 5, 1975]