SALES

SALE Article 1464

Article 1458 Sale of Undivided Share of a Specific Mass
By the contract of sale one of the contracting parties obligates Effect of Sale:
himself to transfer the ownership of and to deliver a determinate 1. The buyer becomes co-owner of the whole mass in
thing, and the other to pay therefor a price certain money or its proportion of the share brought
equivalent. A contract of sale may be absolute or conditional. 2. If later on it was discovered that the goods are less than what
was bought, the buyer becomes the owner of the whole
Kinds of Contract of SALE
mass. The seller is bound to deliver the deficiency.
1. Absolute
2. Conditional Article 1465
Sale Subject to Resolutory Condition
Essential Elements of a Contract of SALE
Effect of Sale:
1. Consent
• When the condition is fulfilled, the obligation is extinguished
2. Object or Subject matter
• The parties shall return to each other what they have
3. Cause or Consideration
received.
Characteristics of a Contract of SALE
Article 1466
• Consensual – Perfected by mere consent
Sale vs. Agency
• Bilateral – Reciprocal obligation
Sale Agency
• Onerous – Conveyed in consideration of a price
The buyer pays for the price The agent does not pay for
• Commutative – Thing is sold for its equivalent price/value of the goods/property the price. He merely accounts
• Nominate – Special name is given to a particular transaction purchased for the proceeds of the sale
• Principal – The contract of sale can stand on its own The buyer becomes the The agent does not become
owner of the foods/property the owner of the
Natural and Accidental Elements of SALE
purchased goods/property delivered to
1. Natural Elements him for sale
Those which are deemed to exist in certain contracts, Buyer as a general rule The agent returns the
ex. Warranty cannot return the goods/property if he was not
2. Accidental Element goods/property sold able to sell the same.
Those which may be agreed upon by parties, The seller warrants the The agent does not make any
ex. Interest, penalty, terms goods/property sold warranty as long as he acts
within his authority and in
Article 1459 the name of the principal
The thing must be licit and the vendor must have a right to The seller has full freedom to The agent must follow the
transfer the ownership thereof at the time it is delivered enter into any terms or instructions of the principal
conditions on the contract of
Requisites concerning Object sale
The thing must be:
1. Determinate – It must be specific Article 1467
2. Lawful – It must not be contrary to public laws, morals, etc. Contract for a piece of work
3. Not impossible – It should be within the commerce of man Contract for a piece of work Contract of Sale
The thing transferred is one The thing transferred is one
Article 1462
not in existence and which which would have existed
Goods as Subject Matter of Contract
never would have existed but and would have been the
Kinds of Goods for the order of the party subject of sale to some other
1. Existing goods desiring to acquire it. person, even if the order had
2. Future goods not been given
The services dominate the The primary objective of the
Article 1463
contract even tough there is a contract is a sale of the
Sale of Undivided Interest in a Thing
sale of goods involved manufacture item; it is a sale
1. Sale by Sole Owner of goods even though the
To make the buyer co-owner of the thing sold. item is manufactured by
2. Sale by Co-owner labor furnished by the seller
Co-owner may sell his interest limited only up to his portion. and upon previous order of
the customer.
Article 1468 Article 1476
Sale vs. Barter RULES GOVERNING AUCTION SALE
Sale Barter 1. Sales of separate lots by auction are separate sales
A thing is given in exchange A thing is given in exchange 2. Sale perfected by the fall of the hammer
for money or its equivalent for another thing 3. Right of Seller to bid in the auction
Governed by law on sales
If consideration consists part In money and partly by thing Article 1477&1478
– look at manifest intention DELIVERY OF THING SOLD
If intention is not clear: value If intention is not clear: value General Rule:
of thing is equal or less than of thing is more than amount Ownership is transferred upon delivery of the thing sold.
amount of money – sale of money – barter
Exception:
If there is a stipulation that ownership shall not be transferred
Article 1469
until the purchaser has full paid the price.
Price Considered Certain
1. No sale if price is not certain or ascertainable Article 1479
2. Cases when price is considered certain: KINDS OF PROMISE TO BUY OR TO SELL
o The parties have fixed the price or agreed upon a 1. An accepted unilateral promise to sell in which the acceptor
definite amount elects to buy
o It can be ascertained with reference to another 2. An accepted unilateral promise to buy in which the acceptor
thing certain elects to sell
o The determination of the price is left to the 3. A bilateral promise to buy and sell reciprocally accepted in
judgment of a 3rd person which either of the parties chooses to exact fulfillment
Article 1470 OPTION
EFFECT OF GROSS INADEQUACY OF PRICE A privilege to which a person has paid a consideration which
Mere inadequacy of the price does not affect the validity of the gives him the right to buy or to sell a certain specified property
sale, except at any time within the agreed period at a fixed price.
1. When there is fraud, mistake, or undue influence
2. When it shows that the parties really intended a donation or Article 1480
some other act or contract. RISK OF LOSS
1. If the thing is lost before perfection, the seller bears the loss
Article 1471 2. If the thing is lost at the time of the perfection, the contract
EFFECT WHERE PRICE IS SIMULATED is void or inexistent
1. The act may be shown to have been in reality a donation, or 3. If the thing is lost after perfection but before delivery, the
some other act or contract risk of loss is shifted to the buyer
2. If not and neither party had any intention whatsoever that 4. If the thing is lost after delivery, the buyer bears the risk of
the amount will be paid (absolutely simulated): the sale is loss
void
3. If there is a real price but what is stated in the contract is not 1164 rights of the fruits of the thing obligation to deliver arises
the one intended to be paid (only relatively simulated): the 1165 delivery of a determinant thing
contract of sale is valid but subject to reformation (amend
Article 1481
the contract)
1. Sale of Goods by Description
Article 1474 2. Sale of Goods by Sample
EFFECT OF FAILURE TO DETERMINE PRICE 3. Sale by Description and Sample
1. In executory contract – the contract is without effect
Article 1482
2. Where delivery has been made – the buyer must pay a
EARNEST MONEY
reasonable price.
• Money given by the buyer to the seller to bind the bargain
Article 1475 • Part of the price and as proof of the perfection of the
PERFECTION OF CONTRACT OF SALE contract
Perfected at the moment there is meeting of the minds upon the
thing and price.

Effect: Parties may reciprocally demand performance

Earnest Money vs. Option Money Article 1486
Earnest Money Option Money Forfeiture of Installments or Rents Paid
It is part of the purchase price It is a given as a distinct a. The parties may stipulate that installments paid or rents
consideration for an option paid are not to be returned
contract which gives the b. Such stipulation should not be unconscionable under the
buyer a specific period within circumstances
which to purchase the thing c. The court has the power to order the return of a portion of
It is given only when there is It is given at a time when the the total amount paid in installments or rents.
already a perfected sale sale had not yet been
perfected. What had been Article 1847
perfected only is the option Expenses for Execution and Registration
contract a. Vendor has the duty to pay expenses for execution of the
When it is given, the buyer is Even if option money is paid sale and registration, unless stipulated otherwise
bound to pay the balance of by the would-be-buyer he is b. Expenses subsequent to the transfer of title shall be borne
the agreed purchase price not bound to buy the thing
by the buyer.
If the sale does not If the buyer decides not to
materialize, the earnest buy the thing, he cannot Article 1488
money paid must be recover the option money he Expropriation of Property for Public Use
returned, unless a contrary paid as consideration for the Constitutional Provision under Bill of Rights
agreement had been contract of option 1. That private property shall not be taken for public use
stipulated
without just compensation
2. That no personal shall be deprived if his/her life, liberty, or
Article 1483
property without due process of law.
FORM OF SALES
I. When Form is not important in validity of sale RA 6552 – Realty Installment Buyer Act
a. Sale being consensual, may be oral or written, The law involves the sale of immovables on installment
perfected by mere consent as to price and subject 1. Coverage: Residential Real Estate
matter 2. Exclude:
b. If particular form is required under the statute of a. Industrial lots
frauds – valid and binding between parties but not b. Commercial buildings and lots
binding to 3rd persons c. Sale to tenants under agrarian laws
II. When form is important for validity
Rights Granted to Buyers of Realty by Installment
a. Power to sell a piece of land granted to an agent
1. Buyer paid at least 2 years installment
b. Sale of land or real property
a. Pay without interest the unpaid installments due
III. When form is important for enforceability (STATUTE
within grace period of 1 month for every year of
OF FRAUDS Article 1403 (2))
installment payment. Grace period to be exercised
a. A sale agreement which by items is not to be
one every 5 years.
performed within a year from the making thereof;
b. When no payment – cancelled; buyer entitled to
b. An agreement for the sale of goods, chattels or
50% of what he has paid + 5% for every year but not
things in action, at a price not less than P500.00;
exceeding 90% of payments made
c. A sale of real property or of an interest therein.
2. Buyer paid less than 2 years installment
Article 1484 a. Grace period is not less than 60 days from due date
SALE of PERSONAL PROPERTY in INSTALLMENTS b. Cancellation if failure too pay w/in 60 days grace
Remedies of Vendor: c. 30 days notice before final cancellation
1. Elect fulfillment upon the vendee’s failure to pay
PD 957 Subdivision and Condominium Buyer’s Protective
2. Cancel the sale, if the vendee failed to pay two or more
Decree
installments
Aim to protect the buyers of condominium projects and
3. Foreclose the chattel mortgage, if any, if the vendee failed to
subdivision developments against misrepresentations and
pay two or more installments
fraudulent activities of developers, sellers and operators

Sec 9 – Revocation of Registration Certificate and License to Sell

Buyer may file a verified valid complaint based on satisfactory
evidences against the property developers or operators, of the
following grounds:
• Is insolvent; or
• Has violated any of the provisions of this decree or any
applicable rule or regulation of the authority, or any
undertaking of his/its performance bond; or
• Has been or is engaged or is about to engage in fraudulent
transactions; or
• Has made any misrepresentation in any prospectus,
brochure, circular or other literature about the subdivision
project or condominium project that has been distributed to
prospective buyers; or
• Is or bad business repute; or
• Does not conduct his business in accordance with law or
sound business principles
• Project in excess of 50 years, obsolete and uneconomical to
repair-owners holding over 50% interest in common areas
opposed to repair
• Project is condemned or expropriated, no longer viable –
owners of 70% interest in common areas are opposed to the
continuation after condemnation or expropriation of a
material part of project
• That conditions for such partition are set forth in the
Declaration of Restrictions duly registered.

Section 23 – Delayed Turn-over

The buyer can do two (2) things:
1. Desist from further payment after due notice to the owner or
developer of the project and clearance from the Board
(HLURB) as mandate din the 2009 revised implementing
rules and regulations for the decree.
2. Demand to be reimbursed the total amount paid including
amortization interests but excluding delinquency interests,
with interest thereon at the legal rate.

RA 4726 – The Condominium Act

• Provides the rights of the owner and the extent of his
influence in the property where he has purchased the unit.
• It serves to protect the rights of buyers to ensure that they
are not being misled by property owners or developers.
• It allows foreigner to purchase condos in the Philippines,
given that they do not own the land on which is built.

- The ultimate consideration is your purpose for buying one

- It offers a kind of flexibility that can’t find in owning a house
or land

Rights of Condominium Owner

• Absolute ownership of his unit
• Co-ownership of land and common areas
• Exclusive easement of the space of his unit
• Non-exclusive easement to common areas for ingress or
egress
• Right to sell, lease, or mortgage his unit
• Right to repair, paint, decorate the interior surface of his unit
• Right to participate and vote in condominium corporation
meetings

Right to Partition by Sale of Entire Project

Requirements:
• Three (3) years after damage or destruction, no rebuilding or
repair has been made to a material part rendered unfit for
use
• More than ½ of project rendered untenantable – owners of
more than 30% interest in the common areas are opposed
to repair