TITLE VI SALES

Chapter 1
Nature and Form of the Contract
Article 1458
Definition of sale: Sale is a contract where one
party (seller or vendor) obligates himself to
transfer the ownership of and to deliver a
determinate thing, while the other party (buyer
or vendee) obligates himself to pay for said
thing a price certain in money or its equivalent

2.
3.
4.
5.

6.

Q: is the execution of waiver of rights equivalent to a

sale?
A: it depends. In the following cases, the issue is the
price and not the heirship.

Case: Acap vs. CA

-

In this case, execution of waiver of rights is not

equivalent to sale because there was no price
paid.

Elements of the Contract of Sale

1.

Case: Caoibes vs. Pantoja

-

In this case, execution of renunciation and

transfer of rights and interest is equivalent to
sale for there was a consideration. The heirs
renounced, transferred their rights to a
particular property in favour of a sister who paid
for the loans obtained by one of the heirs. In
consideration for Pantoja paying the loan
obtained by one of the heirs who executed the
renunciation, they renounced whatever right
they had to the property.

2.

3.

Case: Toyota Shaw, Inc. vs. CA

Q: is the document denominated Agreement between
Mr. Sosa and Popong Bernardo of Toyota Shaw, Inc.
binding as a contract of sale? A: In this case, there was
no binding contract of sale as there was no stipulation in
the contract on the mode of payment of the purchase
price. If the mode of payment is not stipulated, it is as if
there is no agreed price. To determine if a contract of
sale exists when you see a document you need to
determine whether the three essential elements are
present: Consent, Object, and Consideration.
Q: What is the Effect of offer and counter offer?
A:

Case: Manila Metal Container Corporation vs. PNB

-

Since during the 10 year period there was a

continuous counter offer, there is no perfected
contract of sale
Note that the offer must be definite and
acceptance must be absolute. Until the final
offer or counter-offer is accepted absolutely
without conditions is the point where the
contract is perfected.

Essential Characteristics of the Contract of Sale

1.

Consensual contract is perfected by mere

consent (as distinguished from real where the
contract is one perfected by delivery)

Bilateral Reciprocal both parties are bound by

obligations dependent upon each other
Onerous to acquire the rights, valuable
consideration must be given
Nominate Code refers to it by a special
designation (sale)
Principal for the contract of sale to validly
exist, there is no necessity for it to depend upon
the existence of another valid contract
Commutative because the values exchanged
are almost equivalent to each other; fulfillment
is predetermined in advance upon perfection of
contract
- by way of exception, some contracts of
sale are aleatory: what one receives
may in time be greater or
smaller than what he has given; ex.
Sweepstakes ticket

Essential Elements absence of one would

result to an invalid sale
a.
Consent or Meeting of the minds
consent to transfer ownership in
exchange for the price
b. Determinate subject matter - object
c.
Price certain in money or its equivalent
- cause or consideration
Natural Elements inherent in the contract, and
which in the absence of any contrary provision,
are deemed to exist in the contract
Accidental Elements not demandable unless
specifically stipulated; those which may be
present or absent in the stipulation

Distinctions from
1.

2.

3.
4.

Barter - in that the latters consideration consists

in the giving of another thing rather than a price
in money (See 1468, 1638); exchange of goods
- if what was given was both an object and
money: if money is bigger from the
value of the thing in
exchange it is a sale
Dation in Payment there is a pre-existing
obligation to pay a sum of money which is
thereby extinguished (look at pg. 9 of paras)
Lease there is no transfer of ownership
Donation contract is gratuitous and requires
special formalities; unilateral

Promise to Sell: when binding

Article 1479
A promise to buy and sell a determinate thing for a
price certain is reciprocally demandable. (good as
perfected sale)
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding
upon the promissory if the promise is supported
by a consideration distinct from the price.

1
SALES[

Bilateral
promise to sell a determinate thing coupled with a
correlative promise to buy at a specified price; it is
binding as an executory
agreement

Case: Bible Baptist Church vs. CA

Unilateral
given only by one by one party
can be accepted but you dont promise to buy
binding only once option money is paid
(consideration distinct from the purchase price)

Note: if the money paid forms part of the purchase price

you would have already entered into a perfected
contract and you would call the consideration as earnest
money.
Q: how is option defined?
A: Case: Eulogio vs. Apeles
an option is a contract by which the owner of the
property agrees with another person that the latter
shall have the right to buy the formers property at a
fixed price within a certain time (Note: if option is
granted but there was no stipulation on the period,
the court will fix the term)
An option is not of itself a purchase, but merely
secures the privilege to buy. It is not a sale of
property but a sale of the right to purchase
sometimes called an UNACCEPTED OFFER
What is accepted is the promise of the seller to sell
and not the offer because otherwise, if it is the offer
which is accepted, there is a perfected contract of
sale.
The test to determine if it is an option is the test of
SEPARATENESS
In the present case, there was no option contract
Q: What constitutes a CONSIDERATION in an option
contract?
A: Case:Villamor vs. CA
Consideration is the why of the contract. It is the
essential reason why parties enter into a contract
Note that consideration need not be payment of
money. It can be anything for as long as it has
value. The Court considered as value as sufficient
consideration for that option between the Reyes
spouses and the Villamor spouses the discrepancy in
the purchase price. The Court said whether you say
it is P18/sq m or P25/sq m, the difference between
the actual market value and the purchase price is
considered as the consideration for the option.
There was a valid option contract entered into
between the two spouses but the Villamor spouses
were not allowed to exercise the option because
they exercised it long after they executed the deed
which was after 10 years. The Court said that under
the law actions on written documents prescribe in 10
years and the Villamor spouses opted to exercise the
option long after the 10 year period has lapsed. Plus
the Court may have also considered the fact that the
value of the property appreciate rapidly.

In this case, there was no distinct consideration for

the option as the payment of the P84,000 which
Bible 098Baptist paid the bank for the loan obtained
by the Villanuevas was actually applied for the first
year of the lease.
If there is no distinct consideration the offeror can
withdraw the option anytime even if the offeree has
accepted the option
In this case it was sited that if the consideration is
not monetary, it should still be onerous in nature
and should be specified as such

Q: In a valid option contract, what is the remedy of the

optionee if the optioner refuses to honor the option
money?
A: You can demand for specific performance. You can
compel him to sell the property to you

Right of First Refusal

-

There is no price stipulation even if there is a

determinate thing
The undertaking of the offeror is merely to sell to
you the property first before he sells it to another
person (if I sell, I offer it to you first. If you refuse, I
sell it to another)
There is NO promise to sell
This is not considered as a perfected sale or a
perfected option contract

Q: what is the remedy of the person to whom the right

of first refusal is given if the offeror instead of offering
the property to him sells it to another person?
A: the Court said that if the right of first refusal is
granted under a contract of lease, the remedy of the
lessee is to sue for the rescission of the contract. As far
as the lessee is concerned he is the creditor because the
privilege is given to him therefore he can demand that
the property be first offered to him before it is offered to
another person. But if the right of first refusal is not
embodied or is not included on a contract of lease then
the remedy of the person is to sue for damages.
However, before you can sue for damages make sure
that the promise or the right of first of refusal must be in
writing otherwise it is unenforceable.
OPTION MONEY vs. EARNEST MONEY
OPTION MONEY
Not part of the
purchase price
Proof
of
the
perfection
of
the
option contract
applies to a sale not
yet perfected
Would be buyer is not
required to buy

EARNEST MONEY
It is part of the purchase price
(sort of a down payment)
Proof of the perfection of the
contract (parties are already
bound)
given when there is already a
sale
Buyer is bound to pay the
balance

CONTRACT TO SELL vs. CONTRACT OF SALE

2
SALES[

Case: Nabus vs. Pacson; Ong. Vs. CA

CONTRACT TO SELL
It is a bilateral contract
whereby the prospective
seller,
while
expressly
reserving the ownership of
the subject property despite
delivery
therof
to
the
prospective buyer, binds
himself to sell the said
property exclusively to the
prospective
buyer
upon
fulfillment of the condition
agreed upon, that is full
payment of the purchase
price

CONTRACT OF SALE
The
title
to
the
property passes to the
vendee
upon
the
delivery of the thing
sold. The vendor loses
ownership over the
property and cannot
recover it until and
unless the contract is
resolved or
rescinded

The non-payment of
price is a resollutory
The payment of the purchase condition
price is a positive suspensive
condition, the failure of
which is not a breach, but a
situation that prevents the
obligation of the vendor to
convey title from acquiring
an obligatory force

The bank insisted that it had better right to the

property because it was a mortgagee in good
faith. The bank inspector admitted that he did
not go to the property and inspected because if
he did he would have discovered that somebody
else was occupying the property.

The bank claimed that the contract between Kim

Hyeun Soon and the Stratchan spouses was a
contract to sell and she has not complied with
their contract. Kim Hyeun Soon said that it is an
absolute sale although she has not paid the
purchase price. Prudential says that the title was
not even delivered to her therefore it could not
be an absolute sale. However, as a general
rule, ownership is transferred upon
delivery which may be either real or
constructive delivery. What happened in
the case is that there was actual delivery
of the property.

The Court said that this is not a contract to sell

or a conditional sale but actually an absolute
sale. While the title of the property is
retained by the sellers, there was actual
delivery of the property to the buyer and
therefore ownership would transfer to the
buyer upon delivery of the property. The
court may have also taken into consideration the
bad faith of the Stratchan spouses. You could
also fault the bank for not acting in good faith
because it failed to determine whether there
was another person occupying the property. The
nature of the business of the bank requires that
it observe and perform extraordinary diligence.

They did not expressly reserve their ownership

over the property.

Even if the purchase price has not been fully

paid and even if the title is retained by the sale,
this is a case of absolute sale because there was
actual delivery of the property to the buyer.
Note: But this is not always the rule because
there are cases that there was actual delivery to
the buyer, there was retention of the title to the
seller and the Court said that it is a contract to
sell and not an absolute sale.

The Contract of Sale may be Case: Ramos vs. Heruela

1.

Absolute
a.
ownership is transferred to the buyer upon
delivery regardless of when payment of price is
made (note: it is not payment of the price that
transfers ownership, it is the delivery of the
thing which may be real or constructive)
b. there is no stipulation in the contract that title to
the property remains with the seller until full
payment of the purchase price
c.
there is no stipulation giving the vendor the
right to cancel unilaterally the contract the
moment the vendee fails to pay within a fixed
period

Case: Prudential Bank vs. Kim Hyeun Soon

-

Kim Hyeun Soon, a Korean national, entered into

a contract with the Stratchan spouses for the
purchase of a condominium unit. The purchase
price was P3.7M and Soon paid a partial
payment of more than P2M. They agreed that
the condominium certificate of title would be
delivered to her upon full payment of the price.
About one month after they entered into the
agreement, the Stratchan spouses obtained a
loan from Prudential Bank and secured the loan
with a mortgage over the condo unit. In the
meantime, Kim Hyeun Soon already took
possession of the condo unit. The Stratchan
spouses failed to pay the loan. Kim Hyeun
Soon also fully paid the price so she was
demanding for the delivery of the title. The
Stratchan
spouses
cannot
deliver
the
condominium certificate of title because it was
delivered to the bank.

2.

Conditional
- may either be an executed contract or an
executory contract and usually a contract to sell
a.
Executed Contract
- which property (ownership) in the thing is
transferred from seller to buyer, and
nonpayment of the price is a negative
resolutory condition which entitles the seller to
the rescission or cancellation of the contract
- ownership is already transferred
- one of the party has performed his part (ex.
Partial payment; earnest money is already
paid)
b. Executory Contract

3
SALES[

(an agreement or contract to sell) when

ownership does not pass until
i. Some future time, or ii. The fulfillment of some
condition, such as full payment of the purchase
price when said payment then becomes a
positive suspensive condition

First element of consent

- First element is lacking
is present (consent to
as transfer of ownership
transfer ownership in
is reserved
exchange for a price)
- Upon
fulfillment,
- If
condition is not
ownership
will
not
fulfilled,
contract
is
automatically transfer to
ABATED
the
buyer
although
property may have been
- If condition is fulfilled,
delivered
contract is
PERFECTED (ownership
- Needs to further enter a
automatically transfer to
contract of ABSOLUTE
buyer by operation of
SALE to convey title
law without any
further act)
Upon fulfillment of - 3rd person buying cannot be
suspensive condition, sale deemed in bad faith and
becomes absolute and will prospective buyer cannot
definitely
affect
title, seek relief or reconveyance
causing 3rd person buying
of property
to be in BAD FAITH
There is nothing to
transfer to 3rd person as
title
is
automatically
transferred to buyer

EXECUTED CONTRACT vs. EXECUTORY CONTRACT

EXECUTED CONTRACT
EXECUTORY CONTRACT
Property
No property is conveyed
(ownership)
is conveyed
If buyer defaults, seller If buyer defaults, seller
may sue for the price
is only entitled to
damages
Risk of loss is generally Risk of loss is generally
borne by the buyer
borne by the seller

Case: Ong vs. CA

-

Interpretation of document denominated agreement

of Purchase and
Sale is equivalent to that of a contract to sell
The contract they entered into was that the seller
undertakes to execute the absolute deed of sale only
upon full payment of the purchase price. The sellers
are retaining ownership over the property even if the
property is in the possession of the buyer.
The Court said that in a contract of sale ownership is
transferred upon delivery of the property. In a
contract to sell, ownership is by agreement reserved
by the vendor until full payment of the purchase
price. Moreover, full payment of the purchase price
is a positive suspensive condition. Therefore, the
failure to fulfill the condition is not a breach of the
contract. It prevents the obligation of the vendor to
convey title from acquiring an obligatory force. The
obligation of the vendor to transfer ownership and to
convey title does not arise.

Q: Do you need to sue for the cancellation of the

contract if the buyer fails to comply with his obligation in
a contract to sell? A: No. Unless the contract is covered
by the Maceda Law.

Stages in the Contract of Sale

1.
2.
3.

Interpretation of document denominated receipt of

partial payment is equivalent to contract to sell
(thus, earnest money does not apply)
Absence of deed of sale is a great indicator that
contract was only a contract to sell
Failure to pay full payment on the agreed dates
render the contracet ineffective without force and
effect

a.

b.

c.

d.

e.

f.

g.

CONDITIONAL SALE vs. CONTRACT TO SELL

Case: Coronel vs. CA

CONDITIONAL SALE

CONTRACT TO SELL

Generation or negotiation
Perfection meeting of the minds
Consummation when the object is delivered
and the price is paid

Kinds of Sales

Case: Serrano vs. Caguiat

-

Note: contract to sell is a bilateral contract while

expressly reserving ownership, binds himself to sell

h.
i.

As to the nature of the subject matter

i. Sale of real property
ii. Sale of personal property
As to the value of the things exchanged
i. Commutative sale
ii. Aleatory Sale
As to whether the object is tangible or intangible
i. Sale of Property chose in possession
ii. Sale of a Right chose in action
As to the validity or defect of the transaction
i. Valid Sale
ii. Rescissible Sale
iii. Voidable Sale iv. Unenforceable Sale v. Void Sale
As to the legality of the object
i. Sale of a licit object
ii. Sale of an illicit object
As to the presence of absence of conditions
i. Absolute sale
ii. Conditional sale
As to the proximate inducement for the sale
i.
Sale by description
ii. Sale by sample
iii. Sale by description and sample
As when the price is tendered
Cash Sale
ii. Sale on the installment plan
4
SALES[

CA 141. On the other hand, in the Hermosilla case, what

was used as basis for the decision was Land Authority
Administration #4.

Article 1459
2 rules to take into consideration:
1. The object must be licit lawful; within the
commerce of man
2. The vendor must have the RIGHT to transfer
OWNERSHIPS at the time the object is delivered

In Patent, there is no in pari de licto

You or your heirs can recover the land even if
you committed the mistake of selling it within
the 5 years prohibitory period

Things may be ILLICIT

a.
Per se (of its nature)
b. Per accidens (made illegal by provisions of the
law

Q: Can you execute a confirmatory deed of sale which

will take effect after the 5 year period?
A: No, for there is nothing to confirm because you
cannot ratify a void contract.

Note: services can be an object of a contract

Case: Daclag vs. Macahilig

-

Q: Are all things which are in the commerce of man be

an object of sale? Can rights be an object of
transmission, be an object of sale?
A: Rights may be transferred but cannot be an object of
sale. Services can be an object of contract but not of
contract of sale

Sale by a non owner results to a nullity of the

sale
Since Maximo who sold the lot to petitioner was
not the real owner of the property, attack to
ownership is imprescriptible
Being an absolute nullity , the deed is subject to
attack anytime

Q: What objects cannot be an object of sale?

A: Real properties which are under the homestead and
free patent, and is still within the prohibition period,
cannot be an object of sale

Q: When can the defense of good faith in purchasing

properties be availed of?
A: You can invoke good faith if (1) the land is registered
and (2) if there is a double sale

Case: Agustino vs. CA

Remember the following:

In this case, the lot was NOT VALIDLY sold to

Cruz because Luarca, from whom Cruz bought
the land, had an invalid contract of sale with
Loren.
The sale of the lot by Loren to Luarca was within
the 5-year prohibition against alienation of
homesteads thus all subsequent transactions
with the said property is void abinitio and cannot
be perfected by laches.

Case: Manlapat vs. CA

-

In this case, before given he was given the

patent, Manlapat already sold the land to
Ricardo Cruz.
Prior to the issuance of a patent, the land can be
validly sold Thus it was only the sale of the 50
sq. m. which was void as it was sold after the
issuance of the patent
Note: the mortgagor must be the owner of the
property otherwise the mortgage is void.

Future Inheritance cannot be an object of sale

Future destruction or with potential destruction
can be an object of sale
Mere expectancy can be subject of sale as long
as HOPE is not VAIN
While there can be a sale of future property,
there can generally be no donation of future
property
A person who has a right over a thing (although
he is not the owner of the thing itself) may sell
such right. (ex. A usufructuary may generally
sell his usufructuary right)

Case: Tanedo vs. CA

-

In this case, Tanedo executed another deed of

sale to another person of whatever share he has
over a parcel of land
Sale of future inheritance is invalid, thus any act
confirming the sale cannot be considered a
ratification because it is void from the very
beginning

Case: Hermosilla vs. Remoquillo

-

It was ruled that any sale made during the

pendency or before the issuance of a patent is
considered invalid

Transferability of Ownership
-

Valid transfer of ownership cannot take place if

the party who is transferring ownership is not
the real owner of the property

Case: Cavite Development Band vs. Lim

Q: Why is it there a difference in the ruling in the
Manlapat and Hermosilla case?
A: The difference in the ruling was die to the different
laws that governed in the case. In the first case, the law
used was based on the homestead law provided under

Courts are not bound by the name or title given

to the contract by the contracting parties. In this
case, circumstances would tell us that there was
really a contract of sale perfected and partly
consummated.
5
SALES[

However, contract of sale is void as CDB was not

the owner of the property at the time of
consummation of contract. Although it is not
required that at the perfection stage the seller
be the owner of the ting sold, such requirement
becomes necessary at the consummation stage
of the sale (general rule).
Exception to the general rule is a Mortgagee in
GOOD FAITH. However, CDB cannot be
considered as such as it failed to observe
the kind of diligence required from a banking institution
-

Case: Heirs of Arturo Reyes vs. Beltran

-

The contract to sell on which the petitioners

based their claim over the subject property was
executed by Miguel Socco who was not the
owner of the property, therefore had NO right to
transfer the same. Article 1459 provides that the
thing must be licit and vendor must have a right
to transfer ownership at the time of delivery.

Article 1460
A thing is determinate when it is particularly
designated or physically segregated form all
others of the same class
The object of sale must be determinate or is
capable of being determinate without need of
any new agreement

Article 1462
Goods may be
o
Future goods still to be manufactured
or raised or acquired by seller after the
perfection of the contract
(like land which the seller
expects to buy) o Existing goods
Article 1463
The sole owner of a thing may sell an undivided
interest therein
Ex. Selling a portion of your house to somebody
else in which case the two parties become coowners
Ex. A full owner may sell the usufruct of his land
leaving the naked ownership to himself
Article 1464
Sale of Share in a Specific Mass
Ex. In a stock of rice, the exact number of
cavans oh which is still unknown, Jose buys 100
cavans. If there are really 150, Jose becomes
the co-owner of the whole lot, his own share
being 2/3
thereof (read paras pg. 23)

Case: National Grains Authority vs. IAC

-

Case: Vagilidad vs. Vagilidad

-

Contemplates on a sale by co-heir of undivided

portion of estate
Loreto has a right to transfer in whole or in part
his undivided interest in the lot even without the
consent of his co-heirs
The subject parcel, being an inherited property
is subject to the Rules of co-ownership
In this case, the lot was sold despite the fact
that there was no adjudication of property yet.
However, upon adjudication, the same lot sold
was what was adjudicated to the seller, thus
making the sale of such property valid
There was a determinate object because there is
no need to enter into subsequent contract to
identify the subject of the contract

Article 1461
Sale of a thing having a potential existence: this
is a future thing that may be sold
Sale of an expected thing or Emptio Rei Sperati
If the expected thing does not materialize, the
sale is not effective
Sale of the Hope itself or Emptio Spei
It does not matter whether the expected thing
materialized or not; what is important is that the
hope itself validly existed
Ex. Sale of a valid sweepstakes ticket. Whether
the ticket wins or not, the sale itself is valid
If the hope or expectancy itself is vain, the sale
is itself void

If you enter into a certain contract to deliver a

certain amount of product, and what was
delivered was lesser, it does not invalidate a
contract
When exact number of goods is fixed in a
contract, as long as you dont exceed the
maximum, the contract is perfected
In this case, NGA accepted to purchase cavans
of rice not exceeding 2, 640 cavans and what
was delivered to them was less
than the said quantity there was a perfected
contract of sale

Article 1465
Things subject to a resolutory condition may be
the object of the contract of sale
Article 1466
In distinguishing a contract of sale and an
agency to sell, the essential clauses of the whole
instrument shall be considered
CONTRACT OF SALE vs. AGENCY TO SELL
CONTRACT OF
SALE
The buyer
pays the price
The
buyer
after
delivery
becom
es the owner

AGENCY TO SELL
The agent delivers the price which in
turn he got from his buyer
The agent who is supposed to sell
does not become the owner, even if
the property has
already been delivered to him

6
SALES[

The seller
warrants

Agent who sells assumes no personal

liability as long as he acts with his
authority and in the name of the
principal

Case: Quiroga vs. Parsons Hardware

-

In determining whether there was a breach in

contract, one should first determine whether
there was a contract of sale or merely an agency
to sell
In this case, there is clearly a contract of sale>
there was an obligation to supply the beds, and
a reciprocal obligation to pay their price.
An agent does not pay the price, he merely
delivers it. If he is not able to sell, he returns
the goods

Case: Commissioner of Internal Revenue vs. Constantino

-

Answers the question on how to determine a

contract of agency to sell o Such is tested by the
criterion that is such transfer puts the transferee
in the attitude or position of an owner and
makes him liable to the transferor as debtor for
the agreed price, and not merely as an agent
who must account for the proceeds of a resale,
the transaction is that of a sale. But if the
delivery is to another, not as his property, but as
the property of the principal, who remains the
owner and has the right to control sales, fix the
price and terms, demand and receive the
proceeds less the agents commission upon sales
made, the transaction is that of an
agency to sell

Article 1467
Distinguishes contract of sale and contract for a
piece of work - Rules
to
determine
the
difference:
o
If ordered in the ordinary course of
business SALE o If manufactured
specially and not for the market;
specially done at the order of another
PIECE OF WORK CONTRACT

Case: Commissioner of Internal Revenue vs. Engineering

Equipment and Supply Co.
-

Engineering is a contractor rather than a

manufacturer as the machines were made
especially for each customer and installed upon
special order. They design each unit to meet the
requirements of each customer. Further, units
were not intended for sale to the general public
The distinction between a contract of sale and
one for work, labor and materials is tested by
the inquiry whether the thing transferred is one
not in existence and which never would have
existed but for the order of the party desiring to
acquire it, or a thing which would have existed
but has been the subject of sale
to some other persons even if the order had not
been given

Case: Del Monte Phil. Inc. vs Aragones

-

Interpretation of supply agreement

Considering that that the S shape blocks was a
piece of work, Del Monte is liable for the
payment of orders done by Mega-Watt
The supply agreement is replete with
specifications, terms or conditions showing that
it was one for a piece of work

Q: Why is it necessary to distinguish sale and contractor?

A: So that (1) one can determine the tax that one should
pay (bigger tax for manufacturer than contractor) and
(2) to determine the liability of the owner
(refer to article 1729)
Article 1468
Provides for the rule to determine if one is a
contract of sale or of barter
Rules:
o
First rule determine intent
o
If intent does not clearly appear

If thing is more valuable than

money BARTER

If 50-50 SALE

If thing is less valuable than the

money SALE
Article 1469
Principles in the agreement as to the price
Price: must be certain; otherwise, there is no
true consent between the parties
The failure to pay the agreed price does not
cancel a sale for lack of consideration, for the
consideration is still there, namely, the price

Case: Boston Bank of the Philippines vs. Manalo

-

Since there was no agreement on how to pay

the balance, there was no perfected contract of
sale. If a material element of a contemplated
contract is left for future negotiations, the same
is too indefinite to be enforceable

If no specific amount is stipulated, the price is still

considered certain:
1. If it be certain with reference to another thing
certain (par.1)
2. If the determination of the price is left to the
judgment of a specified person or persons

Should such person or persons be

unable or unwilling to fix it CONTRACT
SHALL BE INEFFICACIOUS, unless the
parties subsequently agree upon the
price (par.2)

If third person or persons acted in bad

faith or by mistake COURTS MAY FIX
THE PRICE (par.3)

If third persons are prevented from

fixing the price by fault of the seller or
the buyer PARTY IN FAULT MAY HAVE
SUCH REMEDIES AGAINST THE PARTY
IN FAULT
7
SALES[

(par.4)
3. In the cases provided for under article 1472, Civil
Code

low price is sufficiently explained by the consideration of

liberality

Case: Askay vs. Cosalan

Q: How price is determined (other ways)?
A:
1. Determined by third person (par.
1, 2, 4) Case: Barreto vs. Sta

Marina

2.
3.
4.

It was the appraisers who were appointed to

ascertain and fix the total net value of the
factory for the purpose of determining the true
present value of the interest.
The appraiser was the one who determined the
total net value of the shares of the company and
thereafter that of Baretos share.
By the courts
By reference to a definite day, etc. (art. 1472)
By reference to invoices

Case: McCuloug vs. Aenlle & Co

In this case, the price for each article was fixed.
By its terms, the appellee agreed to pay therefor
the amount named in the invoices then in
existence. The price could be made certain by a
mere reference to those invoices. Thus, each
party could compel the other to fulfill its
obligation
5. By application of known facts
e.g. in proportion to variations in calories and
ash content of coal
-

SUMMARY FOR THE REQUISITES OF PRICE

1. Should be of reference to another certain thing
(Price must be REAL)
2. Agreement on the DEFINITE price should be
present
(certain
or
ascertainable
or
determinable)
3. Agreement on the MODE OR MANNER of
payment is necessary (disagreement on the
manner of payment is tantamount to a failure to
agree on the price)
4. Price is in MONEY or its EQUIVALENT (article
1458)
Article 1470
GR: INADEQUACY OF PRICE does not
necessarily invalidate a contract
Discusses effects of gross inadequacy of price:
1. In ordinary sale, sale remains valid even if the
price is very low. However, if there was vitiated
consent (fraud/undue influence) the contract
may be ANNULLED but only due to such vitiated
consent
2. In execution of judicial sale, if price is so
inadequate as to SHOCK
THE CONSIENCE of the court, it will be set aside
Note: it is possible that a donation, not a sale, was really
intended. In such a case, the parties may prove that the

-the fact that bargain was a hard one, coupled with mere
inadequacy of price when both parties are in a position
to from an independent judgment
concerning transaction, is not a sufficient ground for
cancellation of contract

Case: Aguilar vs. Rubiato

-

The very low price paid for the property is one

very cogent reason which impels us to the
conclusion that Rubiato is only responsible to
the plaintiff for a loan.
It is that the inadequacy of the price which
Villa obtained for the eight parcels of land
belonging to Rubiato is so great that the
minds revolts at it

Case: Sps Buenaventrua vs. CA

-

There is no requirement that the price be equal

to the exact value of the subject matter
Petitioners failure to prove absolute simulation
of price is magnified by their lack of knowledge
of their respondent siblings financial capacity to
buy the questioned lot

Article 1471
If the PRICE IS SIMULATED, the sale is VOID,
but the act may be shown to have been in
reality a donation, or some other act or contract
A simulated price is fictitious. There being no
price, there is no cause or consideration; hence
the contract is void as a sale
Thus, price must be real (not fictitious)
It may only be valid as a donation if the
requirements of donations or other agreements
have been complied with

Case: Cruzado vs. Bustos

-

Simulated contract does not give rise to a

consummated contract of sale since there is
really NO payment of price and no transfer of
possession

Case: Doles vs. Angeles

-

In view of the two agency relationships,

petitioner and respondent are not PRIVY to the
contract of loan between their principals. Since
the sale is predicated on the loan then the sale
is void for lack of consideration
In this case, the consideration of the agents was
the loan between their principal. Such
consideration is ABSENT thus contract of sale is
void

Article 1472
The price of securities, grain, liquids, and other
things shall also be considered certain, when
the price fixed is that which the thing sold
would have on a definite day, or in a
8
SALES[

particular exchange or market, or when an

amount is fixed above or below the price on
such day, or in such exchange or market,
provided said amount be certain.
Article 1473
The price cannot be left to one partys
discretion. However, if the price fixed by one of
the parties is accepted by the other, the sale is
perfected
Article 1474
Provides for the effect of indeterminability of
price:
o
the contract is inefficacious (1474) (as
when the third party is unable to or
refuses to fix the price)
However, if the buyer has made use of the
object, he should not be allowed to enrich
himself unjustly at anothers expense. So he
must pay a reasonable price

Case: Robles vs. Lizarraga Hermanos

-

Read full text

Article 1475
Sale is a consensual contract thus it is perfected
by mere consent
Delivery or payment is not essential for
perfection
Effect of Perfection: the parties must now
comply with their mutual obligations
REQUIREMENTS FOR PERFECTION
1. When parties are face to face when an offer is
accepted without conditions and without
qualifications (no counter-offer)
2. When contract is thru correspondence or
telegram when the offeror receives or has
knowledge of the acceptance by the offeree
3. When a sale is made subject to a suspensive
condition, perfection is had from the moment
the condition is fulfilled

Case: Manila Mining Corporation vs. Tan

-

Article 1476
Discusses sale by AUCTION
Sales of separate lots are separate contracts of
sale
The sale by auction is perfected when the
auctioneer announces its perfection by the fall of
the hammer or in other customary manner
(Case: Dizon vs. Dizon Considering that the
auction sale has been perfected, a supplemental
sale with higher consideration at the instance of
only one party(herein petitioner) could no longer
be validly executed) - Before the hammer falls:
o
The bidder may retract his bid. The
reason behind this is that every bidder is
merely an offer and therefore, before it
is accepted, it may be withdrawn
o
The auctioneer may also withdraw the
goods from the sale EXCEPT if the
auction has been announced to be
WITHOUT RESERVE

Case: Leoquinco vs. Postal Savings Bank

-

Note: review STATUTE OF FRAUDS [Article 1403 (2)]

Case: Coronel vs. CA

Once the condition in a conditional contract of

sale is consummated, the respective obligations
of the parties under the contract of sale became
mutually demandable.
In this case, the circumstances which prevented
the parties from entering into an absolute
contract of sale pertained to the sellers
themselves (the certificate of title was not in
their names) and not the full payment of the
purchase price. If it were not for such
circumstance, the contract of sale could have
been an absolute one. Since the condition
contemplated was later on fulfilled, the Coronels
are obliged to transfer the certificate to Alcaraz
and for Alcaraz to pay the balance. The Coronels

The purchase orders constituted accepted offers

when Tan supplied the electrical materials to
MMC.

Q: Where is the Place of Perfection?

A: Where the offer was made (Article 1319, last
paragraph)

cannot rescind the contract and sell it to another

person.
Note: Even if there was no actual deed of sale, it
does not negate the perfected contract of sale

Because of the expressed stipulation that PSB

reserved to themselves the right to reject any
and all bids, the bid of petitioner may be
rejected. Petitioners participation in the auction
means submission or being bounded to the rules
of auction whether the purchaser knew the rules
or not
Limitations of the seller:
o
The seller himself cannot bid o He
cannot employ or induce any person to
bid on his behalf (people who bid for the
seller, but are not themselves bound,
are
called by-bidders
or
puffers) o EXCEPTION: if right to bid
has been expressly reserved and that notice
of such was given
Limitations of the auctioneer (if he is not the
seller) o The auctioneer cannot bid o He cannot
employ or induce to bid on behalf of the seller
o
He cannot knowingly take any bid from
the seller or any person employed by
him

In an execution sale:

9
SALES[

Judgment Creditor will have a writ to garnish or

attach the property of the debtor and sheriff
sells it in a public sale
Judgment debtor has the right to redeem the
property within 1 year

Q: Why cant the seller participate in the bidding?

A: He cannot bid because in doing such he can
manipulate the biddings of other participants
Note: it is the seller who will set the terms and condition
of the sale. If the seller will bid in the auction without
reserving such right and informing the public, the sales
will be considered as fraudulent.
Q: Will such fraud affect the perfection of the contract?
A: Yes, the contract will be VOID with NO force and
effect
Article 1477
Ownership is not transferred by perfection but
by delivery Delivery may be:
o
Actual (article 1497)
o
Constructive (article 1498-1601)
Article 1478
Generally, ownership is transferred upon
delivery, but even if delivered, the ownership
may still be with the seller will full payment of
the price is made, if there is a STIPULATION to
this effect (technically referred to as a contract
to sell).
But note however that innocent third parties
cannot be prejudiced by such agreements
Article 1479
Already discussed on portion: when promise to
sell is binding

3. If the object is lost after perfection but before

delivery, the buyer bears the loss, as exception
to the rule of res perit domino in this case, the
obligation of the seller to deliver is extinguished,
but the obligation to pay is not extinguished
Exception to this rule that the buyer bears
the loss:
i.
If the object sold consists of
fungibles (personal property
which may be replaced with
equivalent things) sold for a
price fixed according to weight,
number or measure
ii. If the seller is guilty of fraud,
negligence, default, or violation
of contractual term
iii. When the object sold is generic
because genus does not perish
EXPENSES (Article 1487)
A. Of Execution and Registration of the sale
are
borne by the Seller (however, in real situations, it
is usually the buyer who spends for the registration
of the sale); there can, however, be a contrary
stipulation
B. Of putting the goods in a deliverable state (1521,
last par.) are also borne by the Seller
Article 1481
Discusses Sale by description or by Sample A sale may be that of:
SALE BY DESCRIPTION
Where seller sells things as being of a certain
kind, the buyer merely relying on the sellers
representations or descriptions

Case: Pacific Commercial Co. vs. Ermita Market and Cold

Stores
-

Article 1480
Provides for the rules of bears the risk of loss:
1. If the object has been lost before perfection, the
seller bears the loss (reason: for there was no
contract, for there was no cause or
consideration)
2. If the object was lost after delivery to the buyer,
clearly the buyer bears the loss (Res perit
domino the owner bears the loss)

Case: Phil Virginia Tobacco Adm vs. de los Reyes

-

The defense that the objects were not yet

examined thus contract of sale was not
perfected is NOT considered tenable.
Upon delivery of the thing sold and such is
placed under the control and possession of the
vendee, the contract of sale was perfected. Thus
petitioner still needs to pay for the purchase of
the tobacco despite the fact that they were not
able to use it because it was burned.
What is required for the perfection of contract of
sale is agreement on the subject and upon the
price. The delivery only confirms such perfection

The fact that defendant could not use the

machines satisfactorily cannot be attributed to
Pacifics fault. The machine was strictly in
accordance with the written contract and there
was NO deception that took place. Thus, Ermita
Market is still liable to pay for the product.

SALE BY SAMPLE
The seller warrants that the bulk of the goods
(the good themselves) shall correspond with the
sample in kind, quality and character
Note: the mere exhibition of the sample does
not necessarily make it a sale by sample. This
exhibition must have been the sole basis or
inducement of the sale
SALE BY DESCRIPTION AND SAMPLE
Must satisfy the requirements in both, and not in
only one
Note: the remedy afforded by Article 1481 is rescission.
Technically, it should be annulment.
Article 1482
1
0

SALES[

Earnest money defined: is something of value to

show that the buyer was really in earnest, and
given to the seller to bind the bargain
Earnest Money is considered:
o
Part of the purchase price o
Proof of
the perfection of the contract
This article speaks of earnest money given in a
CONTRACT OF SALE.

Case: Serrano vs. Caguiat

-

In this case, receipt of partial payment shows

that the true agreement between the parties is a
contract to sell as ownership over the property
and certificate of title of the lot was retained by
petitioners until full payment of the purchase
price and that the agreement between the
parties was not embodied in a deed of sale.
The earnest money was given in a CONTRACT
TO SELL. The earnest money forms part of the
consideration only if the sale is consummated
upon full payment of the purchase price. Now,
sine the earnest money was given in a
CONTRACT TO SEL, Article 1482, which speaks
of a contract of sale, does not apply

Note: if merchandise cannot be delivered, the earnest

money must be returned. Of course, this right may be
renounced since neither the law nor public policy is
violated

Case: Oesmer vs. Paraiso

-

SC ruled that a careful examination of the words

used in the contract indicates that what was
referred to as option money in this case was
actually earnest money as a down payment.
Thus, Oesmer is to execute a Deed of Absolute
Sale and for Paraiso to pay the balance

Article 1483
Discusses the FORM of a contract of sale
(subject to the provisions of the Statute of
Frauds):
o
May be made in writing o
By word
of mouth

Case: Caili vs. CA

-

Verbal agreement of sale

Absence of a formal deed of sale does not
render the agreement null and void or without
any effect. The necessity of a public document
(art. 1358) is only for convenience, not for
validity or enforceability
So long as the essential requisites of consent,
object and cause of the obligation concur, there
is a valid contract of sale
o
o

Partly in writing and party by word of

mouth
May be inferred from the conduct of
parties

Q: What is the effect of lack of technical description in

the contract?
A: Case: Naranja vs. CA
Technical description is not necessary for there
is no prescribed form of validity of contract of
sale of real properties. What is important is that
the subject of the contract of sale is an object
that
is
DETERMINATE
or
at
least
DETERMINABLE
Note: if the sale of a piece of land or interest therein
when made thru an agent is VOID unless the agents
authority is in writing.
Article 1484
Contemplates on a sale of PERSONAL PROPERTY
the price of which is payable in INSTALLMENTS Remedies:
o
Exact fulfillment of the obligation, should
the vendee failed to pay
o
Cancel the sale, should the vendees
failure to pay cover two or more
installments
(if
the
remedy
of
cancellation is availed of, there must be
a MUTUAL RESTITUTION of whatever
had been received by either party;
except is there is a proviso that
installments paid shall be forfeited. Such
stipulation is valid, provided it is NOT
UNCONSCIONALBE (question of fact)
under the circumstance.
o
RECTO LAW: Foreclose the chattel
mortgage on the thing sold, if one has
been constituted, should the vendees
failure to pay cover two or more
installments. In this case, he shall have
no further action against the purchases
to recover any unpaid balance of the
price.
Any agreement to the contrary shall be
VOID.
Q: when is Recto Law applicable?
A:
1. Applicable to personal property on installments
2. Rights of unpaid seller (article 1484)
3. Mortgage is constituted on the VERY OBJECT
OF THE SALE

Case: Macondray and Co. vs. De Santos

-

There was a mortgage on the Sedan Vehicle

If the remedy chosen by the vendor is to
foreclose the mortgage, he shall have no further
action against the purchaser for the
recovery of any unpaid balance owing by the
same

Case: Levy Hermanos vs. Gervacio

-

If the sale is for cash or on STRAIGHT TERMS

(also called CASH SALE), Article 1484 does NOT
apply

1
1

SALES[

Straight term: balance, after payment of the

initial sum, should be paid in its TOTALITY at
the time specified in the promissory note.
In this case, since the sale was that of a cash
sale, it is not bound by the prohibition in Art.
1484 as to its right to recovery of the unpaid
balance

Case: Dela Cruz vs. Asian Consumer and Indl Finance

Corp
-

Facts: Asian was not the seller but steps into

the shoes of the original creditor
Dela Cruz did not pay thus Asian foreclosed the
mortgages
When sheriff tried to retrieve the property, dela
Cruz did not surrender the property right away.
It was only 2 weeks after that the petitioner
voluntarily surrendered the property
Asia sued for the price rather than pursue the
foreclosure
Issue: Can you first sue for foreclosure then
change you r mind and ask for specific
performance
Ruling: It is only when the vendor did not
desist in the continuance of foreclosure in its
own initiative that it can still choose to ask for
specific performance instead

Case: Magna Financial Services Group Inc. vs. Colarina

-

Where the mortgage elects a remedy of

foreclosure, the law requires the actual
foreclosure of the mortgaged chattel.
It is actual sale of the mortgaged chattel that
would bar the creditor from recovering any
unpaid balance.
Although no actual foreclosure as contemplated
under the law has taken place in this case, since
the vehicle is already in the possession of Magna
and it has persistently avowed that it elects the
remedy of foreclosure, the CA, thus, ruled
correctly in directing the foreclosure of the said
vehicle without more.

Q: Why is it that in the case of dela Cruz, the filing of

specific performance was still granted even after the
expressed desire to foreclose the mortgage was done,
however, in the Magna case, although foreclosure had
not yet technically took place because there was still no
foreclosure sale, filing for specific performance can no
longer be obtained? (difference of Asian and Magna
case)
A: In the first case, there was bad faith with dela Cruz
because they did not voluntarily surrender the object
right away. On the other hand, Elias Colarina voluntarily
surrendered the object upon the expressed desire of
foreclosure was given.
PURPOSE OF THE RECTO LAW
This was to remedy the abuses committed in
connection with the foreclosure of chattel
mortgages. Otherwise, the buyer would find
himself without the property and still indebted

Note: The remedies enumerated in this article are NOT

CUMULATIVE. They are ALTERNATIVE, and if one is
exercised, the others cannot be made use of
Article 1485
Remedies provided for in 1484 shall be the
applied to instances of Leases of Personal
Property with option to buy
Why? Because such type of lease may really be
considered a sale of personal property in
installments

Case: Elisco Tool Mfg. Corp vs. Court of Appeals; PCI

Leasing and Finance, Inc vs. Giraffe-X Imaging, Inc.
-

Since the lessor has deprived the lessee of

possession or enjoyment of the thing by
REPLEVIN, he can no longer ask for the
purchase value; he is considered to have waived
his rights to bring
an action to recover unpaid rentals on the said
leased item

Article 1486
There can be a valid stipulation that installments
or rents paid shall not be returned to the vendee
or lessee provided that the
same may not be unconscionable under the
circumstances
MACEDA LAW (RA 6552)
Q: When is this law applicable?
A:
An act to provide protection to buyers of REAL
ESTATE on installment payments
This
includes
residential
condominium
apartments but excluding industrial lots,
commercial buildings and sales to tenants
(under RA 3844/6379), where the buyer has
paid at least two years of
installments
It applies to both Contract of Sale and Contract
to Sell
Q: What are the Rules when the buyer has paid at least
two years of installments but defaults in the payment of
succeeding installments?
A:

Default in payment
To pay without additional interest, the
unpaid installments (cash surrender value)
within the grace period

Grace period is one month for every year of

installment payments made

Limitation: The right can be exercised only once

every 5 years

Cancellation of sale/ Cash Surrender Value (how

much should seller refund?)
Up to 5 years installments, refund of 50% of
payments

1
2

SALES[

After 5 years of installments, additional 5%

per year but shall not exceed 90% of total
payments made
When cancellation takes
effect:
After 30 days from receipt by the buyer of
(notarized) notice of cancellation; or
After 30 days from receipt by the buyer of
notarial demand for rescission

Note: In both cases after full payment of cash

surrender value

Case: Pagtalunan vs. de Manzano

-

Actual cancellation of the contract shall take

place AFTER 30 DAYS from receipt by the
buyer of the (1) notice of cancellation or the
demand for rescission of the contracts by a
notarial act and upon (2) payment of the
cash surrender value (TWIN REQUIRMENT
SHOULD BE MADE)

Q: What are the Rules when the buyer has paid less than
two years of installments? A:

The buyer has at least 60 days grace period

within which to pay the installment due
If the buyer fails to pay the installments due at
the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt
by the buyer of the notice of cancellation or the
demand for rescission of the contract by a
notarial act

Case: Ramos vs. Heruela

-

In this case since there was no notice of cancellation

given to the lessee, they are not yet considered to
have defaulted in giving the payment as the grace
period has not yet been counted. Thus, they are
still given the right to pay for the unpaid installments
despite the great lapse of time.

Case: Active Realty & Devt Corporation vs. Daroya

-

The failure to cancel the contract in accordance with

the procedure provided by law (twin requirements),
the court held that the contract to sell between the
parties remains valid and subsisting.
As Daroya lost her chance to pay the balance, since
the property was sold to a 3rd party, it is only just
and equitable that the petitioner be ordered to
refund Daroya the actual value of the lot resold or at
the value it was sold to the 2nd buyer.

Article 1487
Already discussed in EXPENSES
Article 1488
Generally, since expropriation is involuntary, it does
not result in a sale
It only becomes a transaction of sale if the property
owner voluntarily sells the property to the
government
Eminent Domain right given to the state

Expropriation refers to the process

ESSENTIAL REQUISITES FOR EXPROPRIATION
1. Taking by competent authority
2. Observance of due process of law
3. Taking for public use
4. Payment of just compensation
PD No. 957
Regulating the sale of subdivision lots and
condominiums, providing penalties for violations
thereof
Section 4. Registration of Projects The registered owner

of a parcel of land who wishes to convert the same into

a subdivision project shall submit his subdivision plan to
the Authority which shall act upon and approve the
same, upon a finding that the plan complies with the
Subdivision Standards' and Regulations enforceable at
the time the plan is submitted. The same procedure shall
be followed in the case of a plan for a condominium
project except that, in addition, said Authority shall act
upon and approve the plan with respect to the building
or buildings included in the condominium project in
accordance with the National Building Code (R.A. No.
6541).
The subdivision plan, as so approved, shall then be
submitted to the Director of Lands for approval in
accordance with the procedure prescribed in Section 44
of the Land Registration Act (Act No. 496, as amended
by R.A. No. 440): Provided, that it case of complex
subdivision plans, court approval shall no longer be
required. The condominium plan as likewise so
approved, shall be submitted to the Register of Deeds of
the province or city in which the property lies and the
same shall be acted upon subject to the conditions and
in accordance with the procedure prescribed in Section 4
of the Condominium Act (R.A. No. 4726).
The owner or the real estate dealer interested in the sale
of lots or units, respectively, in such subdivision project
or condominium project shall register the project with
the Authority by filing therewith a sworn registration
statement
The person filing the registration statement shall pay the
registration fees prescribed therefor by the Authority.
Thereupon, the Authority shall immediately cause to be
published a notice of the filing of the registration
statement at the expense of the applicant-owner or
dealer, in two newspapers general circulation, one
published in English and another in Pilipino, once a week
for two consecutive weeks, reciting that a registration
statement for the sale of subdivision lots or
condominium units has been filed in the National
Housing Authority
The subdivision project of the condominium project shall
be deemed registered upon completion of the above
publication requirement. The fact of such registration
1
3

SALES[

shall be evidenced by a registration certificate to be

issued to the applicant-owner or dealer.

after the effectivity of the law in the absence of any

provision in the contract to the contrary.

Section 5. License to sell. Such owner or dealer to

whom has been issued a registration certificate shall not,
however, be authorized to sell any subdivision lot or
condominium unit in the registered project unless he
shall have first obtained a license to sell the project
within two weeks from the registration of such project.
Section 7. Exempt transactions. A license to sell and
performance bond shall not be required in any of the
following transactions:
(a)
Sale of a subdivision lot resulting from the
partition of land among coowners and co-heirs.
(b)
Sale or transfer of a subdivision lot by the
original purchaser thereof and any subsequent sale of
the same lot.
(c)
Sale of a subdivision lot or a condominium unit
by or for the account of a mortgagee in the ordinary
course of business when necessary to liquidate a bona
fide debt.

Section 25. Issuance of Title. The owner or developer

shall deliver the title of the lot or unit to the buyer upon
full payment of the lot or unit. No fee, except those
required for the registration of the deed of sale in the
Registry of Deeds, shall be collected for the issuance of
such title. In the event a mortgage over the lot or unit is
outstanding at the time of the issuance of the title to the
buyer, the owner or developer shall redeem the
mortgage or the corresponding portion thereof within six
months from such issuance in order that the title over
any fully paid lot or unit may be secured and delivered
to the buyer in accordance herewith.

Section 18. Mortgages. No mortgage on any unit or lot

shall be made by the owner or developer without prior
written approval of the Authority. Such approval shall
not be granted unless it is shown that the proceeds of
the mortgage loan shall be used for the development of
the condominium or subdivision project and effective
measures have been provided to ensure such utilization.
The loan value of each lot or unit covered by the
mortgage shall be determined and the buyer thereof, if
any, shall be notified before the release of the loan. The
buyer may, at his option, pay his installment for the lot
or unit directly to the mortgagee who shall apply the
payments to the corresponding mortgage indebtedness
secured by the particular lot or unit being paid for, with
a view to enabling said buyer to obtain title over the lot
or unit promptly after full payment thereto;
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, with
interest thereon at the legal rate.
Section 24. Failure to pay installments. The rights of
the buyer in the event of this failure to pay the
installments due for reasons other than the failure of the
owner or developer to develop the project shall be
governed by Republic Act No. 6552.
Where the transaction or contract was entered into prior
to the effectivity of Republic Act No. 6552 on August 26,
1972, the defaulting buyer shall be entitled to the
corresponding refund based on the installments paid
1
4

SALES[