1. What are the characteristics of a contract of sale? price paid is the equivalent of the thing sold.

a. Consensual – a sale is perfected by mere

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

b. Bilateral – the seller will deliver and transfer a

determinate thing to the buyer and the latter will
pay an ascertained price or its equivalent

c. GR: Commutative – the thing sold is

considered the equivalent of the price paid and
the price paid is the equivalent of the thing sold.
XPN: Aleatory - the consideration is not
equivalent of what has been received in the
case of purchase of a lotto ticket. It the ticket
wins, the prize is much more than the price of
the ticket.

d. Principal – its existence does not depend upon

the existence and validity of another contract.

e. Onerous - the thing sold is conveyed in

consideration of the purchase price, and vice
versa.

f. Nominate – it has a specific name given by law.

2. Why is the contract of sale an onerous contract?

It is an onerous contract because it imposes a

valuable consideration as a prestation, which is ideally
a price certain in money or its equivalent.

3. Why is the contract of sale a consensual

contract?

It is a consensual contract because it is

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

4. Why is the contract of sale a bilateral reciprocal

contract?

It is a bilateral/ reciprocal contract because it

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

5. Why is the contract of sale a commutative

contract?

It is a commutative contract because a thing of

value is exchanged for equal value. The thing sold is
considered the equivalent of the price paid and the
6. Define the natural elements of a contract of sale.

They are those which are inherent in the

contract, and which in the absence of any contrary
provision, are deemed to exist in the contract.
a. Warranty against eviction
b. Warranty against hidden defects

7. What is an accidental element in a contract of

sale?

They are those which may be present or

absent depending on the stipulations of the parties.
(e.g. conditions, interest. Penalty, time, place of
payment, etc.)

8. What are the requisites of the thing which

constitutes the object of sale?

Object of Sale, requisites:

a. Things
i. Determinate or determinable
ii. Lawful
iii. Should not be impossible (e.g. must be within
the commerce of man)
b. Rights – must be transmissible
Exceptions: future inheritance,
service

9. Distinguish Rei Sperati from Emptio Spei

10. What is Emptio Rei Speratae?

This refers to the sale of a thing having a potential

existence. Its uncertainty is regard the quantity and
 quality by not with regard the existence of the thing. appointed time, Basty named the price at P500, 000.
The sale is subject to the condition that the thing Almar agreed. Is the sale perfected?
should exist, so that if it does not, there is no contract
for lack of an essential requisite.

11. Is there a distinction between a contract of

sale and a contract to sell?

Yes.

a. In a contract of sale, title passes to the buyer

upon delivery of the thing sold, whereas, in a
contract to sell, by agreement, ownership is
reserved in the vendor and is not to pass until
full payment of the price.
b. In a contract of sale, non-payment is a
negative resolutory condition, whereas in a
contract to sell, full payment is a positive
suspensive condition.
c. In a contract of sale, the seller has lost and
cannot recover ownership until and unless the
contract is resolved and rescinded, whereas, in
a contract to sell, title remains in the vendor,
and when he seeks to eject the vendee
because of noncompliance by such vendee
with the suspensive condition stipulated, he is
enforcing the contract and not resolving the
same.

12. Y acquired a booklet of 100 sweepstakes tickets

directly from PCSO. Y paid 18,000 for the booklet,
less the customary discount. What kind of contract
did Y enter into?

Y entered into a contract of purchase and sale,

notwithstanding the fact that he may be referred to as
an “agent” of the Sweepstakes Office, and the fact that
he may be entitled to an “agent’s prize” should one of
the tickets purchased win a principal prize.

The truth is that he is not really required to

resell the tickets, and even if he were to do so, still
failure on the part of his purchasers to pay will not
allow him to recover what he himself has paid to the
office.

Moreover, the delivery of the tickets to him

transferred their ownership to him; this is not true in the
case of an agency to sell. Furthermore, it has been
said that in a contract of sale, the buyer pays the price;
while in an agency to sell, the agent delivers the price.
The mere fact that a “discount” or so-called
commission has been given is immaterial. (Bar
Question, Quiroga vs Parsons Hardware, page 24
Paras)

13. Almar sold to Basty his car. It was agreed that

Basty would fix the price a week later. At the
Yes. The sale is perfected for there is already a true
meeting of the minds. (page 34. Paras, Article 1473)

14. Give the effect of failure to determine price

where the contract is executory.

Under Article 1474, where the price cannot be

determined where the contract is executory, the
contract is inefficacious.

15. Give the effect of failure to pay price, or the

non- delivery of the thing bought to the contract of
sale.

Delivery and payment in a contract of sale are so

interrelated and intertwined with each other that
without delivery of the goods, there is no
corresponding obligation to pay. The two complement
each other. It is clear that the two elements cannot be
dissociated, for the contract of purchase and sale is
essentially a bilateral contract, as it gives rise to
reciprocal obligations.

16. What is the concept of reservati domini or

contractual reservation of title?

Pactum reservati domini or contractual reservation of

title is a stipulation, usually in sales by instalment,
whereby, despite delivery of the property sold,
ownership remains with the seller until full payment of
the price is made.

17. Is the contractual reservation (reservati

domini) valid?

Yes, provided there is a stipulation to this effect. It is

based on sound policy in commercial conditional
sales and is not contrary to law, morals, good
customs, public policy and public order.

18. Distinguish the concept of pactum reservati

domini and contract to sell.

In pactum reservatii domini, it is a conditional sale

which is already a contract of sale. Whereas, in a
contract to sell, there is no contract of sale but a mere
preparatory contract.

In pactum reservati domini, there is already delivery

but ownership is retained by the seller. In a contract
to sell, there is no delivery yet hence, there is no sale.

In pactum reservatii domini, the remedy is specific

performance or rescission. While, in a contract to sell,
such remedies are not available for there is no
contract yet.
In pactum reservatii domini, payment completes the
transaction. Where, in a contract to sell, payment will
not complete the transaction.

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

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

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

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

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

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

could prove that he was the owner thereof by
pertinent document. Before the condition was
complied with, the vessel sank in a storm. Can S
demand the price?
24. Dan orally sold a parcel of land to Jerry. Is the
No. S cannot demand the price. If the object has been sale valid?
lost before perfection, the seller bears the loss. This is
because there was no contract for there was no cause Yes, the sale is valid but is unenforceable because the
or consideration. Being the owner, the seller bears the law requires that it be in writing to be enforceable.
loss and cannot demand the payment of the price. (Page 117 De Leon, Article 1356, 1403)

In this case, the condition was never fulfilled; 25. In a sale of real property, if made through an
therefore, the contract of sale was never perfected. agent, is it valid?
Therefore, S bears the loss and cannot demand the
price. (page 62 Paras, Roman vs Grimalt) A sale of real property when made through an agent is
void unless the agent’s authority is in writing.
21. Define earnest money.
Article 1874: When a sale of piece of land or any
Earnest money or “arras” is the money given to the interest therein is through an agent, the authority of
seller by the prospective buyer to show that the latter the latter shall be in writing; otherwise, the sale shall
is truly interested in buying the property, and its aim is be void.
to bind the bargain.
26. Can a vendor who chooses foreclosure of a
It is actually a partial payment of the purchase price chattel mortgage recover unpaid balances?
and is considered as proof of the perfection of the
contract. As such, it shall be deducted from the total No. Article 1484 (3) provides that when the vendor
price. exercises foreclosure of chattel mortgage as a remedy
for the vendee’s failure to pay two or more
instalments, he shall have no further action against
the purchaser to recover any unpaid balance of the
price. Any agreement to the contrary shall be void.
22. What is option money? 27. Del bought a particular automobile on
instalment plan. Del defaulted in the payment of
It is the distinct consideration in case of an option one of the instalment. Does the seller, Sal, have
contract. It does not form part of the purchase price the right to exact fulfilment of the obligation to
hence, it cannot be recovered if the buyer did not pay?
continue with the sale.
Yes. Under Article 1484 (1), in a contract of sale of
23. Distinguish earnest money and option money. personal property the price of which is payable in
instalments, the vendor may exact fulfilment of the
obligation should the vendee fail to pay even one of beds which B will order. The price of each bed is
the instalment. the invoice price with a discount of 20%. Payment
is to be made within the first 4 days of the
28. B brought a particular laptop, but defaulted in succeeding month. Is the contract of an agency to
the payment of two installments. May the seller sell?
ask for the cancellation of the sale?
No. The contract is not of an agency to sell but a
Yes. Under Article 1484 (2), in a contract of sale of contract of sale. There was an obligation on the part of
personal property the price of which is payable in S to supply the beds, and a reciprocal obligation on
instalments, the vendor may cancel the sale, should the part of B, to pay their price.
the vendee fail to pay cover two or more instalments.
An agent does not pay the price, he merely delivers it
In this case, B has defaulted to pay two instalments If he is not able to sell, he returns the goods. This is
and therefore the seller may cancel the sale. not true in the present contract, for a price was fixed
and there was a duty to pay the same regardless as to
29. B bought a car from S on instalment. It was whether or not B had sold the beds. (page 25 Paras,
agreed that the installments already paid should page 44 De Leon)
not be returned even if the sale is cancelled. Is the
stipulation valid? 34. S sold his car to B. The price to be paid is the
price X paid for the car he bought one week ago
Yes. Under Article 1486, a stipulation that the as specified in the invoice thereof. Is there price
installments or rents paid shall not be returned to the certain?
vendee or lessee even if the sale is cancelled shall be
valid insofar as the same may not be unconscionable Yes. There is a price certain based on the price paid
under the circumstances. by X for the car he bought one week ago as specified
in the invoice. Under Art. 1463, in order that the price
30. A husband sold his land to his wife. Later he may be considered certain, it shall be sufficient that it
borrowed money from C. The loan matured. When be so with reference to another thing certain.
C discovered that the husband did not have any
cash or any property, he decided to question the In this case, the price to be paid by B to S in reference
sale that had previously been made in favor of the to the price paid by X for the car he bought one week
wife. Can the creditor go after such property? ago as specified in the invoice is considered certain.
No. The creditor cannot go after such property for he 35. When is sale by auction perfected?
was not yet a creditor at the time the transaction took
place. Therefore, it cannot truthfully be said that he Under Article 1476(2), a sale by auction is perfected
had been prejudiced by the sale. It would have been when the auctioneer announces its perfection by the
different if at the time the sale was effected, he was fall of the hammer, or in other customary manner.
already a creditor. (Article 1490, page 94 Paras)
Until such announcement is made, any bidder may
31. What is the effect of Loss of Object before retract his bid, and the auctioneer may withdraw the
sale? When the object is lost before sale, there would goods from the sale unless the auction has been
be no cause or consideration, hence, the contract is announced to be without reserve.
void. (Article 1493, page 104 Paras)

32. Can service be a valid object of sale? 36. What is “puffing” or “by-bidding?”

Yes. Service can be a valid object of sale provided number of

they are not contrary to law, morals, public policy,
public order and good customs. Further, they must not
be physically impossible of performance and must be
determinate and certain as to its nature.

33. S gives to B the exclusive distributorship of

his beds. Under the contract, S will send the
Puffing or by-bidding is when people bid for the seller
but are not themselves bound. This occurs when the
seller employ others to bid for him and is valid
provided that he has notified the public that the
auction is subject to the right to bid on behalf of the
seller.

In view of the notice, there would not be any fraud,

and the transaction with the rest should be
considered as
valid. If without notice, any sale contravening the rule the same effect as a perfected contract of sale since it
may be treated by the buyer as fraudulent. (Page 48 is reciprocally demandable. (page103 De Leon)
Paras, Article 1476 (3, 4)

37. What is the status of a contract to sell

executed by an heir of real property involved in
testate proceedings entered into without the
approval of the probate court?

The contract to sell is valid but can be subject to

rescission (Objects of litigation; contract entered into
by defendant without knowledge or approval of
litigants or judicial authority)

Under Art 1630, an inheritance may be sold either with

specification of the properties to be alienated or
without enumerating the things comprising it, that is to
say, the hereditary rights only. Hereditary rights in an
estate under judicial settlement can be validly sold
without need for approval by the probate court.

38. When is a contract of sale perfected?

Under Art. 1475, a contract of sale is perfected at the

moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the
price.

From that moment, the parties may reciprocally

demand performance, subject to the provision of the
law governing the form of contracts.

39. When shall ownership of the thing sold

transfer to the vendee or buyer?

Under Art. 1477, the ownership of the thing sold shall

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

40. What is “Policitacion?”

A unilateral promise or offer to sell or to buy a thing

which is not accepted creates no juridical effect or
legal bond. Such unaccepted imperfect promise or
offer is called a policitacion.

(A policitacion is a unilateral promise or offer to sell or

to buy a thing which is not accepted. It creates no
juridical effect or legal bond.)

41. If A promised to sell his car for P50,000 to B

and
B promised to buy A’s specific car for P50,000. Is
there a perfected contract of sale?
Yes. Under Article 1479, when the promise is bilateral,
that is, one party accepts the other’s promise to buy
and the latter, the former’s promise to sell a
determinate thing for a price certain, it has practically
42. Which contracts of sale are required to be in
writing under the Statute of Frauds?

Under the Statute of Frauds, the following contracts

of sale must be in writing, otherwise, they shall be
unenforceable:

a. sale of personal property at a price not less

than P500
b. sale of real property or an interest therein
c. sale of property not to be performed within a
year from the date thereof
d. when an applicable statute requires that the
contract of sale be in a certain form

43. So that ownership is transferred, must the

vendor have the ownership at the time of the
perfection of the contract?

No. In Quijada vs. Court of Appeals:

Sale, being a consensual contract, is perfected by

mere consent, which is manifested the moment there
is a meeting of the minds as to the offer and
acceptance thereof on three elements: subject
matter, price and terms of payment of the price.
Ownership by the seller on the thing sold at the time
of perfection of the contract of sale is not an element
for its perfection. What the law requires is that the
seller has the right to transfer ownership at the time
the thing sold is delivered. Perfection per se does not
transfer ownership which occurs upon the actual or
constructive delivery of the thing sold. A perfected
contract of sale cannot be challenged on the ground
of non-ownership on the part of the seller at the time
of its perfection; hence, the sale is still valid.

The exception to the rule that the ownership by the

seller is not essential at the time of perfection would
be in the case of judicial sale.

44. Who is considered an unpaid seller?

Under Article 1525, the seller of the goods is deemed

to be an unpaid seller:

a. When the whole of the price has not been

paid or tendered;
b. When a bill of exchange or other negotiable
instrument has been received as a conditional
payment, and the condition on which it was
received has been broken by reason of the
dishonour of the instrument, the insolvency of
the buyer, or otherwise.
 inferior quality irrespective of the extent of lack of
45. What are the remedies of an unpaid seller? area or quality.

The remedies of an unpaid seller are: The vendee may also rescind the contract in case of
a. Possessory lien over the goods breach of warranty by the seller by returning or offering
b. Right of stoppage in transit after he has parted the return of the goods, and recover the price of any
with the possession of the goods and the buyer part thereof.
becomes insolvent
c. Special Right of resale 50. What are the implied warranties in a contract of
d. Special Right to rescind the sale sale?
e. Action for the price
f. Action for damages Implied warranties are those deemed included in all
contracts of sale by operation of law, such as:
46. Under what cases may the unpaid seller’s
possessory lien be exercised? a. Warranty that the seller has right to sell
b. Warranty against eviction
In possessory lien, the seller is not bound to deliver the c. Warranty against non-apparent burden or
object of the contract of sale if the buyer has not paid servitude, except when it is recorded in the
him the price. This remedy presupposes that the sale is Registry of Property.
on credit. d. Warranty against hidden defects

Under Article 1527, it is exercisable only in the following 51. Are there cases where the vendor shall not be
circumstances: liable for eviction?
a. Goods sold without stipulation as to credit
b. Goods sold on credit but term of credit has Yes. Under Article 1550, when the adverse possession
expired has been commenced before the sale but the
c. Buyer becomes insolvent prescriptive period is completed after the transfer the
vendor shall not be liable for eviction.
The seller may exercise his right of lien notwithstanding
that he is in possession of the goods as agent or bailee Further, under Article 1554, when the vendee has
for the buyer. waived the right to warranty in case of eviction with
knowledge of the risks of eviction and assumed its
47. Under what circumstances does an unpaid consequences, the vendor shall not be liable.
seller of goods lose his lien thereon?
52. When is a contract a contract of sale and when
Under Article 1529, the unpaid seller of goods loses his is it a contract for piece of work?
lien thereon:
Under Article 1467, a contract for the delivery at a
a. When he delivers the goods to a carrier or other certain price of an article which the vendor in the
bailee for the purpose of transmission to the ordinary course of his business manufactures or
buyer without reserving the ownership in the procures for the general market, whether the same is
goods or the right to the possession thereof; on hand at the or not, is a contract of sale.
b. When the buyer or his agent lawfully obtains
possession of the goods; or But, if the goods are to be manufactured especially for
c. By waiver thereof. the customer and upon his special order, and not for
49. When is the vendee entitled to rescind the sale? the general market, it is a contract for a piece of work.

Under Article 1539, in a sale of real property by unit, 53. What is the warranty against eviction?
when the entire area could not be delivered, the
vendee may rescind the sale: It is an implied warranty under Article 1547 (1) in which
the seller guarantees that he has the right to sell the
a. If the lack in area is at least 1/10 than that thing sold and to transfer ownership to the buyer who
stated or stipulated; shall not be disturbed in his legal and peaceful
b. If the deficiency in quality specified in the possession thereof.
contract exceeds 1/10 of the price agreed upon;
c. If the vendee would not have bought the 54. Under what cases is the remedy of rescission
immovable had he known of its smaller area of not available to the buyer?
Rescission is available to the buyer in case of breach Under Article 1486, a stipulation that the installments or
of warranty by the seller. This is done by returning or rents paid shall be forfeited by the vendee or lessee in
offering the return of the goods, and recovering the the event the contract is rescinded is VALID provided
price of any part thereof which has been paid. that it is not unconscionable under the circumstances.
However, rescission by the buyer is not allowed in the 58. What requisites must be present for a co-owner
following cases: to exercise the right of redemption?
a. If the buyer accepted the goods knowing of the The right of legal redemption among co-owners
breach of warranty without protest; presupposes of course, the existence of a co-
b. If he fails to notify the seller within a reasonable ownership. The following are the requisites for the right
time of his election to rescind; and to exist:
c. If he fails to return or offer to return the goods in
substantially as good condition as they were in a. There must be co-ownership of a thing;
at the time of the transfer of ownership to him. b. There must be alienation of all or of any of the
(De Leon, page 378, Article 1599) shares of the other co-owners;
c. The sale must be to a third person or stranger or
55. Define conventional redemption. non-co-owner; and
d. The sale must be before partition.
It is where the seller reserves the right to repurchase
the thing sold coupled with the obligation to return the 59. Is it essential that the thing or object of a
purchase price of the sale, expenses incurred under contract of sale be always determinate?
the contract, other legitimate payments, and necessary
and useful expenses made on the thing sold. No. The law does not require that the object of the sale
be always determinate for it is sufficient that it be at
56. In what form shall a contract of sale be entered least determinable.
into?
It is not necessary that the thing sold must be in sight
As a general rule, a contract of sale can be entered at the time the contract is entered into. It is sufficient
into in any form. Contracts shall be obligatory, in that the thing is determinable or capable of being made
whatever form they have been entered into, provided determinate without the necessity of a new or further
all the essential requisites for their validity are present. agreement between the parties.
The exceptions are: 60. What are the principal obligations of the vendor?
a. If the law requires a document or other special
form, the contracting parties may compel each a. To transfer the ownership of the determinate
other to observe that form thing sold
b. Under the statute of Frauds, the following shall b. To deliver the thing, with its accessions and
be in writing, otherwise, they are unenforceable: accessories, if any, in the condition in which
they were upon the perfection of the contract
i. sale of personal property at a price not c. To warrant against eviction and against hidden
less than P500 defects
ii. sale of real property or an interest therein d. To take care of the thing, pending delivery, with
iii. sale of property not to be performed within proper diligence,
a year from the date thereof e. To pay for the expenses of the deed of sale,
iv. when an applicable statute requires that the unless there is a stipulation to the contrary,
contract of sale be in a certain form
61. What is the effect of gross inadequacy of price?
c. Sale of large cattle which requires that the
same be recorded with the city/municipal Under Article 1470, gross inadequacy of price does not
treasurer and that a certificate of transfer be affect a contract of sale, except as it may indicate a
issued. Otherwise, the sale is not valid. defect in the consent, or that the parties really intended
a donation or some other act or contract.
57. What is the effect of the stipulation that the
installments or rents paid shall be forfeited by the 62. Define a contract of sale.
vendee or lessee in the event the contract of sale is
rescinded? Under Article 1458, a contract of sale is one whereby
one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate
thing, and the other to pay therefor a price certain in
money or its equivalent. It may be absolute or
conditional.

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

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

Under Article 1546, any affirmation of fact or any

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

64. How is the ownership of the thing transferred to

the vendee?

Under Article 1477, ownership of the thing sold shall be

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

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

65. Who are granted the right of legal redemption?

The right of legal redemption in a contract of sale are

granted to:

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

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

66. What is an equitable mortgage?

An equitable mortgage is one which lacks the proper

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

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

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

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

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