LAW ON SALES
 Possible – not necessarily nag eexist at the
NEGOTIATION STAGE
Option – right but not the obligation to buy/sell
 Option contract – a separate contract (w/
the presence of COC); supported by a
consideration other than the price – option
premium.
o w/ in a certain period and may binigay
na price
o Once na hindi sinunod ni seller or
binawi sa period na pinagusapan –
breach of contract.
o Once exercise – option contract is
extinguishing then magiging contract
of sale.
 Earnest money – part of the purchase price
(considered as downpayment).
Right of first refusal – a privilege given to the
holder (lessee) to refuse first; sa’yo muna as a
lessee i-ooffer bago ipagbenta sa iba.
 Once exercised – saka palang paguusapan
ang price (wala pang sale).
 Not a contract by itself – unless included sa
contract of lease
 Once violated – nagiging recissible.
 What will be offered to third party – is the
same of what has been offered to you.
Contract to sell – full payment is considered as
condition.
 Once the condition is fulfilled – you are bound
to enter to a contract of sale.
 Wala pang COS – kapag na fulfilled saka
palang mageexecute ng COS.
 Full payment – is a positive condition in order
to have consumatioon. (FULL PAYMENT
HAS TO HAPPEN PARA MA-TRIGGER ANG
COS)
 A positive condition is an uncertain event
that triggers a duty to perform a promised
action.
Conditional contract of sale
 Meanwhile here, there is already a perfected
contract of sale.
 Full payment – is a negative condition; if not
fulfilled it’ll give rise to remedy; if hindi
nakapagbayad nagkakaroon ng remedy.
PERFECTION
Contract of sale is already EXISTING.
C – consent
 Meeting of the minds
 An offer that is complete is met by an
acceptance that is absolute.
 Offer is considered complete – if there is
object/subject matter and price/consideration.
O – object
OBJECT
 Must be possible, licit, and determinable.
time of perfection – it can be future goods or
to be acquired in the future or even subject to
a condition.
o YOU CAN SELL SOMETHING AS
LONG AS IT HAS POTENTIAL
EXISTENCE.
o Imposible / vain hope – contract of
sale is VOID – due to lack of subject
matter.
 Licit – not against the law, morals, good
customs, public policy, and public order.
 Determinable – something that is cable of
being segregated.
C – consideration/price
 It has to be real – if simulated COS is VOID.
 Valuable – contract of sale is onerous not
gratuitous (if gratuitous – void as COS but
coud be something else)
 Certain/ascertainable – may reference to
something else as long as ascertainable.
 Manner/terms of payment is clear – if not set
ang manner/terms – tantamount to VOID
COS.
Absolute acceptance:
 Once present na ang COC – accept
absolutely; meaning you do not change
anything or any of the terms – otherwise it is
a counter offer.
 COUNTER OFFER YEALDS NO
ACCEPTANCE.
Consensual – perfected by mere consent; doesn’t
require any formalities.
GR: Perfected by mere consent; doesn’t required
certain formalities.
Exc: it requires formalities for the ff:
 For enforceability
 If it falls under statute of fraud (require to be
in writing)
o Authority of an agent must be in
writing
CONSUMATION
Once sale is perfected – obligation of both parties
rises. This is the time where the parties are expected
to perform their obligation.
Who can be a buyer/seller?
GR: Anyone w/ the capacity to enter into a contract.
Exc:
1. Minors (exc for necessities); otherwise
voidable
2. Sale between spouses
a. Unless there is a complete separation
of property.
3. Fiduciary relationship – relationship at at most
trust
 a. Guardian and ward
b. Principal and agent
c. Judges and cases under litigation
d. Attorney and client
e. Government and government property
Deterioration, fruits, improvement
GR: Res perit domino; OWNER bears the lost.
 Before delivery, and before perfection:
SELLER
 At perfection: SELLER (the seller hasn’t
deliver/fulfill obligation)
o If lost; not VOID but extinguish/
inefficious
 After perfection; before delivery – SELLER
o EXC: buyer’s fault
o Fortuitous event
 After delivery – BUYER
o ART. 1504 – deliver through carrier;
ownership is retained by the seller
FOR SECURITY (security of
payment).
o In cases that ownership is retained
only for security purposes – buyer
bears the loss.
Obligation of the seller
1. Delivery (ownership and possession)
a. Actual
b. Constructive – delivery isn’t actually made
i. Execution of a public instrument –
there is notarial
acknowledgement; must have not
contrary stipulation. The buyer
must be placed in control.
ii. Constitutum possesorium – an
agreement where someone
transfers possession of something
to another person, but still keeps
control over it
iii. Traditio brevi manu – giving
something to someone who
already has it. This is called
constructive delivery.
iv. Tradition longa manu – longhand;
when seller points the object
v. Quasi – tradition - a situation
where someone gains the right to
use something without following
the usual legal process.(e.g.,
endorsement of certificate of
shares of stock)
vi. Carriers – not directly given to
buyer
vii. Document or title – giving the
document/title as proof of
ownership. Also serve as receipt.
(if nasold ang goods pwedeng ang
ibigay nalang ay certain document
of title). WHOEVER IS THE
HOLDER OF DOCUMENT/TITLE
IS THE OWNER OF GOODS.
GR: You cannot give what you do not owned.
 If you sold something that you do not
currently own/posses – valid; provided that at
the time of the delivery you owned the goods/
you already have the possession.
EXC:
 Trust
 Co-ownership
 Estoppel
 Chain of title (1505, 1506)
 1506 – voidable title sold to INNOCENT third
party – VALID.
 DOT – goods are stolen / DOT are stolen
SELLER’S WARRANTY – goes into performance of
the seller.
 Express (ART.1546)
o Affirmation of fact / promise – to induce
the buyer; it must influence the decision of
buyer. (not a mere dealer’s talk)
 Implied (art 1542) – goods has fitness and
quality; sample must be the same.
o Warranty against eviction – there must
always be FINAL JUDGEMENT. You
were evicted from the immovable property
that is sold tom you.
 Seller must be given the chance to
defend.
o Non apparent servitude (real property)
 E.g., Right of way
 It must be non-apparent/ not
expressed/included in a title.
 PRESCRIPTIVE PERIOD – 1 YR
o Hidden defects – defect is not apparent
 Withdrawal/rescission
 Reduction of price
WARRANTY – SALE OF GOODS
 Goods has fitness and quality
 Sample is the same as that of purchased
otherwise – breach of warranty.
Double sales
Personal property – must always have good faith
 Possessor
 Oldest title
Real property
 Registration
 Possessor
 Oldest title
Remedy:
 Accept – reduction of price/extinguishment of
price or DAMAGES
 REFUSE TO RECIVE W/ DAMAGES
 Rescind
Remedy of unpaid seller (ART.1525)
 Right of retention – pwedeng hindi ibigay/diliver
sa buyer until you secure the payment
 Stoppage in transit
 Special right of resale (1532)
 Special right to rescind (1534)
Obligation of the buyer
1. To accept
 a. Buyer has the obligation to accept unless
ther is JUSTIFIABLE REASON not to
(e.g., defect)
b. Or sale on trial or satisfaction – ibibigay
muna sa buyer for approval until buyer’s
satisfaction; if buyer isn’t satisfied he can
return.
i. Note that there is no transfer of
ownership unless the buyer
express/implied such satisfaction.
ii. Express – buyer express his/her
satisfaction directly to the seller.
iii. Implied – indirectly confirms his
satisfaction (e.g., can be indicated
by the lapse/passage of time).
c. Sale on return – once buyer acquire the
goods there is a transfer of ownership.
i. Buyer has two option – to pay or
return the goods
ii. If returned – meaning he is
returning the ownership to the
seller.
2. To pay
RECTO LAW
 Sales of movable property on installment; lease
w/ option to buy.
 Installment sales – one downpayment; two or
more payments
Remedies:
 Specific performance (at least one default)
 Rescission (at least two default); can be
subject to forfeiture
 Foreclosure of chattel mortgage (at least two
default)
o Chattel mortgage – collateral
o You cannot recover the deficiency
o The same object/item of the sale ang
naka collateral.
MACEDA LAW
 Residential property
 Protects buyer or real estate/residential property
in installment.
 2 yrs – reckoning point
 Less than 2 yrs of installment payments – no
refund (but there is grace period of 60 days)
 Atleast 2 yrs of payment – allowed na ang refund
(atleast 50%)
o Anticipatory breach – suspension of
payment if the buyere anticipates the
breach
o Recission
Installment sale is cancelled:
 Notarial act of recission
 Cash surrender value
If the seller fails to submit the ff you can still
reinstate.
PD 957
 Subdivision
 Once hindi nagcomply – full refund.
EXTIGUISHMENT OF SALE
 Applicable ang ART. 1231
 Redemption – right of redemption
o Conventional – contractual/stipulated;
pacto de retro (sale w/ right of
redemption). There is a period wherein
you can buy the property back; if there is
pacto de retro SALE IS NOT YET
EXTIGUISH. Unless the ff has took place:
 Right if redemption is exercise
 If you allow the period of
redemption to last
 If co-owner – hindi mareredeem
ng fully. The only portion you can
redeem is your share. However if
the item is essentially indivisible
the GR doesn’t apply. Instead the
share – can be redeemed fully.
 Lapse of period – if stipulated; it
cannot go over 10 yrs.
 If period not stipulated – 4 yrs
 Equitable mortgage (ART. 1602)
– a loan wherein you mortgage the
property. The money you received
is not a selling price but a – loan to
buyer w/ collateral (in a sense
yung property na binenta).
 In equitable mortage – in a
sense you are not exercising the
right of redemption but rather you
are paying the loan
o legal -- no stipulation; instances where
law provide right of redemption.
 Co-owner/co-heirs (in order to
reduce the co-ownership). W. in
30 days after notifying the co-
owners (must be written)
 Adjacent owners
 Urban
o Redemption
o preemption
 Rural – not exceeding one
hectares
o There is only a right
of redemption if the
grantee already
owns a RURAL
LAND.
 CO-OWNERS ARE PREFFERED
OVER ADJCENT OWNERS.
 CREDIT/RIGHT IN LITIGATION –
a creditor sold a receivable; the
debtor can redeem and once
redeem debt is extinguish.
GR: There is a right of redemption
EXC: sold to:
1. Co-owner / co-heir
2. Creditor of creditor
3. Possessor of the property