Here are 50 questions and answers with explanations based on the provided document on the

Law on Sales.

I. Basic Concepts, Characteristics, and Elements

1. What is a contract of sale?
●​ Answer: A contract where the seller obligates themselves to transfer ownership and
deliver a determinate thing, and the buyer obligates themselves to pay a price certain in
money or its equivalent.
●​ Explanation: This definition is explicitly stated in Article 1458 of the Civil Code.
2. A contract of sale is perfected by mere consent. What characteristic does this
describe?
●​ Answer: Consensual.
●​ Explanation: A consensual contract is perfected by the mere meeting of minds, as
opposed to a real contract which requires delivery.
3. Why is a contract of sale considered bilateral and reciprocal?
●​ Answer: Because both parties are bound by obligations that are dependent on each
other.
●​ Explanation: The seller's obligation to deliver is dependent on the buyer's obligation to
pay, and vice-versa.
4. The characteristic of a sale where valuable consideration must be given to acquire
rights is known as?
●​ Answer: Onerous.
●​ Explanation: In an onerous contract, each party receives something of value in exchange
for their obligation.
5. While most sales are commutative, what is an example of an aleatory sale?
●​ Answer: The sale of a genuine sweepstakes ticket.
●​ Explanation: In an aleatory contract, the value of what one receives is not equivalent to
what is given, depending on a chance event. The ticket's value is uncertain.
6. What are the three essential elements of a valid contract of sale?
●​ Answer: Consent, a determinate subject matter, and a price certain in money or its
equivalent.
●​ Explanation: Without these three "essential elements," a valid contract of sale cannot
exist.
7. What type of elements are inherent in a contract of sale and are deemed to exist even
without a specific provision?
●​ Answer: Natural elements.
●​ Explanation: Natural elements, such as the warranty against eviction and hidden defects,
are presumed by law to be part of the contract unless expressly excluded.
8. What is the final stage in the life of a contract of sale, where the object is delivered and
the price is paid?
●​ Answer: Consummation.
●​ Explanation: The three stages are generation (negotiation), perfection (meeting of the
minds), and consummation (performance of obligations).

II. Distinctions and Kinds of Sale

9. What key difference distinguishes a sale from dation in payment (dacion en pago)?
 ●​ Answer: Dation in payment involves a pre-existing credit which it extinguishes, while a
sale creates new obligations.
●​ Explanation: In dation in payment, a debtor offers an object to the creditor to settle a
debt. A sale, conversely, gives rise to the obligation to pay.
10. In a contract to sell, what is the effect of the non-payment of the full price?
●​ Answer: The obligation of the seller to deliver and transfer ownership never becomes
effective.
●​ Explanation: In a contract to sell, full payment is a positive suspensive condition. If not
met, the sale does not materialize.
11. How does ownership transfer differ between a contract of sale and a contract to sell?
●​ Answer: In a contract of sale, ownership generally passes upon delivery; in a contract to
sell, the seller retains ownership until the full price is paid.
●​ Explanation: This distinction is crucial, as the seller in a contract to sell retains ownership
regardless of delivery until the condition of full payment is met.
12. Who becomes the owner of the goods after delivery in a contract of sale versus an
agency to sell?
●​ Answer: In a sale, the buyer becomes the owner after delivery; in an agency to sell, the
agent does not become the owner even after delivery.
●​ Explanation: An agent merely receives the goods to sell on behalf of the principal, who
retains ownership.
13. A contract for an article that the seller manufactures in the ordinary course of
business is a contract of sale. What if it's made upon a special order?
●​ Answer: It is a contract for a piece of work.
●​ Explanation: If goods are manufactured especially for a customer's specific order and not
for the general market, the contract is for a piece of work.
14. In a transaction involving both money and another thing as consideration, what is the
primary rule to determine if it is a sale or barter?
●​ Answer: The intention of the parties must be determined.
●​ Explanation: The manifest intention of the contracting parties is the first and most
important rule to follow.
15. If the parties' intention is unclear and the value of the thing given as part of the
consideration is more valuable than the money, the contract is a?
●​ Answer: Barter.
●​ Explanation: If intent is not clear, the contract is a barter if the thing's value exceeds the
money's value. If the money's value is equal to or greater than the thing's value, it is a
sale.

III. Object and Price

16. From what principle does the rule "nobody can dispose of that which does not belong
to him" stem?
●​ Answer: Nemo dat quod non habet.
●​ Explanation: This Latin maxim means that a seller must be the owner of the object sold
to be able to transfer ownership.
17. When must the seller have the right to transfer ownership of the thing sold?
●​ Answer: At the time of delivery.
●​ Explanation: The seller does not need to be the owner at the time of perfection, but must
be the owner at the time the object is delivered to the buyer.
18. What is the sale of a future thing, such as a future harvest, called?
●​ Answer: Emptio rei speratae (sale of an expected thing).
●​ Explanation: This is the sale of a thing that has a potential existence. If the thing does
not materialize, the sale is not effective.
19. What happens in an emptio spei (sale of a hope) if the expected thing does not
materialize?
●​ Answer: The sale remains valid.
●​ Explanation: In an emptio spei, the object is the hope itself, which is a present thing. As
long as the hope validly existed, the sale is valid regardless of the outcome.
20. A buyer purchases an undivided share of a specific mass of fungible goods. What is
their status relative to the seller?
●​ Answer: The buyer becomes a co-owner with the seller of the whole mass.
●​ Explanation: The buyer becomes a co-owner in proportion to the definite share they
bought relative to the entire mass.
21. Besides being in money or its equivalent and being real, what is the other key
requisite for the price in a sale?
●​ Answer: It must be certain or ascertainable.
●​ Explanation: The price must be definite or capable of being determined without needing
a new agreement between the parties.
22. If the determination of the price is left to a third person, and that person is unable or
unwilling to fix it, what is the effect on the contract?
●​ Answer: The contract becomes inefficacious (without effect), unless the parties
subsequently agree on a price.
●​ Explanation: Without the third party's determination as agreed, there is no certain price,
rendering the contract ineffective.
23. What is the general rule regarding the effect of gross inadequacy of the price on a
contract of sale?
●​ Answer: It does not affect the validity of the contract of sale.
●​ Explanation: Gross inadequacy of price does not invalidate a sale, except where it
indicates a defect in consent (like fraud or undue influence) or an intention to donate.
24. If the price in a contract is made to appear, but in reality, there is no price at all, the
contract is?
●​ Answer: Void.
●​ Explanation: This is an absolutely simulated contract, which is void for lack of cause or
consideration.

IV. Perfection, Formalities, and Delivery

25. What is the term for money given by the buyer to the seller to bind the bargain, which
is considered proof of the contract's perfection?
●​ Answer: Earnest money (or arras).
●​ Explanation: Earnest money is actually a partial payment of the purchase price and is
considered proof that the contract of sale has been perfected.
26. How is option money different from earnest money?
●​ Answer: Option money is a distinct consideration for an option contract and applies to a
sale not yet perfected, while earnest money is part of the purchase price of an existing
sale.
●​ Explanation: Giving earnest money binds the buyer to pay the balance, whereas giving
 option money does not obligate the would-be buyer to purchase.
27. An oral agreement for the sale of goods at a price of P400 is enforceable. What if the
price is P500?
●​ Answer: The agreement must be in writing to be enforceable.
●​ Explanation: Under the Statute of Frauds, an agreement for the sale of goods, chattels,
or things in action at a price not less than P500 must be in writing to be enforceable in
court.
28. If a tenant who is already in possession of a car decides to buy it from the owner,
what type of constructive delivery occurs?
●​ Answer: Traditio brevi manu.
●​ Explanation: This occurs when the buyer already had possession of the object before the
purchase, but in a different capacity (e.g., as a lessee).
29. What is the rule on double sales for movable property?
●​ Answer: Ownership is transferred to the person who first took possession thereof in good
faith.
●​ Explanation: For movable property, the first possessor in good faith is deemed the
owner.
30. In a double sale of immovable property, who has the better right?
●​ Answer: The vendee who first registered the sale in good faith in the Registry of Property.
●​ Explanation: For immovable property, the rule is "first in registration, first in right,"
provided there is good faith. In its absence, the first possessor in good faith, and then the
one with the oldest title in good faith, prevails.
31. In a "sale or return" transaction, who bears the risk of loss?
●​ Answer: The buyer.
●​ Explanation: In a "sale or return," ownership passes to the buyer upon delivery, so the
risk of loss or injury rests with the buyer.
32. What is the opposite of traditio brevi manu, where a seller continues in possession of
the thing sold, but now in a different capacity (e.g., as a lessee)?
●​ Answer: Traditio constitutum possessorium.
●​ Explanation: This happens when the vendor sells a property but continues to possess it
under a different title, such as a lessee.

V. Obligations, Warranties, and Remedies

33. What is eviction in the context of a contract of sale?
●​ Answer: It is a judicial process where the vendee is deprived of the whole or part of the
thing purchased by virtue of a final judgment based on a right prior to the sale.
●​ Explanation: This is the legal deprivation of the buyer's possession, triggering the seller's
warranty against eviction.
34. For a vendor to be liable for warranty against eviction, what is a key procedural
requisite involving the vendee?
●​ Answer: The vendor must have been summoned in the suit for eviction at the instance of
the vendee.
●​ Explanation: The buyer must notify the seller of the lawsuit so the seller has an
opportunity to defend the title they transferred.
35. What is the difference between a waiver consciente and a waiver intencionada
regarding eviction?
●​ Answer: A waiver consciente is made without knowledge of the risk, while a waiver
 intencionada is made with full knowledge of the risk of eviction.
●​ Explanation: In a waiver consciente, the vendor still pays the value of the thing at the
time of eviction. In a waiver intencionada, the vendor is not liable if they acted in good
faith.
36. A hidden defect that renders a thing unfit for its intended use is called a?
●​ Answer: Redhibitory defect.
●​ Explanation: This is a serious, hidden defect existing at the time of sale that gives the
buyer the right to withdraw from the contract or demand a proportionate reduction of the
price.
37. What is the prescriptive period for filing an action based on a hidden defect
(redhibition)?
●​ Answer: Six months from the delivery of the thing sold.
●​ Explanation: The action for rescission or price reduction due to hidden defects must be
brought within this specific period.
38. When can a buyer of real estate suspend the payment of the price?
●​ Answer: If they are disturbed in the possession or ownership of the thing, or have a
well-grounded fear of such disturbance.
●​ Explanation: This right protects the buyer from having to pay for something they might
lose due to a vindicatory action or foreclosure of a mortgage.
39. What are the three alternative remedies available to a vendor of personal property
sold on an installment basis under the Recto Law?
●​ Answer: (1) Exact fulfillment (specific performance), (2) cancel the sale (if two or more
installments are unpaid), or (3) foreclose the chattel mortgage (if two or more installments
are unpaid).
●​ Explanation: These remedies are alternative, meaning the choice of one bars the others.
40. If a vendor chooses to foreclose the chattel mortgage under the Recto Law, can they
recover any deficiency?
●​ Answer: No.
●​ Explanation: The law explicitly prohibits the vendor from recovering any unpaid balance
of the price after foreclosing the mortgage. Any agreement to the contrary is void.
41. Under the Maceda Law, what right does a real estate buyer have after paying at least
two years of installments and then defaulting?
●​ Answer: The right to pay the unpaid installments without additional interest within a grace
period of one month for every year of installment payments made.
●​ Explanation: This grace period is a key protection for long-term installment buyers of real
estate.
42. Under the Maceda Law, if the contract is canceled after the buyer has paid at least
two years of installments, what is the buyer entitled to?
●​ Answer: A cash surrender value equivalent to 50% of the total payments made, plus an
additional 5% for every year after five years of installments (not to exceed 90%).
●​ Explanation: This provision ensures that the buyer does not forfeit all payments made.
43. What is the grace period given to a real estate buyer who has paid less than two years
of installments under the Maceda Law?
●​ Answer: A grace period of not less than 60 days from the date the installment became
due.
●​ Explanation: Even buyers with less than two years of payments are afforded a minimum
60-day grace period before the seller can cancel the contract.
44. According to PD 957, what must a buyer check before purchasing a subdivision lot or
condominium unit?
●​ Answer: That the project has a Certificate of Registration and a License to Sell issued by
the HLURB.
●​ Explanation: This is a primary right of the buyer to ensure the project is legitimate and
the developer is authorized to sell.
45. Under PD 957, can a buyer stop paying installments if the developer fails to develop
the project according to the approved plans?
●​ Answer: Yes.
●​ Explanation: Section 23 of PD 957 states that no installment payment shall be forfeited if
the buyer desists from further payment due to the failure of the owner or developer to
develop the project. The buyer can even demand a refund of the total amount paid with
legal interest.

VI. Redemption and Special Cases

46. What is conventional redemption?
●​ Answer: The right which the vendor reserves to themselves to reacquire the property
sold.
●​ Explanation: This right, also known as pacto de retro, must be reserved at the moment of
the perfection of the contract.
47. If the parties to a sale with a right to repurchase agree on a redemption period, what
is the maximum duration allowed by law?
●​ Answer: Ten years.
●​ Explanation: The period agreed upon cannot exceed ten years. If no period is agreed
upon, the law provides a default period of four years.
48. When is a sale with a right of repurchase presumed to be an equitable mortgage?
●​ Answer: When the price is unusually inadequate, the vendor remains in possession as
lessee, or the vendor binds himself to pay taxes on the thing sold, among other instances.
●​ Explanation: Article 1602 provides several instances where the law presumes the real
intention was to secure a debt, not to sell property.
49. What is the purpose of the Bulk Sales Law?
●​ Answer: To prevent the secret sale or disposal of a merchant's stock of goods in bulk to
defraud creditors.
●​ Explanation: The law requires specific formalities, such as notifying creditors, to ensure
transparency and protect their interests.
50. What is the effect of a sale that violates the Bulk Sales Law?
●​ Answer: The sale is valid between the parties but void as to the affected creditors.
●​ Explanation: The transfer is considered fraudulent and void with respect to creditors,
who can still go after the property.