Basic Sales Law

SALES LAW
by:
ATTY. RHANDELL ALVIN B. MATULOY
A.B., LL.B,CPV, PIArb, REB, REA. REC
09178493738
STAGES OF A CONTRACT
PARTS OF A CONTRACT
1. TITLE
2. PARTY/IES
3. BODY
a. Object
b. Consideration (price)
c. Other terms and conditions, if any
d. Signature
FORMALITIES
Written
Notarized (Public Document)
Registration
STAGE 1: NEGOTIATION
TWO WAYS OF NEGOTIATING
1. DIRECT NEGOTIATION
2. HIRING A LICENSED
REAL ESTATE BROKER
OR SALESPERSON
(AGENCY)
FORM OF CONTRACTS
CONTRACTS THAT MUST BE IN
WRITING
GENERAL RULE: Contracts
shall be obligatory, in whatever
form they may have been
entered into, provided all the
essential requisites for their
validity are present.
EXCEPTIONS:
When the law requires that a contract
be in some form in order that it may
be valid
be in some form in order that it may
be enforceable
be in some form for mere convenience
FOR VALIDITY
CONTRACT WHICH MUST APPEAR IN
WRITING TO BE VALID
-IN A SALE OF A PIECE OF LAND OR

ANY INTEREST THEREIN THROUGH
AN AGENT (ART. 1874), THE
AUTHORITY OF THE AGENT MUST BE
IN WRITING
-
FOR ENFORCEABILITY
Sales Agreements within the scope of the
Statute of Frauds (EXCLUSIVE LIST,
ART. 1402 (2) CIVIL CODE):
1. Agreement for the sale of goods, etc.
at a price not less than P500.00
2. Agreements for the sale of real
property or interest therein
NOTES:
The contracts/agreements under the
Statute of Frauds require that the same
be evidenced by some note,
memorandum or writing, subscribed by
the party charged or by his agent,
otherwise, the said contracts shall be
unenforceable.
The statute of frauds applies only to
executory contracts, not to those that
are partially or completely fulfilled.
EFFECT OF NON-COMPLIANCE
WITH THE STATUTE OF FRAUDS
THE FORM REQUIRED IS FOR
EVIDENTIARY PURPOSE ONLY. IT
SIMPLY PROVIDES A METHOD BY
WHICH THE CONTRACTS ENUMERATED
THEREIN MAY BE PROVED. HENCE IF
THE PARTIES PERMIT A CONTRACT TO
BE PROVED, WTHOUT ANY OBJECTION,
IT IS THEN AS BINDING AS IF THE
STATUTE HAS BEEN COMPLIED WITH.
FOR CONVENIENCE OF THE
PARTIES
The following must appear in a public document:
Acts and contracts which have for their object the
creation, transmission, modification or
extinguishment of real rights over immovable
property; sales of real property or of an interest
therein a governed by Articles 1403, No. 2, and 1405;
All other contracts where the amount involved
exceeds five hundred pesos must appear in
writing, even a private one. But sales of goods,
chattels or things in action are governed by
Articles, 1403, No. 2 and 1405. (Art. 1358. CC)
RA 8792 (E- COMMERCE ACT)
provides that the formal requirements
to make contracts effective as against
third persons and to establish the
existence of a contract are deemed
complied with provided that the
electronic document is unaltered and
can be authenticated as to be usable for
future reference.
FACSIMILE TRANMISSION NOT AN
ELECTRONIC DOCUMENT
We, therefore, conclude that the terms
"electronic data message" and "electronic
document," as defined under the Electronic
Commerce Act of 2000, do not include a
facsimile transmission. Accordingly, a facsimile
transmission cannot be considered as electronic
evidence. It is not the functional equivalent of
an original under the Best Evidence Rule and
is not admissible as electronic evidence . (MCC
INDUSTRIAL SALES CORPORATION, vs.
SSANGYONG CORPORATION)
REFORMATION OF INSTRUMENTS
Requisites:
meeting of the minds to the contract
true intention is not expressed in the
instrument by reason of mistake,
accident, relative simulation, fraud, or
inequitable conduct
clear and convincing proof of mistake,
accident, relative simulation, fraud, or
inequitable conduct
Instances when there can be no
reformation:
Simple unconditional donations inter vivos;
Wills;
When the agreement is void;

NOTE:
When one of the parties has brought an action
to enforce the instrument, no subsequent
reformation can be asked.
DEFECTIVE CONTRACTS
VOID VOIDABLE RESCISSIBLE UNENFORCEABLE
Defect is Defect is Defect is Defect is caused

caused caused by caused by by lack of form,
by lack vice of injury/ authority, or
of consent damage capacity of both
essential either to parties not
elements one of the cured by
or parties of prescription
illegality
Intellectual Property of Atty. Rhandell Alvin
to
B. Matuloy
a 3rd
19
person
TITLE OF THE CONTRACT
“ CONTRACT OF SALE”
“CONTRACT OF LEASE”
“DEED OF REAL ESTATE MORTGAGE”
“DEED OF DONATION”
ANIMUS: THE INTENTION
Art. 1370. If the terms of a contract are
clear and leave no doubt upon the
intention of the contracting parties, the
literal meaning of its stipulations shall
control.
If the words appear to be contrary to
the evident intention of the parties, the
latter shall prevail over the former.
PEOPLE'S INDUSTRIAL AND COMMERCIAL
CORPORATION vs COURT OF APPEALS and MAR-ICK
INVESTMENT CORPORATION
In addition, the title of a contract

does not necessarily determine its
true nature. Hence, the fact that
the document under discussion is
entitled "Exclusive Option to
Purchase" is not controlling
where the text thereof shows that
it is a contract to sell.
Art. 1371. In order to judge the
intention of the contracting
parties, their contemporaneous
and subsequent acts shall be
principally considered. (1282)
NOMINATE CONTRACTS
Contracts named by the law

SALE
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. (Art. 1456, NCC).

25 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

BARTER –personal property
EXCHANGE- real property
contract whereby one of the parties binds himself
to give one thing in consideration of the other's
promise to give another thing.
NOTE: The only point difference between
contract of sale and barter (exchage) is in the
element which is present in sale but not in barter,
namely: price certain in money or its equivalent


DATION IN PAYMENT
or DACION EN PAGO
Delivery and transmission of
ownership of a thing by the debtor to
the creditor as an accepted equivalent
of the performance of the obligation.

SALES CONTRACTS

SALES CONTRACTS

SALES CONTRACTS
Conditional Sale Contract to Sell

SALES CONTRACTS

SALES CONTRACTS

PACTUM RESERVATI DOMINII
Also known as contractual reservation of title

a stipulation, usually in sales by installment,
whereby, despite delivery of the property sold,
ownership remains with the seller until full
payment of the price is made.
33 EXCEL
PARTIES TO A CONTRACT
CITIZENSHIP
CAPACITY TO BUY OR SELL REAL
PROPERTIES
As a rule, all persons, natural or juridical, who are

authorized by the Constitution to own lands (Art. XIV)
and by the New Civil Code to obligate (Art. 1469), may
buy or sell real estate.
Only Filipino citizens or corporation at least sixty (60%)
per centum of the capital of which is owned by Filipino
citizens can acquire land in the Philippines.

NATURAL PHILIPPINE CITIZENS
Citizens of the Philippines at the time of the adoption of the

1987 Constitution (1987 Constitution)
Those whose fathers or mothers are citizens of the Philippines
(1987 Constitution)
Those born before January 17, 1973, of Filipino mothers, who
elect Philippine citizenship upon reaching the age of majority;
(1987 Constitution)
Those who are naturalized in accordance with law pursuant to
Commonwealth Act No. 473 or the Revised Naturalization Law
(1987 Constitution)
Those who acquired dual citizenship (R.A. 9225, Citizenship
Retention and Reacquisition Act)
- the law declares that natural-born citizens of the Philippines who
become citizens of another country shall be deemed not to have
lost their Philippine citizenship.
- RA 9225 does not apply to dual citizens, i.e., those who have both
Philippine as well as foreign citizenship not acquired through
naturalization
- Re-acquired or retained by taking an oath of allegiance


Those who acquired derivative citizenship (R.A.
9225)
Citizens of the Philippines who marry aliens but
have not renounced their Philippine citizenship.
(1987 Constitution)

Natural-born citizens – those who from birth do not have to
perform any act to acquire or perfect their Philippine citizenship
Derivative citizens – the unmarried child, whether legitimate or
illegitimate or adopted, below eighteen (18) years of age, of
those who re-acquire Philippine citizenship pursuant to RA
9225.
NOTE: Filipino citizen, who acquires citizenship of another
country, can retain ownership of land acquired by him prior to
his change of citizenship.


JURIDICAL PHILIPPINE CITIZENS (R.A.
7042 as amended by RA 8179 or the Foreign
Investments Act)
Domestic Partnerships or associations are citizens of the

Philippines if they are wholly owned by citizens of the
Philippines
Corporations at least 60% of the capital stock is owned and
held by citizens of the Philippines.

Corporations organized and registered abroad, 100% of the
capital stock is wholly owned by Filipinos.
Corporations and their non-Filipino stockholders own
stocks in a Securities and Exchange Commission registered
enterprise, at least 60% of the capital of each of the both
corporations are owned by citizens of the Philippines.

EXCEPTION: INSTANCES WHEN
FOREIGNERS MAY PURCHASE REAL
PROPERTY (PRIVATE LANDS)
1. natural born citizen of the Philippines who has lost his who
has lost his citizenship subject to limitations provided by law:
For residential purpose - 1,000 square meters of urban land
or one (1) hectare of rural land (BP 185)
For business or other purpose - 5,000 square meters of urban land or three
hectares of rural land. "Business or other purpose" refers to the use of the land
primarily, directly and actually in the conduct of business or commercial
activities in the broad areas of agriculture, industry and services, including the
lease of land, but excluding the buying or selling thereof."

2. through hereditary succession particularly intestate succession
3. foreign sovereign for purposes of creation and maintenance of
its diplomatic mission
4. foreign condominium unit owners and members of
condominium corporation owning not more than 40% interest
5. foreign condominium unit owners in a condominium
corporation who are holders of Special Resident Retirees Visa
under the Philippine Retirement Authority are allowed to more
than 40% interest or up to100% interest in a condominium
project or townhouse.

LIMIT IN OWNERSHIP

LEGAL AGE
INCAPABLE OF GIVING
CONSENT TO A CONTRACT
(legal incapacity)
minors ( below 18 )
insane unless acted in lucid interval
deaf mute who can’t read or write
persons specially disqualified: civil interdiction
in state of drunkenness
in state of hypnotic spelL
NOTE: Curable by CONFIRMATION
UNENFORCEABLE
Both parties incapable of giving consent -2 minor or 2
insane persons
Note: Curable by ACKNOWLEDGEMENT

STATUS
Persons who cannot acquire by purchase because of
fiduciary relationship
GUARDIAN – the property of the person or
persons who may be under his guardianship
AGENTS – the property whose administration
or sale may have been entrusted to them,
unless the consent of the principal has been
given
EXECUTORS and ADMINISTRATORS – the
property of the estate under administration
STATUS OF CONTRACTS ENTERED BY THESE
TRUSTED PERSONS- VOIDABLE
Persons who cannot acquire by purchase because of
fiduciary relationship
 PUBLIC OFFICERS and EMPLOYEES – the property of the State or of any
subdivision thereof, or of any government owned or controlled corporation
or institution, the administration of which has been entrusted to them; this
provision shall apply to judges and government experts who, in any manner
whatsoever take part in the sale
 JUSTICES, JUDGES, PROSECUTING ATTORNEYS, CLERKS OF SUPERIOR AND
INFERIOR COURTS, AND OTHER OFFICERS and EMPLOYEES CONNECTED with
the administration of justice – the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory
they exercise their respective functions
STATUS OF CONTRACTS EXECUTED BY THESE PUBLIC OFFICIALS - VOID
 ANY OTHERS disqualified by law.

CAPACITY TO BUY OR SELL REAL
PROPERTIES

MARITAL CONSENT IN DEED OF SALE
Marital consent is required –

when the property relations between the
spouses is one of absolute community; or
when the property relations between the
spouses is one of conjugal partnership and the
property involved was acquired by onerous
title during the marriage at the expense of the
common fund.
Effect of NO CONSENT
(Art. 96, Art. 124, FC)
If one spouse acts without the written consent of the other
or without court authority, the disposition or
encumbrance shall be VOID.
Period to file questioning transaction by a spouse:
- Imprescriptible

MARRIAGE CONTRACT
special contract of permanent union
between a man and a woman entered
into in accordance with law for the
establishment of conjugal and family
life. Its nature, consequences and
incidents are fixed by law and cannot
be the subject of stipulation.
rearranged from San Beda Law Memory Aid
DONATION BY REASON OF
MARRIAGE
“ DONATION PROPTER
NUPTIAS”
Requisites:
* made before celebration of
marriage
* in consideration of marriage
MARRIAGE SETTLEMENT
* made before celebration of marriage
* in writing (even modifications)
* signed by the parties
* should not prejudice third persons unless registered in the civil

registry
* to fix terms and conditions of their property relations
additional signatories
- 18-21: parents
- civil interdictees & disabled: guardian
SYSTEM OF ABSOLUTE COMMUNITY
The property regime of the

spouses in the absence of a
marriage settlement or when
the marriage is void. This is so
because it is more in keeping
with Filipino culture.
COMMUNITY PROPERTY
GENERAL RULE:
- shall consist of all property owned by the
spouses at the time of the marriage or acquired
thereafter.
EXCEPTIONS:
1. property acquired before the marriage by
either spouse who has legitimate descendants by
a former marriage
2. property for personal and exclusive use except
jewelry
COMMUNITY PROPERTY
3. property acquired during the
marriage by gratuitous title, except
when the donor, testator or grantor
expressly provides otherwise
NOTE: No waiver of rights allowed
during the marriage except in case of
judicial separation of property. The
waiver must be in a public instrument.

CONJUGAL PARTNERSHIP OF
GAINS
It is that formed by a husband and wife

whereby they place in a common fund the
fruits of their separate property, and the
income from their work or industry, the same
to be divided between them equally (as a
general rule) upon the dissolution of the
marriage or the partnership.

Conjugal Partnership Property
1.obtained from labor, industry, work or
profession
2. acquired by chance
3.acquired during the marriage with conjugal
funds
4.fruits of the conjugal property
5.acquired through occupation
6.net fruits of their exclusive property
7.share of either spouse in hidden treasure
Exclusive Property Of Each
Spouse:
1.that which is brought to the marriage as his/her

own;
1.acquired during the marriage by gratuitous title;
2.acquired by right of redemption, barter or

exchange with property belonging to either spouse;
3.purchased with exclusive money of either spouse

Rules In Cases Of Improvement
Of Exclusive Property
Reverse Accession – if the cost of the
improvement and the plus value is more than the
value of the principal property at the time of the
improvement, the property becomes conjugal
Accession – if the cost of the improvement of the

plus value is equal to or less than the value of the
principal property at the time of the improvement,
the entire property becomes the exclusive property
of the spouse.
KINDS OF SEPARATE
PROPERTY
PARAPHERNAL –
EXLUSIVE PROPERTY OF
THE WIFE
CAPITAL –
EXCLUSIVE PROPERTY OF
THE HUSBAND
NOTE
Property bought on installments paid partly from
exclusive funds of the spouses and partly form
conjugal funds:
• If full ownership was vested before the

marriage – it shall belong to the buyer-spouse
•If full ownership was vested during the

marriage
- it shall belong to the conjugal
partnership
Grounds For Termination Of
Absolute Community and
Conjugal Partnership
1.decree of legal separation
2.annulment or declaration of nullity of

marriage
3. death of either spouses
4. judicial separation of property

LEGAL SEPARATION
1. The spouses shall be entitled to live
separately from each other but the marriage
bond is not severed
2. The absolute community or conjugal
partnership shall be dissolved and liquidated.
1. The offending spouse shall be disqualified

from inheriting from the innocent spouse by
intestate succession and the provisions in
favor of the offending spouse made in the
will of the innocent spouse shall be revoked
by operation of law.
EFFECTS OF LEGAL
SEPARATION
4. The innocent spouse may revoke the

donations made by him/her in favor of
the offending spouse, as well as the
designation of the latter as beneficiary
in any insurance policy, even if the
designation be irrevocable.

EFFECTS OF RECONCILIATION
The final decree of legal separation

shall be set aside, but the
separation of property and any
forfeiture of share of the guilty
spouse already effected shall
subsist, unless the spouses agree to
revive their former property
UNIONS WITHOUT MARRIAGE
ARTICLE 147 ARTICLE 148
1. Without legal 1. With legal impediment

impediment to marry to marry
2. Adulterous
2. Void marriages due to relationships
absence of formal 3. Bigamous or
requisite polygamous marriages
4. Incestuous void
marriages under Art. 37
5. Void marriages by
reason of public policy
PROPERTY RELATIONS UNDER
147 AND 148
147 148
Property Belongs to such Belongs to

Acquired party provided such party
Exclusively there is proof that
he/she acquired it
by Either by exclusive
Party funds
Property Governed by Owned by them in
the rules on co- common in
Acquired by proportion to their
Both Parties ownership
respective
contributions
147 AND 148
147 148
Presumption of joint No presumption of
acquisition and equal joint acquisition.
sharing as to When there is
property acquired evidence of joint
while they live acquisition but none
together. as to the extent of
actual contribution,
there is a
rearranged from San Beda Law Memory Aid presumption of equal
147 AND 148
When only one of the If one of the parties is validly
parties is in good faith, the married to another, his/her
share in the co-ownership shall
share of the party in bad accrue to the absolute
faith in the co-ownership community or conjugal
shall be forfeited: partnership existing in such valid
a. in favor of their common marriage. If the party who acted
children; or in bad faith is not validly married
to another or if both parties are
b. in default of or in caseof in bad faith, such share shall be
waiver by any or all of the forfeited in the manner provided
common children or their in the last paragraph of Article
descendants, in favor of 147.
the innocent party.

CAPACITY TO BUY OR SELL REAL ESTATE
PROPERTIES

SPOUSES ARE JOINT
ADMINISTRATORS
 Significantly, the Family Code has introduced some changes
particularly on the aspect of the administration of the conjugal
partnership. The new law provides that the administration of
the conjugal partnership is now a joint undertaking of the
husband and the wife. In the event that one spouse is
incapacitated or otherwise unable to participate in the
administration of the conjugal partnership, the other spouse
may assume sole powers of administration. However, the
power of administration does not include the power to dispose
or encumber property belonging to the conjugal partnership.
In all instances, the present law specifically requires the
written consent of the other spouse, or authority of the court
for the disposition or encumbrance of conjugal partnership
property without which, the disposition or encumbrance shall
be void. (ABALOS VS. DR. MACATANGAY, JR.)
SPOUSE’S RIGHT TO ASSAIL SALE
WITHOUT MARITAL CONSENT
IMPRESCRIPTIBLE
 Consequently, when Tarciano sold the conjugal lot to the Fuentes
spouses on January 11, 1989, the law that governed the disposal of that
lot was already the Family Code. In contrast to Article 173 of the Civil
Code, Article 124 of the Family Code does not provide a period within
which the wife who gave no consent may assail her husband’s sale of
the real property. It simply provides that without the other spouse’s
written consent or a court order allowing the sale, the same would be
void. Article 124 thus provides:
Art. 124. x x x In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the conjugal
properties, the other spouse may assume sole powers of administration.
These powers do not include the powers of disposition or encumbrance
which must have the authority of the court or the written consent of the
other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. x x
 Under the provisions of the Civil Code governing contracts, a void or
inexistent contract has no force and effect from the very beginning.
And this rule applies to contracts that are declared void by positive
provision of law, as in the case of a sale of conjugal property without
the other spouse’s written consent. A void contract is equivalent to
nothing and is absolutely wanting in civil effects. It cannot be validated
either by ratification or prescription. But, although a void contract has
no legal effects even if no action is taken to set it aside, when any of its
terms have been performed, an action to declare its inexistence is
necessary to allow restitution of what has been given under it. This
action, according to Article 1410 of the Civil Code does not prescribe.
Thus:Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.Here, the Rocas filed an
action against the Fuentes spouses in 1997 for annulment of sale and
reconveyance of the real property that Tarciano sold without their
mother’s (his wife’s) written consent. The passage of time did not
erode the right to bring such an action. (FUENTES VS. ROCA)
 Under the provisions of the Civil Code governing contracts, a void or
inexistent contract has no force and effect from the very beginning. And this
rule applies to contracts that are declared void by positive provision of law, 20
as in the case of a sale of conjugal property without the other spouse’s written
consent. A void contract is equivalent to nothing and is absolutely wanting in
civil effects. It cannot be validated either by ratification or prescription. 21But,
although a void contract has no legal effects even if no action is taken to set it
aside, when any of its terms have been performed, an action to declare its
inexistence is necessary to allow restitution of what has been given under it. 22
This action, according to Article 1410 of the Civil Code does not prescribe.
Thus:Art. 1410. The action or defense for the declaration of the inexistence of
a contract does not prescribe.Here, the Rocas filed an action against the
Fuentes spouses in 1997 for annulment of sale and reconveyance of the real
property that Tarciano sold without their mother’s (his wife’s) written
consent. The passage of time did not erode the right to bring such an action.
GENERAL RULE: Disposition or encumbrance
of community or conjugal property is made
without marital consent is VOID applying 124
of the Family Code which took effect on 03
August 1988.

EXCEPTION: When the sale is made before 3
August 1988, the applicable law is Article 173
of the Civil Code and thus VOIDABLE and may
be subject to annulment within 10 years from
the transaction or ratification.
Rule when Real Property is
registered “Juan Dela Cruz
married to Maria Clara”
In case the marriage is governed by regime of
Conjugal Partnership of Gains: The real
property shall be the exclusive property of the
spouse, the status of being married being
merely descriptive. However, when there is
proof that the real property was acquired
during marriage the presumption in favor of
conjugal partnership shall apply.

In case the marriage is governed by regime of
Absolute Community of Property: The real
property shall be presumed part of the aboslute
community of property. However, if there is proof
that a property is either capital (husband’s) or
paraphernal (wife’s), it will be treated accordingly.
The following are separate property of a spouse:
a. acquired during the marriage by gratuitous title
b. property for personal and exclusive use of
either spouse
c. property of spouse by former marriage who has
legitimate descendants
AUTHORIZATION
TWO KINDS OF AUTHORITY
 POWER OF ATTORNEY
BOARD RESOLUTION
(SPA)
An instrument in writing by which one person, as

principal, appoints another as his agent and confers
upon him the authority to perform certain specified
acts or kinds of acts on behalf of the principal.
NOTE: It need not be notarized; except where it
is executed in a foreign country, must be certified
in accordance with the Rules of Court.
Instances when death of principal does
not terminate agency
If the agency has been constituted in the common

interest of the principal and the agent
If it has been constituted in the interest of a third
person who has accepted the stipulation in his favor
Agency coupled with an interest
An agency wherein the agent has acquired some interest

of his own in the execution of the authority granted to
him, in addition to his mere interest in the contract of
employment with the resulting gains.
The agency becomes merely a part of another obligation
or agreement, or an incidental element thereof so it
cannot be unilaterally revoked.
NOTE: However, in Coleongco vs. Claparals (10 SCRA
577), the SC made a sweeping statement that coupled with
an interest or not, the authority (agency) can certainly be
revoked for a just cause.
AUTHORITY TO SELL REAL
PROPERTIES
 Article 1874 of the Civil Code explicitly requires a written
authority before an agent can sell an immovable property. Based on
a review of the records, there is absolutely no proof of
respondent’s written authority to sell the lot to petitioners. In fact,
during the pre-trial conference, petitioners admitted that at the time
of the negotiation for the sale of the lot, petitioners were of the
belief that respondent was the owner of lot. Petitioners only knew
that Revelen was the owner of the lot during the hearing of this
case. Consequently, the sale of the lot by respondent who did not
have a written authority from Revelen is void. A void contract
produces no effect either against or in favor of anyone and cannot
be ratified. A special power of attorney is also necessary to enter
into any contract by which the ownership of an immovable is
transmitted or acquired for a valuable consideration. Without an
authority in writing, respondent cannot validly sell the lot to
petitioners. Hence, any “ sale” in favor of the petitioners is void.
(SPOUSES ALCANTARA VS. NIDO)
SIGNING IN CAPACITY AS HEIRS
SUCCESSION
A mode of acquisition by virtue of which
the property, rights and obligations to
the extent of the value of the
inheritance, of a person are transmitted
through his death to another or others
either by his will or by operation of law.

ELEMENTS OF SUCCESSION
I. DECEDENT (subjective element)
II. SUCCESSORS (subjective element)
1. Heirs - those who are called to the whole or to an aliquot

portion of the inheritance either by will or by operation of
law
Voluntary – those instituted by the testator in his will, to
succeed to the inheritance or the portion thereof of
which the testator can freely dispose.

Compulsory or Forced – those who succeed by force of
law to some portion of the inheritance, in an amount
predetermined by law, known as the legitime.
ELEMENTS OF SUCCESSION
Legal or Intestate – those who succeed to the estate of
the decedent who dies without a valid will, or to the
portion of such estate not disposed of by will.
2. Devisees or legatees - persons to whom gifts of real or

personal property are respectively given by virtue of a will
DEATH OF THE DECEDENT (casual element)
INHERITANCE (objective element);

KINDS OF SUCCESSION
1.Testamentary or Testacy (by will);
1.Legal or intestacy (by operation of law

based on the decedent’s presumed will);
2.Mixed (Partly Testamentary and Legal);

and
1.Partition inter vivos (to a certain degree).

TESTAMENTARY
SUCCESSION
WILL - an act whereby a person is
permitted, with the formalities prescribed by
law, to control to a certain degree the
disposition of his estate to take effect after
his death
Kinds of Wills:
Notarial or ordinary – notarized and with special

formalities prescribed by law
Holographic – written, dated, and signed by hand

SPECIAL FORMALITIES OF A
NOTARIAL WILL
SUBSCRIPTION refers to the manual act of testator and
also of his instrumental witnesses of affixing their signature
to the instrument.
ATTESTATION consists in the act of witnesses of

witnessing the execution of the will in order to see and take
note mentally that such will has been executed in
accordance with requirements prescribed by law.
MARGINAL SIGNATURES – affixed by the testator or the

person requested by him to write his name and the
instrumental witnesses of the will on each and every page
thereof, except the last, on the left margin;
SPECIAL FORMALITIES OF A
NOTARIAL WILL
PAGE NUMBERINGS – Written correlatively
in letters placed on the upper part of each
page;
ACKNOWLEDGMENT – Done before a

notary public by the testator and the
instrumental witnesses.


HOLOGRAPHIC WILL
entirely written by the hand of the

testator;
entirely dated by the hand of the

testator; and
entirely signed by the hand of the

testator.
TERMINOLOGIES
PROBATE - A special proceeding mandatorily required for
the purpose of establishing the validity of a will.
PRETERITION - Omission in the testator’s will of one,

some, or all of the compulsory heirs in the direct line,
whether living at the time of the execution of the will or born
after the death of the testator.
LEGITIME - That part of the testator’s property which he

cannot dispose of because the law has reserved it for
certain heirs who are, therefore, called compulsory heirs.

COMPULSORY HEIRS
If the testator is a LEGITIMATE If the testator is an ILLEGITIMATE
person person
1.Legitimate children and 1.Legitimate children and

descendants (LCD) descendants (LCD)
2.In default of the foregoing, 2.Illegitimate children and

legitimate parents and ascendants descendants (ICD)
(LPA)
3.Surviving spouse (SS) 3.In default of the foregoing,

illegitimate parents only (IP)
4.Illegitimate children and 4.Surviving spouse (SS)

descendants (ICD)
KINDS OF COMPULSORY HEIRS
Primary – those who have precedence
over and exclude other CH. E.g. LCD.
Secondary – those who succeed only

in the absence of the primary CH. E.g.
LPA or IP.
Concurring – those who succeed

together with the primary or secondary
CH. E.g. ICD and SS.
LEGITIME AND FREE PORTION
One half of the estate is always reserved
for the primary or secondary compulsory
heirs. The other half is what is termed under
the NCC as the “free portion” from which
the legitime of the concurring compulsory
heirs are taken. This “free portion” is
different from the “disposable free portio
n” over which the testator has testamentary
control. The “disposable free portion” is that
which remains after the legitime has been
covered.
ABSOLUTE
COMMUNITY/CONJUGAL
PARTNERSHIP

LEGAL OR INTESTATE
SUCCESSION
That which is effected by operation of law in the
absence or default of a will.
•Affidavit of Self-adjudication –
the document
executed when the deceased registered owner
is survived as a sole heir, the estate of the
former maybe transferred to a latter with the
execution of a document is known as; otherwise
EXTRAJUDICIAL OR JUDICIAL SETTLEMENT
OF ESTATE
SEC 4 RULE 74 OF THE RULES
OF COURT
. . . SUCH BOND AND SUCH REAL ESTATE SHALL
REMAIN CHARGED WITH A LIABILITY TO CREDITORS,
HEIRS, OR OTHER PERSONS FOR THE FULL PERIOD
OF TWO YEARS AFTER SUCH DISTRIBUTION,
NOTWITHSTANDING ANY TRANSFERS OF REAL
ESTATE THAT MAY HAVE BEEN MADE. . .
NOTE:
The two year lien upon the real property distributed by
extrjudicial or summary settlement shall be annotated on
the title issued to the distributees and after 2 years will be
cancelled by the Register of Deeds without need of court
order
ORDER OF INTESTATE
SUCCESSION
REGULAR ORDER OF SUCCESSION
(Decedent is a legitimate person):
1.Legitimate children or descendants (LCD)
2.Legitimate parents or ascendants (LPA)
3.Illegitimate children or descendants (ICD)
4.Surviving spouse (SS)
5.Brothers and sisters, nephews and nieces
(BS/NN)
6.Other collateral relatives within the 5th
degree (C5)
7.State (ESCHEAT)

ORDER OF INTESTATE OF
SUCCESSION
IRREGULAR ORDER OF SUCCESSION
(Decedent is an illegitimate person):
1.Legitimate children or descendants (LCD)

2.Illegitimate children or descendants (ICD)
3.Illegitimate parents (IP)
4.Surviving spouse (SS)
5.Brothers and sisters, nephews and nieces
(BS/NN)
6.State (ESCHEAT)
REVILLA LAW
R.A. No. 9255
An Act Allowing Illegitimate Children to use the surname of
their Father, amending for the purpose Article 176 of EO
No. 209, otherwise known as the "FAMILY CODE OF THE
PHILIPPINES":
Approved February 24, 2004

Illegitimate children may use the surname of their father
if:
their filiation has been expressly recognized by the father
through the record of birth appearing in the civil register, or
when an admission in a public document or private
handwritten instrument is made by the father
BODY OF THE CONTRACT
CIVIL CODE PROVISIONS ON

INTERPRETATION OF CONTRACTS
Art. 1376.The usage or custom of the place
shall be borne in mind in the interpretation
of the ambiguities of a contract, and shall
fill the omission of stipulations which are
ordinarily established. (1287)
Art. 1377. The interpretation of
obscure words or stipulations in
a contract shall not favor the
party who caused the obscurity.
(1288)
Art. 1378. When it is absolutely impossible to settle
doubts by the rules established in the preceding
articles, and the doubts refer to incidental
circumstances of a gratuitous contract, the least
transmission of rights and interests shall prevail. If the
contract is onerous, the doubt shall be settled in favor
of the greatest reciprocity of interests.
If the doubts are cast upon the principal object of the
contract in such a way that it cannot be known what
may have been the intention or will of the parties, the
contract shall be null and void. (1289)
Thus, in the early case of Olino v. Medina, 1909, Olino
filed a complaint against Medina to recover a parcel of
Riceland which he alleged to have mortgaged for
P175.00 and which Medina refused to return on the
ground that the latter allegedly bought the property. In
deciding the conflict of allegations between the parties,
this Court, through Justice Florentino Flores, considered
the transaction over the property as a loan, reasoning that
"such contract involves a smaller transmission of rights
and interests, and the debtor does not surrender all rights
to his property but simply confers upon the creditor the
right to collect what is owing from the value of the ting
given as security, there existing between the parties a
greater reciprocity of rights and obligations."
BODY OF SALES CONTRACT
RULE IN CASE AREA IS DIFFERENT FROM THAT
STATED IN THE CONTRACT (Art. 1539, 1540 and 1542, NCC)
If the sale is for a lump sum (A Cuerpo Cierto), there shall
be no increase or decrease of the price, although there be
a greater or lesser area than that stated in the contract.
If the sale be made with a statement of its area at the rate
of a certain price per square meter, the VENDEE may:
a) If the area is bigger, choose to:
- accept the area included in the contract and reject the
excess; or
- accept the whole area, but must pay for the excess
area at the contract rate.
RULE IN CASE AREA IS DIFFERENT FROM THAT
STATED IN THE CONTRACT (Art. 1539, 1540 and
1542, NCC)
b) If the area is smaller, choose to:

1. have a proportional reduction of the
price; or
2. rescind contract, provided:
- that the lack in area be not less than 10% of that in
the contract; or
- that he would not have bought the land had he
known of its smaller area.
REQUIREMENT AS WHAT MAY BE
ACQUIRED OR POSSESSED
NATURAL PERSONS – under the Constitution, the area

of alienable lands of the public domain that may be
acquired is limited to not more than twelve (12) hectares
thereof, by purchase, homestead, or grant. They may only
lease alienable lands of the public domain of not more than
five hundred hectares. Once, the public domain is converted
to private land, then the limitation does not apply.

PRIVATE JURIDICAL PERSONS – under the Constitution,
private corporations and associations may not hold alienable
lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than
twenty-five years, and not to exceed one thousand hectares
in area. Once, the public domain is converted to private land,
then the limitation does not apply.


PRICE OR CONSIDERATION
The sum stipulated as the equivalent of

the thing sold and also every incident
taken into consideration for the fixing of
the price, put to the debit of the vendee
and agreed to by him.


REQUISITES
Certainty or ascertainable at the time of

perfection
Real, not fictitious
In some cases, must not be grossly inferior
to the value of the thing sold.
Paid in money or its equivalent

CONSIDERATION
Earnest money (ARRAS) Option money

1. Title passes to the buyer upon 1. Ownership is reserved to the
delivery of the thing sold seller and is not to pass until full
payment
2. In case of non-payment, an 2. In case of non-payment, there
action for specific performance or can be action for specific
for rescission can be filed by the performance
injured party
3. Money given as a distinct
3. Part of the purchase price consideration for an option contract

CONSIDERATION
Earnest money Option money
4. When given, the buyer is 4. The would-be buyer is not

bound to pay the balance required to buy
5. Given when there is 5. Applies to a sale not yet

already a sale perfected

OBLIGATIONS OF THE VENDOR
1. The vendor is bound to transfer the ownership of, and deliver,
as well as warrant, the thing which is the object of the sale
(Art. 1495, NCC).
2. Unless a contrary intention appears, the sale carries (Art.
1547, NCC):
a. an implied warranty on the part of the seller that he has a
right to sell the thing at the time when the ownership is to pass,
and that the buyer shall, from that time, have and enjoy the legal
and peaceful possession of the property; and


OBLIGATIONS OF THE VENDOR
b. an implied warranty that the thing shall

be free from any hidden faults or defects,
or any charge or encumbrance not
declared or unknown to the buyer

OBLIGATIONS OF THE VENDEE
The Vendee is bound to accept delivery of the

property sold at the time and place stipulated
in the contract; and
The Vendee is bound to pay the price of the
property sold at the time and place stipulated
in the contract.

EARNEST MONEY IN CONTRACT
TO SELL
 It is true that Article 1482 of the Civil Code provides that “ [W]henever
earnest money is given in a contract of sale, it shall be considered as
part of the price and proof of the perfection of the contract.” However,
this article speaks of earnest money given in a contract of sale. In this
case, the earnest money was given in a contract to sell. The Receipt
evidencing the contract to sell stipulates that the earnest money is a
forfeitable deposit, to be forfeited if the sale is not consummated
should Chua fail to pay the balance of the purchase price. The
earnest money forms part of the consideration only if the sale is
consummated upon full payment of the purchase price. If there is a
contract of sale, Valdes-Choy should have the right to compel Chua
to pay the balance of the purchase price. Chua, however, has the
right to walk away from the transaction, with no obligation to pay the
balance, although he will forfeit the earnest money. Clearly, there is
no contract of sale. The earnest money was given in a contract to
sell, and thus Article 1482, which speaks of a contract of sale, is not
applicable. (TOMAS K. CHUA vs. COURT OF APPEALS)
Right of First Refusal
It is a right of first priority all things and

conditions being equal; there should be
identity of the terms and conditions to
be offered to the optionee and all other
prospective buyers, with optionee to
enjoy the right of first priority.
PURCHASE OF THE LEASED PROPERTY
GENERAL RULE: Purchaser of thing leased can terminate

lease.
EXCEPTIONS:
lease is recorded in Registry of Property
there is stipulation in the contract of sale that purchaser
shall respect the lease
purchaser knows the existence of the lease
sale is fictitious
sale is made with right of repurchase

WHEN CONTRACT SHALL BE PRESUMED
TO BE AN "EQUITABLE MORTGAGE”

When the price of sale with right to repurchase is usually
inadequate.
When the vendor remains in possession as lessee or
otherwise.
When, upon or after the expiration of the right to
repurchase, another instrument extending the period of
redemption or granting a new period is executed.
When the purchaser retains for himself to pay a part of the
purchase price.
WHEN CONTRACT SHALL BE PRESUMED TO BE
AN "EQUITABLE MORTGAGE”
When the vendor binds himself to pay the realty taxes on the
property sold.
In any other case where it may be fairly inferred that the real
intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation.
When there is doubt as to whether the contract is a contract
of sale with right to repurchase (pacto de retro) or an
equitable mortgage (Art. 1602, 1603).


PERFECTION OF SALE
Sale is a CONSENSUAL CONTRACT

It is perfected at the moment there is meeting of
the minds upon a determinate thing (object), and
a certain price (consideration), even if neither is
delivered.
In case of default:
A choice between rescission and fulfillment,
with damages in either case
NOTARIZATION
NATURE AND EFFECT OF
NOTARIZATION
The notarization of a document carries considerable
legal effect. Notarization of a private document converts
such document into a public one, and renders it
admissible in court without further proof of its
authenticity.40 Thus, notarization is not an empty routine;
to the contrary, it engages public interest in a substantial
degree and the protection of that interest requires
preventing those who are not qualified or authorized to
act as notaries public from imposing upon the public and
the courts and administrative offices generally.
(TIGNO VS. SPOUSES AQUINO)
 True enough, from a civil law perspective, the absence of
notarization of the Deed of Sale would not necessarily
invalidate the transaction evidenced therein. Article 1358 of the
Civil Code requires that the form of a contract that transmits or
extinguishes real rights over immovable property should be in a
public document, yet it is also an accepted rule that the failure
to observe the proper form does not render the transaction
invalid. Thus, it has been uniformly held that the form required
in Article 1358 is not essential to the validity or enforceability
of the transaction, but required merely for convenience.We
have even affirmed that a sale of real property though not
consigned in a public instrument or formal writing, is
nevertheless valid and binding among the parties, for the time-
honored rule is that even a verbal contract of sale or real estate
produces legal effects between the parties. (TIGNO VS.
SPOUSES AQUINO)
CONVENIENCE VS
CONSEQENCES
 Court in Dela Cruz-Sillano v. Pangan:
The Court is aware of the practice of not a few lawyers
commissioned as notary public to authenticate documents
without requiring the physical presence of affiants. However, the
adverse consequences of this practice far outweigh whatever
convenience is afforded to the absent affiants. Doing away with
the essential requirement of physical presence of the affiant does
not take into account the likelihood that the documents may be
spurious or that the affiants may not be who they purport to be.
A notary public should not notarize a document unless the
persons who signed the same are the very same persons who
executed and personally appeared before him to attest to the
contents and truth of what are stated therein. The purpose of this
requirement is to enable the notary public to verify the
genuineness of the signature of the acknowledging party and to
ascertain that the document is the party’s free act and deed.
ACKNOWLEDGMENT
An acknowledgment is the act of one who has
executed a deed in going before some competent
officer or court and declaring it to be his act or deed. It
involves an extra step undertaken whereby the signor
actually declares to the notary that the executor of a
document has attested to the notary that the same is
his/her own free act and deed.
JURAT
part of an affidavit in which the notary certifies that
before him/her, the document was subscribed and
sworn to by the executor. Ordinarily, the language of
the jurat should avow that the document was
subscribed and sworn to before the notary public.
LAST STAGE: CONSUMMATION
CONSUMMATED CONTRACT OF
SALE

R.A. No. 6552 or Maceda Law
“Realty Installment Buyer Protection Act”

transactions or contracts involving the sale OR
financing of real estate on installment payments,
including residential condominium apartments;
and
buyer defaults in payment of succeeding
installments.
Rights of the buyer:
If Buyer has paid at least two (2) years of installments

I. The buyer must pay, without additional interest, the
unpaid installments due within the total grace period
earned by him. There shall be one (1) month grace
period for every one (1) year of installment payments
made.
NOTE:
This right shall be exercised by the buyer ONLY once in
every 5 years of the life of the contract AND its extensions.

Rights of the Buyer
NOTE:
Actual cancellation can only take place after 30 days from

receipt by the buyer of the notice of cancellation OR demand
for rescission by a notarial act AND upon full payment of the
cash surrender value to the buyer (Olympia Housing vs. Panasiatic, 16
January 2003.)
NOTE:
The seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to 50% of the total
payments made. After five (5) years of installments, there shall
be an additional 5% every year but not to exceed 90% of the
total payments made
Rights of the Buyer
III. The buyer shall have the right to sell his rights or
assign the same to another person OR to reinstate the
contract by updating the account during the grace
period and before actual cancellation of the contract.
IV. The buyer shall have the right to pay in advance any
installment or the full unpaid balance of the purchase
price any time without interest and to have such full
payment of the purchase price annotated in the
certificate of title covering the property.

Rights of the Buyer:
If Buyer has paid less than 2 years of installments

1. The seller shall give the buyer a grace period of NOT
less than 60 days from the date the installment became
due. If the buyer fails to pay the installments due at the
expiration of the grace period, the seller may cancel the
contract after 30 days from receipt by the buyer of the
notice of cancellation or the demand for rescission of
contract by a notarial act.
2. Same as No. 2 and 3 above

PERTINENT PROVISIONS OF PD 957 (SUBDIVISION AND
CONDOMINIUM BUYERS’ PROTECTIVE DECREE)
ON INSTALLMENT PAYMENTS
Section 23. Non-Forfeiture of Payments. No installment

payment made by a buyer in a subdivision or condominium
project for the lot or unit he contracted to buy shall be
forfeited in favor of the owner or developer when the
buyer, after due notice to the owner or developer, desists
from further payment due to the failure of the owner or
developer to develop the subdivision or condominium
project according to the approved plans and within the
time limit for complying with the same. Such buyer may, at
his option, be reimbursed the total amount paid including
amortization interests but excluding delinquency interests,
Intellectual Property of Atty. Rhandell Alvin B. Matuloy
145
with interest thereon at the legal rate.
TENDER OF PAYMENT AND
CONSIGNATION
Tender of Payment
- Manifestation of the debtor to the creditor of his decision
to comply immediately with his obligation.
-It is the preparatory act and extrajudicial in character.
Consignation - Deposit of the object of the obligation in a
competent court in accordance with the rules prescribed by
law, after the tender of payment has been refused or
because of circumstances which render direct payment to
the creditor impossible or inadvisable.
- It is the principal act and judicial in character.
REGISTRATION
PURPOSES OF REGISTRATON OF
TRANSFER WITH THE REGISTER
OF DEEDS
TO MAKE THE INSTRUMENT EVIDENCING THE
TRANSACTION VALID AGAINST 3RD PERSON
TO GIVE PREFERENTIAL RIGHTS TO
REGISTERED OWNER
TO PREVENT FRAUD
TO MAKE IT PUBLIC RECORD AS TO WHO IS
THE OWNER OF THE PARTICULAR PROPERTY
REGISTRATION WITH RD: NOTICE
TO THE WHOLE WORLD
In this jurisdiction, we adhere to the doctrine that registration in
a public registry works as constructive notice to the whole
world. Section 51 of Act No. 496, as amended by Section 52 of
Presidential Decree No. 1529, provides:
SECTION 52. Constructive notice upon registration.—Every
conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land shall, if registered,
filed or entered in the Office of the Register of Deeds for the
province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such
registering, filing, or entering. (RUBEN C. REYES vs. TANG
SOAT ING (JOANNA TANG) and ANDO G. SY)
RULE ON WHO HAS BETTER RIGHT TO
OWNERSHIP OF PROPERTYSOLD TO TWO OR
MORE BUYERS (Art. 1544, NCC)
The buyer in good faith who first recorded sale

in the Registry of Property.
Should there be no inscription, then the buyer
in good faith who was first in possession.
Should there be neither inscription nor
possession, then the buyer in good faith who
can present the oldest title.

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SALES LAW

-IN A SALE OF A PIECE OF LAND OR

Defect is Defect is Defect is Defect is caused

In addition, the title of a contract

Contracts named by the law

By the Contract of Sale, one of the

25 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

26 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

27 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

28 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

29 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Conditional Sale Contract to Sell

30 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Conditional Sale Contract to Sell

31 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Conditional Sale Contract to Sell

32 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Also known as contractual reservation of title

As a rule, all persons, natural or juridical, who are

Citizens of the Philippines at the time of the adoption of the

38 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

39 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

40 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Domestic Partnerships or associations are citizens of the

41 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

42 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

43 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

44 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

45 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Note: Curable by ACKNOWLEDGEMENT

51 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

52 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

Marital consent is required –

54 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

* in writing (even modifications)

* signed by the parties

* should not prejudice third persons unless registered in the civil

* to fix terms and conditions of their property relations

The property regime of the

It is that formed by a husband and wife

rearranged from San Beda Law Memory Aid

1.that which is brought to the marriage as his/her

1.acquired during the marriage by gratuitous title;

2.acquired by right of redemption, barter or

3.purchased with exclusive money of either spouse

rearranged from San Beda Law Memory Aid

Accession – if the cost of the improvement of the

• If full ownership was vested before the

•If full ownership was vested during the

2.annulment or declaration of nullity of

3. death of either spouses

4. judicial separation of property

1. The offending spouse shall be disqualified

4. The innocent spouse may revoke the

The final decree of legal separation

1. Without legal 1. With legal impediment

Property Belongs to such Belongs to

rearranged from San Beda Law Memory Aid

75 Intellectual Property of Atty. Rhandell Alvin B. Matuloy

An instrument in writing by which one person, as

If the agency has been constituted in the common

An agency wherein the agent has acquired some interest