1. What are the characteristics of a contract of sale?

6. Define the natural elements of a contract of sale.

a. Consensual – a sale is perfected by mere
consent, manifested by the meeting of the minds
as to the offer and acceptance on the subject
matter, price and terms of payment.
b. Bilateral – the seller will deliver and transfer a
determinate thing to the buyer and the latter will
pay an ascertained price or its equivalent
c. GR: Commutative – the thing sold is considered
the equivalent of the price paid and the price paid
is the equivalent of the thing sold.
XPN: Aleatory - the consideration is not
equivalent of what has been received in the case
of purchase of a lotto ticket. It the ticket wins, the
prize is much more than the price of the ticket.
d. Principal – its existence does not depend upon
the existence and validity of another contract.
e. Onerous - the thing sold is conveyed in
consideration of the purchase price, and vice
versa.
f. Nominate – it has a specific name given by law.
2. Why is the contract of sale an onerous contract?
It is an onerous contract because it imposes a
valuable consideration as a prestation, which is ideally a
price certain in money or its equivalent.
They are those which are inherent in the
contract, and which in the absence of any contrary
provision, are deemed to exist in the contract.
a. Warranty against eviction
b. Warranty against hidden defects
7. What is an accidental element in a contract of
sale?
They are those which may be present or absent
depending on the stipulations of the parties. (e.g.
conditions, interest. Penalty, time, place of payment,
etc.)
8. What are the requisites of the thing which
constitutes the object of sale?
Object of Sale, requisites:
a. Things
i. Determinate or determinable
ii. Lawful
iii. Should not be impossible (e.g. must be within the
commerce of man)
b. Rights – must be transmissible
Exceptions: future inheritance, service
9. Distinguish Rei Sperati from Emptio Spei

3. Why is the contract of sale a consensual

contract?

It is a consensual contract because it is

perfected by mere consent, manifested by the meeting
of the minds as to the offer and acceptance on the
subject matter, price and terms of payment.

4. Why is the contract of sale a bilateral reciprocal

contract?

It is a bilateral/ reciprocal contract because it

imposes obligations on both parties to the relationship.
The seller will deliver and transfer a determinate thing to
the buyer and the latter will pay an ascertained price or
its equivalent.

5. Why is the contract of sale a commutative

contract?

It is a commutative contract because a thing of 10. What is Emptio Rei Speratae?

value is exchanged for equal value. The thing sold is
considered the equivalent of the price paid and the price This refers to the sale of a thing having a potential
paid is the equivalent of the thing sold. existence. Its uncertainty is regard the quantity and
 quality by not with regard the existence of the thing. The
sale is subject to the condition that the thing should
exist, so that if it does not, there is no contract for lack
of an essential requisite.
11. Is there a distinction between a contract of sale
and a contract to sell?
Yes.
a. In a contract of sale, title passes to the buyer
upon delivery of the thing sold, whereas, in a
contract to sell, by agreement, ownership is
reserved in the vendor and is not to pass until
full payment of the price.
b. In a contract of sale, non-payment is a negative
resolutory condition, whereas in a contract to
sell, full payment is a positive suspensive
condition.
c. In a contract of sale, the seller has lost and
cannot recover ownership until and unless the
contract is resolved and rescinded, whereas, in
a contract to sell, title remains in the vendor,
and when he seeks to eject the vendee because
of noncompliance by such vendee with the
suspensive condition stipulated, he is enforcing
the contract and not resolving the same.
12. Y acquired a booklet of 100 sweepstakes tickets
directly from PCSO. Y paid 18,000 for the booklet,
less the customary discount. What kind of contract
did Y enter into?
Y entered into a contract of purchase and sale,
notwithstanding the fact that he may be referred to as an
“agent” of the Sweepstakes Office, and the fact that he
may be entitled to an “agent’s prize” should one of the
tickets purchased win a principal prize.
The truth is that he is not really required to resell
the tickets, and even if he were to do so, still failure on
the part of his purchasers to pay will not allow him to
recover what he himself has paid to the office.
Moreover, the delivery of the tickets to him
transferred their ownership to him; this is not true in the
case of an agency to sell. Furthermore, it has been said
that in a contract of sale, the buyer pays the price; while
in an agency to sell, the agent delivers the price. The
mere fact that a “discount” or so-called commission has
been given is immaterial. (Bar Question, Quiroga vs
Parsons Hardware, page 24 Paras)
13. Almar sold to Basty his car. It was agreed that
Basty would fix the price a week later. At the
appointed time, Basty named the price at P500, 000.
Almar agreed. Is the sale perfected?
Yes. The sale is perfected for there is already a true
meeting of the minds. (page 34. Paras, Article 1473)
14. Give the effect of failure to determine price
where the contract is executory.
Under Article 1474, where the price cannot be
determined where the contract is executory, the contract
is inefficacious.
15. Give the effect of failure to pay price, or the non-
delivery of the thing bought to the contract of sale.
Delivery and payment in a contract of sale are so
interrelated and intertwined with each other that without
delivery of the goods, there is no corresponding
obligation to pay. The two complement each other. It is
clear that the two elements cannot be dissociated, for
the contract of purchase and sale is essentially a
bilateral contract, as it gives rise to reciprocal
obligations.
16. What is the concept of reservati domini or
contractual reservation of title?
Pactum reservati domini or contractual reservation of
title is a stipulation, usually in sales by instalment,
whereby, despite delivery of the property sold,
ownership remains with the seller until full payment of
the price is made.
17. Is the contractual reservation (reservati domini)
valid?
Yes, provided there is a stipulation to this effect. It is
based on sound policy in commercial conditional sales
and is not contrary to law, morals, good customs, public
policy and public order.
18. Distinguish the concept of pactum reservati
domini and contract to sell.
In pactum reservatii domini, it is a conditional sale
which is already a contract of sale. Whereas, in a
contract to sell, there is no contract of sale but a mere
preparatory contract.
In pactum reservati domini, there is already delivery but
ownership is retained by the seller. In a contract to sell,
there is no delivery yet hence, there is no sale.
In pactum reservatii domini, the remedy is specific
performance or rescission. While, in a contract to sell,
such remedies are not available for there is no contract
yet.
In pactum reservatii domini, payment completes the
transaction. Where, in a contract to sell, payment will
not complete the transaction.

19. Bea’s hi-lux was sold on credit. Shortly after its

delivery, it was destroyed by a fortuitous event. Is
the buyer still liable for the price?

Yes. Res perit domino (to the owner bears the loss)
provides that if the object was lost after delivery to the
buyer, clearly the buyer bears the loss.

After the delivery of the hi-lux, Bea became the owner,

and therefore, it is she who must bear the loss and must
still pay the purchase price. (page 63, Paras, Song Fo
& Co vs. Oria)

20. B bought a vessel from S on condition that S

could prove that he was the owner thereof by
pertinent document. Before the condition was
complied with, the vessel sank in a storm. Can S
demand the price?
24. Dan orally sold a parcel of land to Jerry. Is the
sale valid?
No. S cannot demand the price. If the object has been
lost before perfection, the seller bears the loss. This is
Yes, the sale is valid but is unenforceable because the
because there was no contract for there was no cause
law requires that it be in writing to be enforceable.
or consideration. Being the owner, the seller bears the
(Page 117 De Leon, Article 1356, 1403)
loss and cannot demand the payment of the price.
25. In a sale of real property, if made through an
In this case, the condition was never fulfilled; therefore,
agent, is it valid?
the contract of sale was never perfected. Therefore, S
bears the loss and cannot demand the price. (page 62
A sale of real property when made through an agent is
Paras, Roman vs Grimalt)
void unless the agent’s authority is in writing.
21. Define earnest money.
Article 1874: When a sale of piece of land or any
interest therein is through an agent, the authority of the
Earnest money or “arras” is the money given to the
latter shall be in writing; otherwise, the sale shall be
seller by the prospective buyer to show that the latter is
void.
truly interested in buying the property, and its aim is to
bind the bargain.
26. Can a vendor who chooses foreclosure of a
chattel mortgage recover unpaid balances?
It is actually a partial payment of the purchase price and
is considered as proof of the perfection of the contract.
No. Article 1484 (3) provides that when the vendor
As such, it shall be deducted from the total price.
exercises foreclosure of chattel mortgage as a remedy
for the vendee’s failure to pay two or more instalments,
he shall have no further action against the purchaser to
recover any unpaid balance of the price. Any
agreement to the contrary shall be void.
22. What is option money?
27. Del bought a particular automobile on
instalment plan. Del defaulted in the payment of
It is the distinct consideration in case of an option
one of the instalment. Does the seller, Sal, have the
contract. It does not form part of the purchase price
right to exact fulfilment of the obligation to pay?
hence, it cannot be recovered if the buyer did not
continue with the sale.
Yes. Under Article 1484 (1), in a contract of sale of
personal property the price of which is payable in
23. Distinguish earnest money and option money.
instalments, the vendor may exact fulfilment of the
obligation should the vendee fail to pay even one of the
instalment.
28. B brought a particular laptop, but defaulted in
the payment of two installments. May the seller ask
for the cancellation of the sale?
Yes. Under Article 1484 (2), in a contract of sale of
personal property the price of which is payable in
instalments, the vendor may cancel the sale, should the
vendee fail to pay cover two or more instalments.
In this case, B has defaulted to pay two instalments and
therefore the seller may cancel the sale.
29. B bought a car from S on instalment. It was
agreed that the installments already paid should
not be returned even if the sale is cancelled. Is the
stipulation valid?
Yes. Under Article 1486, a stipulation that the
installments or rents paid shall not be returned to the
vendee or lessee even if the sale is cancelled shall be
valid insofar as the same may not be unconscionable
under the circumstances.
30. A husband sold his land to his wife. Later he
borrowed money from C. The loan matured. When
C discovered that the husband did not have any
cash or any property, he decided to question the
sale that had previously been made in favor of the
wife. Can the creditor go after such property?
No. The creditor cannot go after such property for he
was not yet a creditor at the time the transaction took
place. Therefore, it cannot truthfully be said that he had
been prejudiced by the sale. It would have been
different if at the time the sale was effected, he was
already a creditor. (Article 1490, page 94 Paras)
31. What is the effect of Loss of Object before sale?
When the object is lost before sale, there would be no
cause or consideration, hence, the contract is void.
(Article 1493, page 104 Paras)
32. Can service be a valid object of sale?
Yes. Service can be a valid object of sale provided they
are not contrary to law, morals, public policy, public
order and good customs. Further, they must not be
physically impossible of performance and must be
determinate and certain as to its nature.
33. S gives to B the exclusive distributorship of his
beds. Under the contract, S will send the number of
beds which B will order. The price of each bed is
the invoice price with a discount of 20%. Payment
is to be made within the first 4 days of the
succeeding month. Is the contract of an agency to
sell?
No. The contract is not of an agency to sell but a
contract of sale. There was an obligation on the part of
S to supply the beds, and a reciprocal obligation on the
part of B, to pay their price.
An agent does not pay the price, he merely delivers it If
he is not able to sell, he returns the goods. This is not
true in the present contract, for a price was fixed and
there was a duty to pay the same regardless as to
whether or not B had sold the beds. (page 25 Paras,
page 44 De Leon)
34. S sold his car to B. The price to be paid is the
price X paid for the car he bought one week ago as
specified in the invoice thereof. Is there price
certain?
Yes. There is a price certain based on the price paid by
X for the car he bought one week ago as specified in
the invoice. Under Art. 1463, in order that the price may
be considered certain, it shall be sufficient that it be so
with reference to another thing certain.
In this case, the price to be paid by B to S in reference
to the price paid by X for the car he bought one week
ago as specified in the invoice is considered certain.
35. When is sale by auction perfected?
Under Article 1476(2), a sale by auction is perfected
when the auctioneer announces its perfection by the fall
of the hammer, or in other customary manner.
Until such announcement is made, any bidder may
retract his bid, and the auctioneer may withdraw the
goods from the sale unless the auction has been
announced to be without reserve.
36. What is “puffing” or “by-bidding?”
Puffing or by-bidding is when people bid for the seller
but are not themselves bound. This occurs when the
seller employ others to bid for him and is valid provided
that he has notified the public that the auction is subject
to the right to bid on behalf of the seller.
In view of the notice, there would not be any fraud, and
the transaction with the rest should be considered as
valid. If without notice, any sale contravening the rule
may be treated by the buyer as fraudulent. (Page 48
Paras, Article 1476 (3, 4)
37. What is the status of a contract to sell executed
by an heir of real property involved in testate
proceedings entered into without the approval of
the probate court?
The contract to sell is valid but can be subject to
rescission (Objects of litigation; contract entered into by
defendant without knowledge or approval of litigants or
judicial authority)
Under Art 1630, an inheritance may be sold either with
specification of the properties to be alienated or without
enumerating the things comprising it, that is to say, the
hereditary rights only. Hereditary rights in an estate
under judicial settlement can be validly sold without
need for approval by the probate court.
38. When is a contract of sale perfected?
Under Art. 1475, a contract of sale is perfected at the
moment there is a meeting of the minds upon the thing
which is the object of the contract and upon the price.
From that moment, the parties may reciprocally
demand performance, subject to the provision of the
law governing the form of contracts.
39. When shall ownership of the thing sold transfer
to the vendee or buyer?
Under Art. 1477, the ownership of the thing sold shall
be transferred to the vendee upon the actual or
constructive delivery thereof.
40. What is “Policitacion?”
A unilateral promise or offer to sell or to buy a thing
which is not accepted creates no juridical effect or legal
bond. Such unaccepted imperfect promise or offer is
called a policitacion.
(A policitacion is a unilateral promise or offer to sell or
to buy a thing which is not accepted. It creates no
juridical effect or legal bond.)
41. If A promised to sell his car for P50,000 to B and
B promised to buy A’s specific car for P50,000. Is
there a perfected contract of sale?
Yes. Under Article 1479, when the promise is bilateral,
that is, one party accepts the other’s promise to buy
and the latter, the former’s promise to sell a
determinate thing for a price certain, it has practically
the same effect as a perfected contract of sale since it
is reciprocally demandable. (page103 De Leon)
42. Which contracts of sale are required to be in
writing under the Statute of Frauds?
Under the Statute of Frauds, the following contracts of
sale must be in writing, otherwise, they shall be
unenforceable:
a. sale of personal property at a price not less than
P500
b. sale of real property or an interest therein
c. sale of property not to be performed within a
year from the date thereof
d. when an applicable statute requires that the
contract of sale be in a certain form
43.So that ownership is transferred, must the
vendor have the ownership at the time of the
perfection of the contract?
No. In Quijada vs. Court of Appeals:
Sale, being a consensual contract, is perfected by mere
consent, which is manifested the moment there is a
meeting of the minds as to the offer and acceptance
thereof on three elements: subject matter, price and
terms of payment of the price. Ownership by the seller
on the thing sold at the time of perfection of the contract
of sale is not an element for its perfection. What the law
requires is that the seller has the right to transfer
ownership at the time the thing sold is delivered.
Perfection per se does not transfer ownership which
occurs upon the actual or constructive delivery of the
thing sold. A perfected contract of sale cannot be
challenged on the ground of non-ownership on the part
of the seller at the time of its perfection; hence, the sale
is still valid.
The exception to the rule that the ownership by the
seller is not essential at the time of perfection would be
in the case of judicial sale.
44. Who is considered an unpaid seller?
Under Article 1525, the seller of the goods is deemed
to be an unpaid seller:
a. When the whole of the price has not been paid
or tendered;
b. When a bill of exchange or other negotiable
instrument has been received as a conditional
payment, and the condition on which it was
received has been broken by reason of the
dishonour of the instrument, the insolvency of
the buyer, or otherwise.

45. What are the remedies of an unpaid seller?
The remedies of an unpaid seller are:
a. Possessory lien over the goods
b. Right of stoppage in transit after he has parted
with the possession of the goods and the buyer
becomes insolvent
c. Special Right of resale
d. Special Right to rescind the sale
e. Action for the price
f. Action for damages
46. Under what cases may the unpaid seller’s
possessory lien be exercised?
In possessory lien, the seller is not bound to deliver the
object of the contract of sale if the buyer has not paid
him the price. This remedy presupposes that the sale is
on credit.
Under Article 1527, it is exercisable only in the following
circumstances:
a. Goods sold without stipulation as to credit
b. Goods sold on credit but term of credit has
expired
c. Buyer becomes insolvent
The seller may exercise his right of lien notwithstanding
that he is in possession of the goods as agent or bailee
for the buyer.
47. Under what circumstances does an unpaid seller
of goods lose his lien thereon?
Under Article 1529, the unpaid seller of goods loses his
lien thereon:
a. When he delivers the goods to a carrier or other
bailee for the purpose of transmission to the
buyer without reserving the ownership in the
goods or the right to the possession thereof;
b. When the buyer or his agent lawfully obtains
possession of the goods; or
c. By waiver thereof.
49. When is the vendee entitled to rescind the sale?
Under Article 1539, in a sale of real property by unit,
when the entire area could not be delivered, the vendee
may rescind the sale:
a. If the lack in area is at least 1/10 than that stated
or stipulated;
b. If the deficiency in quality specified in the
contract exceeds 1/10 of the price agreed upon;
c. If the vendee would not have bought the
immovable had he known of its smaller area of
inferior quality irrespective of the extent of lack of
area or quality.
The vendee may also rescind the contract in case of
breach of warranty by the seller by returning or offering
the return of the goods, and recover the price of any part
thereof.
50. What are the implied warranties in a contract of
sale?
Implied warranties are those deemed included in all
contracts of sale by operation of law, such as:
a. Warranty that the seller has right to sell
b. Warranty against eviction
c. Warranty against non-apparent burden or
servitude, except when it is recorded in the
Registry of Property.
d. Warranty against hidden defects
51. Are there cases where the vendor shall not be
liable for eviction?
Yes. Under Article 1550, when the adverse possession
has been commenced before the sale but the
prescriptive period is completed after the transfer the
vendor shall not be liable for eviction.
Further, under Article 1554, when the vendee has
waived the right to warranty in case of eviction with
knowledge of the risks of eviction and assumed its
consequences, the vendor shall not be liable.
52. When is a contract a contract of sale and when
is it a contract for piece of work?
Under Article 1467, a contract for the delivery at a
certain price of an article which the vendor in the
ordinary course of his business manufactures or
procures for the general market, whether the same is on
hand at the or not, is a contract of sale.
But, if the goods are to be manufactured especially for
the customer and upon his special order, and not for the
general market, it is a contract for a piece of work.
53. What is the warranty against eviction?
It is an implied warranty under Article 1547 (1) in which
the seller guarantees that he has the right to sell the
thing sold and to transfer ownership to the buyer who
shall not be disturbed in his legal and peaceful
possession thereof.
54. Under what cases is the remedy of rescission
not available to the buyer?
Rescission is available to the buyer in case of breach of
warranty by the seller. This is done by returning or
offering the return of the goods, and recovering the price
of any part thereof which has been paid.
However, rescission by the buyer is not allowed in the
following cases:
a. If the buyer accepted the goods knowing of the
breach of warranty without protest;
b. If he fails to notify the seller within a reasonable
time of his election to rescind; and
c. If he fails to return or offer to return the goods in
substantially as good condition as they were in
at the time of the transfer of ownership to him.
(De Leon, page 378, Article 1599)
55. Define conventional redemption.
It is where the seller reserves the right to repurchase the
thing sold coupled with the obligation to return the
purchase price of the sale, expenses incurred under the
contract, other legitimate payments, and necessary and
useful expenses made on the thing sold.
56. In what form shall a contract of sale be entered
into?
As a general rule, a contract of sale can be entered into
in any form. Contracts shall be obligatory, in whatever
form they have been entered into, provided all the
essential requisites for their validity are present.
The exceptions are:
a. If the law requires a document or other special
form, the contracting parties may compel each
other to observe that form
b. Under the statute of Frauds, the following shall
be in writing, otherwise, they are unenforceable:
i. sale of personal property at a price not less
than P500
ii. sale of real property or an interest therein
iii. sale of property not to be performed within
a year from the date thereof
iv. when an applicable statute requires that the
contract of sale be in a certain form
c. Sale of large cattle which requires that the same
be recorded with the city/municipal treasurer and
that a certificate of transfer be issued. Otherwise,
the sale is not valid.
57. What is the effect of the stipulation that the
installments or rents paid shall be forfeited by the
vendee or lessee in the event the contract of sale is
rescinded?
Under Article 1486, a stipulation that the installments or
rents paid shall be forfeited by the vendee or lessee in
the event the contract is rescinded is VALID provided
that it is not unconscionable under the circumstances.
58. What requisites must be present for a co-owner
to exercise the right of redemption?
The right of legal redemption among co-owners
presupposes of course, the existence of a co-ownership.
The following are the requisites for the right to exist:
a. There must be co-ownership of a thing;
b. There must be alienation of all or of any of the
shares of the other co-owners;
c. The sale must be to a third person or stranger or
non-co-owner; and
d. The sale must be before partition.
59. Is it essential that the thing or object of a
contract of sale be always determinate?
No. The law does not require that the object of the sale
be always determinate for it is sufficient that it be at least
determinable.
It is not necessary that the thing sold must be in sight at
the time the contract is entered into. It is sufficient that
the thing is determinable or capable of being made
determinate without the necessity of a new or further
agreement between the parties.
60. What are the principal obligations of the vendor?
a. To transfer the ownership of the determinate thing
sold
b. To deliver the thing, with its accessions and
accessories, if any, in the condition in which they
were upon the perfection of the contract
c. To warrant against eviction and against hidden
defects
d. To take care of the thing, pending delivery, with
proper diligence,
e. To pay for the expenses of the deed of sale,
unless there is a stipulation to the contrary,
61. What is the effect of gross inadequacy of price?
Under Article 1470, gross inadequacy of price does not
affect a contract of sale, except as it may indicate a
defect in the consent, or that the parties really intended
a donation or some other act or contract.
62. Define a contract of sale.
Under Article 1458, a contract of sale is one whereby
one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate
thing, and the other to pay therefor a price certain in
money or its equivalent. It may be absolute or
conditional.

63. When is an affirmation of the value of the thing

or the seller’s expression of opinion considered an
express warranty?

Under Article 1546, any affirmation of fact or any

promise by the seller relating to the thing is an express
warranty if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the same,
and if the buyer purchases the thing relying thereon.

64. How is the ownership of the thing transferred to

the vendee?

Under Article 1477, ownership of the thing sold shall be

transferred to the vendee upon the actual or constructive
delivery thereof.

Exceptions are:
a. Contrary stipulation or Pactum reservati domini
b. Contract to sell
c. Contract of insurance

65. Who are granted the right of legal redemption?

The right of legal redemption in a contract of sale are

granted to:

a. A co-owner, in case of a sale of his share to a

stranger (Article 1620)
b. Owners of adjoining rural lands not exceeding
one hectare (Article 1621)
c. Owner of adjacent small urban lands bought
merely for speculation (Article 1622)
d. An heir, in case of sale if his hereditary rights to a
stranger ( Article 1088)

66. What is an equitable mortgage?

An equitable mortgage is one which lacks the proper

formalities, form of words, or other requisites prescribed
by law for a mortgage, but shows the intention of the
parties to make the property subject of the contract as
security for a debt and contains nothing impossible or
contrary to law.

67. If a co-owner sells his share to another co-

owner, can the other co-owners exercise the right of
redemption?

No. For co-owners to exercise their right to redemption,

the sale of share of one co-owner must have been sold
to a third person or a stranger and not to another co-
owner.