REGFRA (RFLIB) NOTES
voidable).
LAW ON SALES
CONTRACT OF SALE DEFINITION
Article 1458. By the contract of sale one of
the contracting parties obligates himself to
transfer the ownership of and to deliver a
determinate thing, and the other to pay
therefore a price certain in money or its
equivalent.
2 parties - Seller (Vendor) and Buyer)
Vendor
1. To transfer ownership over the determinate
thing sold
2. And to deliver
Vendee
1. Pay a price certain money or equivalent money
(negotiable instrument, check bill of exchange
or promissory notes)
Objects
-Things – object of the contract of the sale
-even if it is generic, at the time of delivery
should be physically segregated
X offered to sell his second-hand iPhone 7 to
Y for the amount of P25,000. Y offered to buy
said phone at P22,500, to which X agreed.
Y paid said amount to X, who then delivered
his iPhone 7 to Y.
Based on our example, we observed that the
parties underwent different stages in the life
cycle of the contract of sale, that is,
preparation or conception, perfection or
birth, and consummation.
Preparation or conception – X decides to sell
his iPhone 7 and determines the current
value of his second-hand phone, based on
prevailing market value. He then looks for a
buyer, who turned out to be Y. X makes an
offer while Y made a counter-offer.
Perfection or birth – Once X and Y had
agreed on the price
Consummation – Y paid the agreed price
while X, at the same time, delivered the
iPhone 7.
ELEMENTS OF A CONTRACT OF SALE
❖ ESSENTIAL ELEMENTS/REQUISITES -
Kapag wala mga to, di mag-eexist ang
contract of sale.
➢ Consent - Meeting of minds to
transfer ownership in exchange
of the price (otherwise, void or
➢ Object - The determinate thing
to be delivered. Objects can be also
intangible rights (stocks)
➢ Cause - Price certain in money
or its equivalent.
As to Consent:
To be valid, the consent between
the buyer and the seller must be
freely, voluntarily and intelligently given;
otherwise, the contract is voidable or void, as
the case may be
Except: Incapacitated persons, i.e., minors,
insane or demented persons and deaf-
mutes who do not know how to write
cannot validly enter into a contract of sale.
Exception to the exception: When the
object of the contract of sale involves
necessaries which are indispensable for
sustenance, dwelling, clothing, medical
attendance and educational expenses.
Exception : example, 16 years old who goes to
7/11, buy medicine, pay tuition, buy clothings.
NECESSARIES should be valid
Exception to the exception: A, 17 years of
age, sold his car to X, an adult person. A told
X that he is 18 and, therefore, legally
capacitated to enter into a contract.
Is the contract of sale valid and binding
upon A and X? May the parents or legal
guardians of A successfully claim in a case to
be filed against X for the annulment of the
contract of sale?
Mercado Vs. Mercado. The law cannot blamed
x because of misrepresentation. That’s why is
sale is valid and binding.
The can file a case but it will not prosper.
“Vitiated consent”
Vices of consent: mistake, violence,
intimidation, fraud or undue influence
As to the Object
The object of the contract of sale must be
licit or lawful; otherwise, the sale is void.
 Human organs are unlawful. I will sell my house
The ownership is The ownership is
and lot if you destroy marriage. Selling 1 kilo of transferred upon the transferred upon the
Shabu (PROHIBITED) delivery of the thing compliance to the
conditions and
❖ NATURAL ELEMENTS - Presumed to delivery of the thing
exist, regardless if it’s stipulated
between the parties. CONTRACT TO SELL
➢ Warranty against hidden
defects Contract of Sale Contract to Sell
➢ Warranty against eviction
❖ ACCIDENTAL ELEMENTS - Terms and Title passes to the By agreement,
Conditions/Stipulations na pinag- vendee upon ownership is
agreehan na ng parties (Mutual delivery of the thing reserved in the
Agreement). sold vendor and is not to
pass until full
CHARACTERISTICS OF CONTRACT OF SALE payment of the price
❖ Consensual - Perfected by mere
Nonpayment is a Full payment is a
consent
negative resolutory positive suspensive
❖ Bilateral - Bound by Reciprocal
condition condition
Obligations (parehong may obligation;
i.e. seller-buyer relationship) The vendor has lost Title remains in the
❖ Commutative - The parties exchange and cannot recover vendor, and when he
almost equivalent values (kung ano ownership until and seeks to eject the
yung ibibigay, yung din ang unless the contract vendee because of
marereceive) is resolved or noncompliance by
❖ Principal - Can exist independently rescinded such vendee with the
from another contract suspensive condition
❖ Onerous - The parties give valuable stipulated, he is
considerations in order to acquire enforcing the
rights contract and not
❖ Nominate - Has a special name given resolving the same
by the law (Santos vs. Santos,
CA, 47 Official
FORM OF A CONTRACT OF SALE Gazette 6372)
GENERAL RULE: Pwede in writing, pwedeng
oral agreement, pwedeng half oral half
writing, pweding inferred from the conduct
of the parties. No prescribed form.

EXCEPTIONS:
❖ Required by law in writing or other
forms
❖ Under Statute of Frauds (list of
contracts that NEEDS to be in writing;
otherwise, unenforceable.) ❖ A kind of Conditional Sale
❖ Sale of large cattle na kailangan ❖ A bilateral contract whereby the
nakarecord sa city/municipal treasurer prospective seller, while expressly
and may certificate of transfer. reserving the ownership of the subject
property despite delivery thereof to
ABSOLUTE VS. CONDITIONAL SALE the prospective buyer, binds himself to
sell the said property exclusively to the
prospective buyer upon fulfillment of
ABSOLUTE CONDITIONAL
the condition agreed upon, that is, full
Walang condition; Subject to certain payment of the purchase price
Pure Obligation conditions ➢ Wala pang sale na involved. Si
prospective seller, bina-bind
 niya sarili niya na ibebenta niya Example:
yung item kapag nabayaran na
ni prospective buyer yung full 1. X owes Y the amount of P20,000. To pay her
purchase price. obligation, X gives her iPhone 6 tablet worth
➢ Hindi pa to ang Contract of Sale. P30,000 to Y, which the latter accepted.
First step (Preparatory Contract)
ang Contract to Sell and then 1 creditor and 1 debtor
kapag nabayaran nang buo,
dun palang mag-eexecute ng Dation in payment Payment by cession
Contract of Sale.
■ Contract to Sell > Full There is usually only There are several
payment of price > one creditor creditors
Contract of Sale > Deliver. It does not The debtor is
presuppose the insolvent at the time
PARTIES OF A CONTRACT OF SALE insolvency of the of assignment
❖ Vendor/Seller debtor or a situation
➢ Kailangan legally capacitated of financial
ang vendor para makapasok sa difficulties
contract. It does not involve all It extends to all the
➢ Kung Corporation ang vendor, the property of the property of the
Kailangan i-execute ng BOD debtor debtor subject to
ang contract or if agent, execution
kailangan duly authorized ng The creditor The creditors only
BOD. becomes the owner acquire the right to
➢ Right to Transfer of ownership: of the thing given by sell the thing and
At the time it is delivered. the debtor apply the proceeds
❖ Vendee/Buyer to their credits pro
➢ Kailangan Legally Capacitated rata
➢ Same rules if corpo/agent It is really an act of It is not an act of
novation (obligation novation.
is extinguished).
SALE DATION IN
PAYMENT Requisites of payment by cession
1. There must be two or more creditors;
There is no pre- There is a pre- 2. The debtor must be (partially)
existing credit existing credit insolvent;
3. The assignment must involve all the
properties of the debtor; and
For the seller, the For the debtor in
4. The cession must be accepted by the
cause of sale is the dacion en pago, the
creditors.
price cause is the
extinguishment of
Atleast 1 debtor or 1 creditor
his obligation in
Creditor will sell the properties of the debtors,
money
the sale of the properties will use to pay for the
debts.
Obligations are The obligation is
SALE CONTRACT FOR A
created extinguished
PIECE OF WORK

There is greater There is less freedom

freedom in the in determining the
determination of the price of the thing
price of the thing delivered
sold
 Contract for the The goods are to be c. If cash and object have the same
delivery at a certain manufactured value, it is a sale.
price of an article especially for the
which the vendor customer and upon Examples:
manufactures or his special order
procures for the and not for the 1. S sold his car to B for P150,000.00 plus a
general market is general market Rolex watch worth P100,000.00.
sale even though the
object is not yet 2. For and in consideration of the amount of
existing at the time P100,000.00 plus a Rolex watch worth
of the sale P200,000.00, S agreed to transfer the
ownership of his car to B.

Examples: 3. For and in consideration of the amount of

1. B went e-malling at Lazada and bought a
hair clipper worth P1,500.00, which he paid
by way of credit card. Lazada caused the
delivery of said hair clipper through Grab
Express.
2. Boy Tangkad, who stands at 7’0” with size
15” feet, went to a furniture shop in Pandan,
Angeles City, and made a special order for a
bed frame with mattress. He then proceeded
to a shoe factory in Maimpis, City of San
Fernando, where he made a special order for
a Nike-imitation basketball shoes.
SALE BARTER
The consideration for The consideration is
the transfer of another thing
ownership of a thing
is money or its
equivalent
(negotiable
instruments)
► If what is paid for an object consists partly
of money and partly some other object, the
transaction may be determined based on:
1) the intention of the parties; or
2) in the absence of a clear intention between
the parties, the following rules shall be
observed:
a. If the value of the object is greater
than cash, it is barter;
b. If cash is greater than the value of
the object, it is a sale;
P150,000.00 plus a Rolex watch worth
P100,000.00, S agreed to transfer the
ownership of his car to B.
4. For and in consideration of the amount of
P100,000.00 plus a Rolex watch worth
P100,000.00, S agreed to transfer the
ownership of his car to B.
OBLIGATIONS OF A VENDOR
❖ To transfer the ownership of the thing
sold
❖ To deliver the thing sold (kailangan
kasama yung accessions and
accessories; yung fruits kay vendee
na from the day the contract was
perfected)
❖ To warrant the thing sold
❖ To take care of the thing sold with the
diligence of a good father of a family,
unless the parties agreed to a different
standard of care
OBLIGATIONS OF THE VENDEE
❖ To accept delivery
❖ To pay the price
❖ Bear the expenses for the execution
and registration of the sale and
putting the goods in a deliverable
state
❖ To take care of the goods without the
obligation to return, where the goods
are delivered to the buyer and he
rightfully refuses to accept it (if mali
yung idineliver; kailangan mo lang
alagaan pero wala kang obligation na
ibalik).
❖ To pay the interest for the period
between delivery of the thing and the
payment of the price in the following
cases:
 ➢ Interest is stipulated (dapat in
writing)
➢ Fruits or income are received by
the vendee from the thing sold
(nakinabang ka sa fruits or
income)
➢ Vendee is guilty of default
(interest by way of damages)
SALE OR RETURN SALE ON TRIAL,
APPROVAL,
SATISFACTION
Examples:
1. S sold his house and lot to B for the amount
of P2,000,000.00, with the right to
repurchase within a period of two years form
the date of the sale. S may buy back the
property within two years by returning to B
the price of the sale, the expenses of the
contract of sale, other legitimate expenses
made by reason of the sale, and if there are
any necessary and useful expenses made on
the thing sold.

2. X borrowed money from Y the amount of

Ownership of the The ownership is P2,000,000.00, to be paid on October 1, 2025.
thing sold is retained by the seller To secure his obligation, X executed a real
transferred to the notwithstanding the estate mortgage in favor of Y. Upon failure of
buyer upon delivery delivery of the thing X to pay his obligation, Y foreclosed the
to the buyer property.

SUBJECT MATTER OF THE SALE (ano-ano

Examples: yung pwedeng ibenta)
❖ It must be licit. Otherwise, it is void.
1. S delivered to B a Smart TV set worth (kailangan legal yung ibinebenta)
P50,000.00 on a sale or return basis. That ❖ It must be a thing the seller of which
night, or three hours thereafter, the house of has a right to transfer ownership of at
B burned down without his fault, including the time of the delivery.
said Smart TV and his other personal ❖ It must be determinate, meaning it is
belongings. Who shall bear the loss of the particularly designated or physically
Smart TV? segregated from all others of the same
class (super specific).
2. S sold and delivered to B a Smart TV set on ❖ It may be things having a potential
a trial, satisfaction or approval basis. That existence or goods to be
night, or three hours thereafter, the house of manufactured , raised or acquired by
B burned down without his fault, including the seller after the perfection of the
said Smart TV and his other personal contract. In either case, the failure of
belongings. Who shall bear the loss of the the condition or contingency to
Smart TV? materialize will invalidate the contract
(in-process palang yung ibebenta;
PACTO DE RETRO MORTGAGE May potential existence; otherwise
SALE (vain/false hope), void ang contract).
There is no The thing ❖ It may be a segregated or an
foreclosure (unless mortgaged shall be undivided share or interest.
declared an foreclosed if the ❖ It may be subject to a resolutory
equitable mortgage_ obligation is not paid condition (ex. Object of Pacto de
retro).

There is no pre- Mortgage is just an

existing obligation accessory obligation
to secure the
performance of an
existing obligation EMPTIO REI SPERATAE (SALE OF
POTENTIAL EXISTENCE) VS. EMPTIO SPEI
(SALE OF MERE HOPE)
 3. If is the price which the object
ERS ES
would have on a definite day.
Contract of Sale of Sale of Mere Hope
future determinate The price is the tuition fee charge at ateneo
things for the pre bar review course. –reference to another
thing certain
Kapag ‘di nag- Valid yung object ng
appear yung thing, contract of sale kahit BAretos right in Sular company was sold 4/173
the obligation is ‘di nag-appear yung of the entire net value of the business among the
extinguished; This is object unless net value assed by the board of assessor. Yes the
Valid. false/vain hope siya. If price is certain
in vain hope, it is
void. Yung pinaka- ❖ Certainty - Price of the thing sold
object ng contract is must be certain; otherwise, the sale is
yung “hope” or void by reason of the absence of
“chance” ng buyer.
meeting of minds between the parties
Ex: Lotto tickets ➢ Price is considered certain
when:
■ It is agreed upon by the
In case of doubt, ERS is presumed.
parties
■ It is in reference to
● Future or potential thing may be the
another thing certain
object of the contract of sale.
(Pwedeng i-reference
yung value niya sa
● The sale of an expected thing (emptio rei
ibang bagay; Ex. Yung
sperati), i.e., offspring of a breeder horse,
bag na to is the same
fruits to be harvested, is valid.
price kung bumili ka ng
10 sack of rice sa
● The sale of a mere hope or expectancy
Pampang Market)
(emptio spei), i.e., sale of a lottery ticket, is
■ The determination
subject to the condition that the thing may
thereof is left to the
come into existence because the sale of a
judgment or specified
vain hope or expectancy is void.
person or persons (Third
persons)
Sale of a gain hope or expectancy. Selling of
■ If it is the price which the
lottery ticket that was already drawn.
object would have on a
definite day ()
PRICE

❖ Failure to pay the consideration vs.

As to the Cause or Consideration
lack of consideration
► Insofar as the seller is concerned, the
cause or consideration is the price certain FAILURE TO PAY LACK OF
in money or its equivalent. THE CONSIDERATION
CONSIDERATION
► On the part of the buyer, the cause is the Hindi nakabayad; Walang contract of
transfer of ownership and delivery of the May perfected na sale (lack of one of the
object of sale. contract of sale pero requisites)
di lang nakabayad.
► The price must be certain but even if the
amount has not been agreed upon, the REMEDY: Demand
the payment or
price is still certain:
cancel the contract

1. If it be certain in reference to
another thing certain; ❖ Gross Inadequacy of Price vs.
2. If the determination of the price is Simulated Price
left to the judgment of a third person or
persons; and
 Discrepancy of at least or more 30% of the
GROSS INADEQUACY SIMULATED PRICE
OF PRICE real value is tax fraud.
If the parties really intended the donation, it
Insufficient yung price Neither party has the will change the nature of the contract. Will
na ibinigay ni seller intention that the pay for donor tax.
compared sa price will be paid.
actual/real price nung May nakalagay na
bagay price pero di naman
OPTION MONEY vs. EARNEST MONEY
binayaran/wala
Ex: Binenta ni seller namang napag-
yung parcel of land usapan or intention OPTION MONEY EARNEST MONEY
niya na worth P2M for na babayaran.
P250k lang. Binibigay para mag- Part of Purchase
hold sa promise to Price
GENERAL RULE: Ex: Binebenta ng buy or sell a
Walang effect sa parents sa anak nila determinate thing
validity ng contract of to avoid over a certain period
sale as long as validly estate/donors tax of time; Wala pa
agreed upon ng contract of Sale
parties.
GENERAL RULE: Separate and distinct Serves as proof of the
EXCEPTIONS: Void ang contract of sa purchase price; Di perfection of the
1. If consent is sale. pwedeng kunin ang contract; May
vitiated net ng purchase contract of sale na
2. If the parties price and option
intended a EXCEPTION: money
Donation or 1. If it can be
some other shown to be a Hindi laging Also called “Arras”
act/contract donation or monetary; pwedeng (something of value)
(intention ng another bagay to show that the
parties ay contract buyer was really in
donation kaya (kapag may earnest and given to
mababa proof na it the seller to bind the
talaga was intended bargain
ibinenta; di na to enter other
EFFECT
siya contract of contract or
sale but a valid donation siya)
contract of Hindi pwedeng mag-
donation) withdraw yung nag
3. If the price is so offer hangga’t di pa
low as to be nag-eexpire yung
“Shocking to time na binigay niya
the Conscience”
(kapag hindi
OPTION MONEY EARNEST MONEY
mutually
agreed upon
ng parties or Given for the exercise Given to show the
kapag walang of the option period buyer’s interest in
minention na the contract of sale
donation siya)
4. If in the event of
resale, a better Given before Given after the
price can be
perfection of the sale contract has been
obtained.
perfected

► Gross inadequacy of the price (lesion) will

not affect the validity of the contract of sale Separate and distinct Part of the purchase
as long as it has been validly agreed upon by from the purchase price
the buyer and the seller.

Examples:
BIR- assessed value
Don’t lower from Market or fair value
1. B and his wife, C, went to the open house of
the new condominium project of XYZ agreement; when seller
Development Corporation inside the Clark points to the property
Green City. The spouses are interested in without need of actually
buying the corner 3-unit with a good view of delivering (literal na
Mount Pinatubo. They gave a non-refundable pagturo using fingers)
reservation fee in the amount of P20,000.00 ■ Tradicion Brevi Manu -
and to decide within two weeks on whether the buyer, being already
or not they will buy the subject in possession of the thing
condominium unit. sold due to some other
cause, merely remains in
2. In the same example in No. 1, B and C possession after the sale
signed a Deed of Conditional Sale with XYZ is effected, but now in
Development Corporation and gave a down concept of owner (naka’y
payment in the amount of P500,000.00. buyer na yung thing
sold pero nung
DELIVERY nagkaron ng contract of
❖ The thing shall be understood as sale, siya parin yung
delivered, when it is placed in the owner; ex. Lessee to
control and possession of the vendee owner)
■ Constitutum
The buyer should be the owner at the time of Possessorium - the seller
the deliver, otherwise the seller will be liable to remains in possession of
any damages to buyer. the property in a different
capacity (kabaliktaran ni
● The seller must be the owner of the thing brevi manu; ex. Owner
sold because sale requires the transfer of to lessee)
ownership to the buyer. This requirement ❖ QUASI-TRADITIO - delivery of rights,
must be present, not at the time of the credits or incorporeal property, made
perfection of the contract of sale but, (intangibles):
at the time of delivery. ➢ When sale is made through a
public instrument
KINDS OF DELIVERY ➢ Placing titles of ownership in
❖ ACTUAL or REAL - thing sold is placed the hands of the buyer
under the physical control and ➢ Allowing buyer to make use of
possession of buyer/agent (binigay rights
physically) ❖ TRADITIONAL BY LEGAL
❖ CONSTRUCTIVE or LEGAL - does not FORMALITIES - Execution of a public
confer physical possession of the thing, instrument is equivalent to delivery.
but by construction of law, is But to be effective, it is necessary that
equivalent to acts of delivery (hindi the seller have such control over the
physically) thing sold that, at the moment of sale,
➢ REQUISITES: its material delivery could have been
■ The seller must have made (kapag ang contract of sale is
control over the thing through public instrument,
■ The buyer must be put considered na as delivered)
under control ➢ GENERAL RULE: There is
■ There must be intention presumption of delivery
to deliver the thing for ➢ EXCEPTIONS:
purposes of ownership ■ Contrary stipulation (nag-
➢ KINDS: agree na di pa delivery
■ Traditio Simbolica - yon)
delivery of certain ■ When at the time of
symbols representing the execution, subject matter
thing (ex. Susi sa bahay) was not subject to the
■ Traditio Longa Manu - control of seller (hindi pa
Delivery of thing by mere
 si seller an owner ng
property na binebenta);
■ Seller has no capacity to
deliver at time of
execution,
■ Such capacity should
subsist for a reasonable
time after execution of
instrument
RECTO LAW
❖ Remedies of vendor in sale of
personal property payable in
installments
➢ Specific performance - elect
fulfillment upon the vendee’s
failure to pay (singilin si vendee
na bayaran yung installment);
■ General Rule: If availed of,
the unpaid seller cannot
anymore choose other
remedies
■ Exception: If after
choosing, it has become
impossible, rescission
may be pursued
➢ Rescission - cancel the sale; if
the vendee shall have failed to
pay two or more installments;
Deemed chosen when:
■ Notice of rescission is
sent
■ Takes possession of
subject matter of sale
■ Files action for rescission
➢ Foreclosure - foreclose the
chattel mortgage (chattel
mortgage is a security
contract wherein the vendee
uses a personal property as
security for his obligation and
registered to chattel
mortgage registrar); if one has
been constituted, if the vendee
shall have failed to pay 2 or
more installments
MACEDA LAW
❖ Sale of immovables on installment
including residential condominium
apartments but excluding industrial
lots, commercial buildings and sales to
tenants under agrarian laws
❖ Only covers sale or financing of real
estate
❖ Rights granted to buyer:
➢ If installment paid is less than 2
years:
■ Grace period is not less
than 60 days from due
date
■ Cancellation if failure to
pay within 60 days grace
■ 30 days notice of
cancellation by a notarial
act before final
cancellation
Perfection of contract of sale
• Article 1475, Civil Code – The 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.
• A sold his piano to B, who immediately
paid the price. Because the piano was
at the repair shop at the time the
contract was perfected, no delivery
was made. Before delivery could be
made, C, a creditor of A, who has filed a
suit against him, attached the piano.
• Questions: What right has B over the
piano? May B oppose the attachment
levied by C?
Delivery is important. Without the delivery, the
buyer will be left nothing. B doesn’t have the
right. B should have the right to refund or
reclaim plus damages.
• Article 1164, Civil Code – The creditor
has a right to the fruits of the thing
from the time the obligation to deliver
it arises. However, he shall acquire no
real right over it until the same has
been delivered to him.
• First sentence – personal right to
demand delivery of the specific thing
• Second sentence – real right, after
delivery of the thing which is the
object of the contract of sale
Natural fruits – fruits and binhi, kittens and puppy
Industrial fruit – rent
Delivery amounts to acquisition of the real rights.
Real right – enforceable against the real worlds
 • X enters the restaurant of Y and ask
the waiter to bring him a dozen fresh
oysters in their shell. After eating, he
notices an almost perfect pearl in one
of the shells. He is about to take it
when the restaurant owner claims the
pearl. To whom does the pearl belong?

It belongs to X. After the delivery of the thing which

is the oyster containing the pearl, He had the real
world.

• Article 1166, Civil Code – The obligation

to give a determinate thing includes
that of delivering all its accessions and
accessories, even though they may not
have been mentioned.
• Accession is anything attached to the
principal thing either naturally or
artificially.
• Accessory is anything that is
necessary for the perfection, use and
preservation of a thing

Accessory – Key to a car,

Accession – Built in cabinent of a house

Article 1479, Civil Code – A promise to buy

and sell a determinate thing for a price
certain is reciprocally demandable.
An accepted unilateral promise to buy
or to sell a determinate thing for a price
certain is binding upon the promissor if the
promise is supported by a consideration
distinct from the price.
Example:

A offered to sell his house and lot to B

who was interested in buying the same for
P200,000. In his letter to B, A stated that he
was giving B a period of one month within
which to raise the amount and that, as soon
as B is ready, they will sign the deed of sale.
One week before the expiration of the
one-month period, A went to B and told him
that he is no longer willing to sell the
property unless the price is increased to
P250,000.
May B compel A to accept the
P200,000 first offered and execute the deed
of sale?

No. because there is no option money.