LAW ON SALES

1. NATURE AND FORM OF CONTRACT 3. Onerous

ARTICLE 1458 - Thing sold is conveyed in consideration
of the price and vice versa
By the contract of sale one of the contracting
parties obligates himself to transfer the 4. Commutative
ownership and to deliver a determinate thing, and - Thing sold is considered the equivalent
the other to pay therefor a price certain in money of the price paid and vice versa
or its equivalent.
5. Nominate
A contract of sale may be absolute or conditional. - Given a special name of designation

CONTRACT OF SALE 6. Principal

- Does not depend for its existence and
A contract where one party obligates himself to validity
transfer ownership of and to deliver a
determinate thing; the other to pay therefor a STAGES OF A CONTRACT OF SALE
price certain in money or its equivalent.
1. Negotiation
A consensual contract and is perfected by mere - Covers the period from the time the
consent which is manifested by the meeting of prospective contracting parties indicate
the offer and the acceptance upon the thing and interest in the contract to the time the
the cause which are to constitute the contract. contract is perfected.

Two kinds: 2. Perfection

1. As to presence or absence of conditions - Takes place upon the concurrence of
a. Absolute the essential elements of the sale,
- Where the sale is not subject to any which is the meeting of the minds of the
condition whatsoever and where title parties as to the object of the contract and
passes to the buyer upon delivery of the upon the price.
thing sold.
3. Consummation
b. Conditional - Begins when the parties perform their
- Where the sale contemplates a respective undertakings under the
contingency, and in general, where the contract of sale, culminating in the
contract is subject to certain extinguishment thereof.
conditions, usually, in the case of the
vendee, the full payment of the agreed ELEMENTS OF CONTRACT OF SALE
purchase price
1. Consent
2. Other kinds - Manifested by the meeting of the offer
- Depending on one’s point of view, as to and the acceptance upon the thing and
the nature of the subject matter, the the cause which are to constitute the
manner of payment of price, or its validity agreement
- Where there is merely an offer by one
CHARACTERISTICS OF A CONTRACT OF party without the acceptance of the other,
SALE there is no consent

1. Consensual 2. Object
- Perfected by mere consent - Determinate thing/subject matter of the
contract
2. Bilateral - If the seller and the buyer differ in regard
- Contracting parties are bound to fulfill to the thing sold, there is no meeting of
correlative obligations towards each the minds; therefore, there is no sale
other
3. Cause condition condition
- Price certain in money or its equivalent
- There can be a sale where the thing given Remedy of the seller is to The failure of which is
as token of payment has “been assessed exact fulfillment or to not a breach, casual or
rescind the contract serious, of the contract
and evaluated and [its] price equivalent but simply an event
in terms of money [has] been that prevents wthe
determined.” obligation of the vendor
to convey title from
CONTRACT TO SELL acquiring binding force

Bilateral contract whereby the prospective The seller promises to

seller, while expressly reserving the ownership of execute a deed of
the subject property despite delivery thereof to absolute sale upon full
the prospective buyer, binds himself to sell the payment of the purchase
price
said property exclusively to the prospective
buyer upon fulfillment of the condition agreed OWNERSHIP OF VENDOR
upon, that is, full payment of the purchase price.
The vendor has lost and The title remains in the
May not be considered as a conditional cannot recover the vendor if the vendee
contract of sale where the seller may likewise ownership of the thing does not comply with
reserve title to the property subject of the sale sold and delivered, actually the condition precedent
until the fulfillment of a suspensive condition. or constructively, until and of making payment at
unless the contract of sale the time specified in the
Upon the fulfillment of the suspensive condition, itself is resolved and set contract.
the full payment of the purchase price, aside
ownership will not automatically transfer to
the buyer although the property may have Entered into to There is no actual sale
consummate the sale until and unless full
been previously delivered to him. The
payment of the price is
prospective seller still has to convey title to the made.
prospective buyer by entering into a contract of
absolute sale. Commonly entered into
so as to protect the
CONTRACT OF SALE CONTRACT TO SELL seller against a buyer
who intends to buy a
TRANSFER OF TITLE property in
installments by
Passes upon delivery of Stipulated that withholding ownership
the thing sold ownership in the thing over the property until
shall not pass to the the buyer effects full
purchaser until full payment therefore.
payment of the thing.
OPTION CONTRACT
In the absence of such
stipulation, especially A privilege existing in one person for which
where the buyer took he has paid a consideration which gives him
possession of the the right to buy/sell, for example, certain
property upon execution
merchandise or certain specified property,
of the contract, indicates
that what the parties from/to another person, if he chooses, at any
contemplated is a time within the agreed period at a fixed price, or
contract of absolute under, or in compliance with certain terms and
sale. conditions

PAYMENT OF PRICE Nature:

1. Contract
Non-payment of the price Full payment is a - A preparatory contract, separate
is a negative resolutory positive suspensive and distinct from the main contract
 itself (subject matter of the option) a. Sale of personal property at a price not
which the parties may enter into less than php500
upon the consummation of the b. Sale of real property or an interest therein
option. regardless of the price involved
c. Sale of property not to be performed
2. Gives the party granted the option the within a year from the date thereof
right to decide, whether or not to enter regardless of the nature of the property
into a principal contract, while it binds the and the price involved
party who has given the option, not to
enter into the principal contract with any Purpose: To prevent fraud and perjury in the
other person during the agreed time and enforcement of obligations depending for their
within that period, to enter into such evidence upon the unassisted memory of
contract with the one to whom the option witnesses by requiring certain enumerated
was granted if the latter should decide to contracts and transactions to be evidenced in
use the option. writing.

3. Must be supported by a consideration 2. PARTIES

distinct from the price. this is the vendor n vendee hahaha just search
4. A consideration of an option contract is ARTICLE 1489
just as important as the consideration
for any other kind of contract. All persons who are authorized in this Code to
- An option without consideration obligate themselves, may enter into a contract of
is void; the effect is the same as if sale, saving the modifications contained in the
there was no option. following articles.

RIGHT OF FIRST REFUSAL Where necessaries are those sold and delivered
to a minor or other person without capacity to act,
While the object might be made determinate, the he must pay a reasonable price therefor.
exercise of the right would be dependent not only Necessaries are those referred to in Article 290.
on the grantor’s eventual intention to enter into a The law does not define who are actually capacitated to
enter into contracts but defines who are incapacitated.
binding juridical relation with another but also on
terms, including the price, that are yet to be General rule: All persons, whether natural or
firmed up. juridical, who can bind themselves, have legal
capacity to enter into a contract of sale.
EARNEST MONEY OPTION MONEY
Exception: Persons who are incapacitate d.
Part of the purchase price Money given as distinct
consideration for an
KINDS OF INCAPACITY
option contract

Given only where there is Applies to a sale not yet 1. Absolute incapacity
already a sale perfected - Who cannot enter into a contract of sale
in all circumstances; otherwise, the
When given, buyer is When given, the would- contract is defective, either voidable or
bound to pay the balance be buyer is not required unenforceable.
to buy - They are incapable of giving consent,
they cannot find benefit from the contract
May become earnest - Examples: Minors, insane, demented
money if the parties so
persons, and deaf-mutes who do not
agree
know how to write.
STATUTE OF FRAUDS 2. Relative incapacity
- Certain persons, under certain
The following contracts must be in writing,
circumstances, cannot buy certain
otherwise, they shall be unenforceable by action
 property. the principal has been given
- Examples: 3. Executors and administrators; the
a. Husband and wife property of the estate under
b. Guardian; the property of their administration
wards under his guardianship 4. Public officers and employees; the
c. Agents; the property whose property of the State or of any subdivision
administration/sale may have been thereof, or of any government-owned or
entrusted to them, unless the controlled corporation, or institution, the
consent of the principal has been administration of which has been
given entrusted to them
d. Executors and administrators; the 5. Justices, judges, prosecuting attorneys,
property of the estate under clerks of superior and inferior courts, and
administration other officers and employees connected
e. Public officers and employees; the with the administration of justice; the
property of the State or of any property and rights in litigation or levied
subdivision thereof, or of any upon an execution before the court within
government-owned or controlled whose jurisdiction or territory they
corporation, or institution, the exercise their respective functions
administration of which has been 6. Any others specially disqualified by law
entrusted to them
f. Justices, judges, prosecuting 3. OBLIGATIONS OF THE VENDOR
attorneys, clerks of superior and
inferior courts, and other officers ARTICLE 1495
and employees connected with the Section 1. General Provisions
administration of justice; the
property and rights in litigation or The prohibitions in the two preceding articles are
levied upon an execution before applicable to sales in legal redemption,
the court within whose jurisdiction compromises, and renunciations.
or territory they exercise their
respective functions OBLIGATIONS OF THE VENDOR

ARTICLE 1490 1. To transfer ownership of the thing sold

2. To deliver the thing
The husband and the wife cannot sell property to 3. To warrant the object sold against
each other, except: eviction and hidden defects
1. When a separation of property was 4. To take care of the object sold pending
agreed upon in the marriage settlements delivery
2. Where there has been a judicial 5. To pay for the expenses for the
separation of property under Article execution and registration of the
191. contract of sale unless there is a
The proscription against sale of property between stipulation to the contrary.
spouses applies even to common law relationships.
DELIVERY
ARTICLE 1491
Described as a composite act, a thing in which
The following persons cannot acquire by both parties must join and the minds of both
purchase, event at a public or juridical auction, parties concur.
either in person or through the mediation of
another: An act by which one party parts with the title to
1. Guardian; the property of the person or and the possession of the property, and the
persons who may be under his other acquires the right to and the
guardianship possession of the same
2. Agents; the property whose
administration/sale may have been Something in addition to the delivery of property
entrusted to them, unless the consent of of title; transfer of possession.
May be actual or constructive, but both forms of PAYMENT IS NOT ESSENTIAL TO TRANSFER
delivery contemplate “the absolute giving up of OF OWNERSHIP
the control and custody of the property on the
part of the vendor, and the assumption of the Ownership of the thing sold is transferred to the
same by the vendee” vendee upon the actual or constructive delivery
of the same.
The concurrent transfer of possession and The thing is understood as delivered when it is placed in
ownership the control and possession of the vendee.
This is the rationale behind the jurisprudential doctrine
that presumptive delivery via execution of a public Payment of the purchase price is not essential to
instrument is negated by the reality that the vendee the transfer of ownership as long as the property
actually failed to obtain material possession of the land sold has been delivered; and such delivery
subject of the sale. In the same vein, if the vendee is
operated to divest the vendor of title to the
placed in actual possession of the property, but by
agreement of the parties, ownership of the same is property which may not be regained or recovered
retained by the vendor until the vendee has fully paid the until and unless the contract is resolved or
price, the mere transfer of the possession of the property rescinded in accordance with law.
subject of the sale is not the “delivery” contemplated in
the Law on Sales.
ARTICLE 1497
Actual delivery: Occurs when it is placed under Section 2. Delivery of the Thing Sold
the control and possession of the vendee.
The thing sold shall be understood as delivered,
PURPOSE OF DELIVERY when it is placed in the control and possession of
the vendee.
Ownership does not pass by mere stipulation
but only by delivery. REAL/ACTUAL DELIVERY

The delivery of the thing signifies that title has The thing sold is placed in the control and
passed from the seller to the buyer. possession of the vendee.

Not only for the enjoyment of the thing but also a ARTICLE 1498
mode of acquiring dominion and determining
the transmission of ownership—the birth of the When the sale is made through a public
real right. instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the
ARTICLE 1496 object of the contract, if from the deed the
contrary does not appear or cannot clearly be
The ownership of the thing sold is acquired by inferred.
the vendee from the moment it is delivered to him
in any of the ways specified in Articles 1497 to With regard to movable property, its delivery may
1501, or in any other manner signifying an also be made by the delivery of the keys of the
agreement that the possession is transferred place or depository where it is stored or kept.
from the vendor to the vendee. Refers to symbolic delivery by the execution of a public
instrument; does not say that the executive of the deed
provides a conclusive presumption of the delivery of
General rule: Ownership of the thing sold is possession. It confines itself to providing that the
acquired only upon its delivery, actual or execution thereof is equivalent to delivery, which means
constructive, to the buyer. that the presumption therein can be rebutted by means
of clear and convincing evidence.
Exception:
The presumptive delivery by the execution of a public
1. When the seller and the buyer agree that instrument can be negated by the failure of the vendee
the ownership shall remain with the to take actual possession of the land sold.
seller until the full payment of the
purchase price KINDS OF DELIVERY
2. Contract to sell
3. Sale on approval, trial or satisfaction 1. Real or Actual
4. Implied reservation of ownership - The thing sold is placed in the control and
 possession of the vendee. owner’s continuous
possession of the property
2. Legal or Constructive he had already sold to
- Delivery by operation of law. another person but his
a. Legal Formalities present possession is no
- Sale is made through a longer that of an owner but
public instrument. under another capacity,
- Gives rise to prima facie like that of a lessee.
presumption of delivery, - Seller remains in
which is destroyed when possession of the
actual delivery is not property in a different
affected due to legal capacity.
impediment.
3. Quasi-Tradition
b. Symbolical Tradition or Traditio - Delivery of rights, credits, or
simbolica incorporeal property, made by:
- The parties use a symbol a. Execution of public instrument
to represent the thing b. Placing of titles of ownership in
delivered the hands of buyer
c. Allowing buyer to make use of
c. Traditio Longa Manu rights
- Delivery is by mere
consent or agreement of ARTICLE 1525
the contracting parties,
where the seller points out The seller of goods is deemed to be an unpaid
to the buyer the object of seller within the meaning of this Title:
sale without the need of 1. When the whole of the price has not been
actually delivering it. paid or tendered;
- By mere consent or 2. When a bill of exchange or other
agreement if the movable negotiable instrument has been received
property sold cannot yet as conditional payment, and the condition
be transferred to the on which it was received has been broken
possession of the buyer by reason of the dishonor of the
at the time of the sale. instrument, the insolvency of the buyer, or
otherwise.
d. Traditio Brevi Manu
- The would be buyer had In Articles 1525 to 1535 the term “seller” includes
already the possession of an agent of the seller to whom the bill of lading
the object even before the has been endorsed, or a consignor or agent who
contract of sale by virtue of has himself paid, or is directly responsible for the
another title which is not price, or any other person who is in the position
ownership (like a lessee in of a seller.
a contract of lease), and
pursuant to a contract of WHO IS AN UNPAID SELLER?
sale, he would now hold
possession in the concept 1. When the whole of the price has not
of an owner. been paid or tendered
- Buyer already had 2. When a bill of exchange or other
possession of the object negotiable instrument has been
even before the sale. received as conditional payment, and
the condition on which it was received has
e. Traditio Constitutum been broken by reason of the dishonor of
Possessorium the instrument, the insolvency of the
- Delivery consists in the buyer, or otherwise
BILL OF EXCHANGE 3. A right of resale as limited by this Title;
4. A right to rescind the sale as likewise
An unconditional written order by one person to limited by this Title.
another, signed by the maker, requiring the
person addressed to pay to a third party a Where the ownership in the goods has not
specified sum on demand or at a fixed or passed to the buyer, the unpaid seller has, in
ascertainable future time. addition to his other remedies a right of
withholding delivery similar to and coextensive
NEGOTIABLE INSTRUMENT with his rights of lien and stoppage in transitu
where the ownership has passed to the buyer.
A written instrument that is signed by the maker
or drawer, includes an unconditional promise or LIEN
order to pay a specified sum on money, is
payable on demand or at a definite time, and is A legal right or interest that a creditor has in
payable to order or bearer another’s property, lasting usually until a debt or
duty that it secures is satisfied
DISHONOR
REMEDIES OF AN UNPAID SELLER
To refuse to accept or pay when presented
1. Possessory lien
INSOLVENCY 2. Right of stopping the goods in transit
3. Right of resale
The condition of being unable to pay debts as 4. Right to rescind
they fall due or in the usual course of business;
the inability to pay debts as they mature. POSSESSORY LIEN
AGENT A lien allowing the creditor to keep possession
of the encumbered property until the debt is
Someone who is authorized to act for or in place satisfied
of another; a representative
ARTICLE 1527
ENDORSED
Subject to the provisions of this Title, the unpaid
To sign to accept responsibility for paying an
seller of goods who is in possession of them is
obligation memorialized by the instrument or to
entitled to retain possession of them until
make the instrument payable to someone other
payment or tender of the price in the following
than the payee.
cases, namely:
CONSIGNOR 1. Where the goods have been sold without
any stipulation as to credit;
The person named in a bill as the person from 2. Where the goods have been sold on
whom goods have been received for shipment. credit, but the term of credit has expired;
3. Where the buyer becomes insolvent.
ARTICLE 1526
The seller may exercise his right of lien
Subject to the provisions of this Title, notwithstanding that he is in possession of the
notwithstanding that the ownership in the goods goods as agent or bailee for the buyer.
may have passed to the buyer, the unpaid seller
of goods, as such, has: WHEN UNPAID SELLER HAS POSSESSORY
1. A lien on the goods or right to retain LIEN
them for the price while he is in
1. Where the goods have been sold without
possession of them;
any stipulation as to credit
2. In case of the insolvency of the buyer , a
2. Where the goods have been sold on
right of stopping the goods in transit
credit, but the terms of credit has expired
after he has parted with the
3. Where the buyer becomes insolvent
possession of them;
 to accept delivery thereof by installments.
4. OBLIGATIONS OF THE VENDEE
ARTICLE 1582 Exception: Stipulation or agreement

The vendee is bound to accept delivery and to ARTICLE 1584

pay the price of the thing sold at the time and
place stipulated in the contract. If the time and Where goods are delivered to the buyer,
place should not have been stipulated, the which he has not previously examined, he is
payment must be made at the time and place not deemed to have accepted them unless
of the delivery of the thing sold. and until he has had a reasonable
opportunity of examining them for the
ACCEPTANCE purpose of ascertaining whether they are in
conformity with the contract if there is no
An offeree’s assent, either by express act or by stipulation to the contrary.
implication from conduct, to the terms of an
offer in a manner authorized or requested by Unless otherwise agreed, when the seller
the offeror, so that a binding contract is formed. tenders delivery of goods to the buyer, he is
bound, on request, to afford the buyer a
If an acceptance modifies the terms or adds new reasonable opportunity of examining the goods
ones, it generally operates as a counteroffer. for the purpose of ascertaining whether they are
in conformity with the contract.
PRINCIPAL OBLIGATIONS OF THE VENDEE
Where goods are delivered to a carrier by the
1. Bound to accept delivery seller, in accordance with an order from or
2. Bound to pay the price of the thing sold agreement with the buyer, upon the terms that
at the time and place stipulated in the the goods shall not be delivered by the carrier
contract to the buyer until he has paid the price,
3. Bear expenses for the execution and whether such terms are indicated by marking
registration of the sale and putting the the goods with the words "collect on delivery,"
goods in a deliverable state, if such is the or otherwise, the buyer is not entitled to
stipulation (Article 1521) examine the goods before the payment of
the price, in the absence of agreement or
ARTICLE 1583 usage of trade permitting such examination.

Unless otherwise agreed, the buyer of goods is General rule: The buyer has a reasonable
not bound to accept delivery thereof by opportunity to examine the goods upon
installments. delivery to ascertain whether they are in
conformity with the contract before accepting the
Where there is a contract of sale of goods to be same.
delivered by stated installments, which are to be
separately paid for, and the seller makes Exceptions:
defective deliveries in respect of one or more 1. There is stipulation to the contrary
installments, or the buyer neglects or refuses 2. In case of collect on delivery, the buyer is
without just cause to take delivery of or pay for not entitled to examine until payment
one or more installments, it depends in each is made, except if:
case on the terms of the contract and the a. There is agreement permitting
circumstances of the case, whether the breach of examination
contract is so material as to justify the injured b. The usage of trade permits such
party in refusing to proceed further and suing for examination
damages for breach of the entire contract, or
whether the breach is severable, giving rise ARTICLE 1585
to a claim for compensation but not to a right to
treat the whole contract as broken. The buyer is deemed to have accepted the goods
when he intimates to the seller that he has
General rule: The buyer of goods is not bound accepted them, or when the goods have been
delivered to him, and he does any act in Unless otherwise agreed, where goods are
relation to them which is inconsistent with the delivered to the buyer, and he refuses to accept
ownership of the seller, or when, after the lapse them, having the right to do so, he is not bound
of a reasonable time, he retains the goods to return them to the seller, but it is
without intimating to the seller that he has sufficient if he notifies the seller that he
rejected them. refuses to accept them. If he voluntarily
constitutes himself a depositary thereof, he shall
TYPES OF ACCEPTANCE be liable as such.

1. Express acceptance EFFECT OF BUYER’S JUSTIFIABLE REFUSAL

- Buyer intimates to seller that he has TO ACCEPT DELIVERY
accepted the goods
1. Buyer has no obligation to return the
2. Implied acceptance goods to the seller
a. Buyer does any act in relation to the 2. It is sufficient that buyer notifies seller
goods which is inconsistent with the that he refuses to accept goods
ownership of the seller 3. If the buyer voluntarily constitutes
b. When, after the lapse of a reasonable himself a depositary of the goods, he
time, he retains the goods without shall be liable as such.
intimating to the seller that he has
rejected them ARTICLE 1588

DELIVERY ACCEPTANCE If there is no stipulation as specified in the first

paragraph of Article 1523, when the buyer's
One of the obligations of An obligation on the part refusal to accept the goods is without just cause,
the vendor is the delivery of the vendee the title thereto passes to him from the
of the thing sold
moment they are placed at his disposal.
ARTICLE 1586
EFFECT OF BUYER’S UNJUSTIFIABLE
In the absence of express or implied agreement REFUSAL TO ACCEPT DELIVERY
of the parties, acceptance of the goods by the
The title thereto passes to the buyer from the
buyer shall not discharge the seller from liability
moment they are placed at his disposal.
in damages or other legal remedy for breach of
any promise or warranty in the contract of sale.
ARTICLE 1589
But, if, after acceptance of the goods, the buyer
fails to give notice to the seller of the breach in The vendee shall owe interest for the period
any promise of warranty within a reasonable time between the delivery of the thing and the
after the buyer knows, or ought to know of such payment of the price, in the following three
breach, the seller shall not be liable therefor. cases:
1. Should it have been so stipulated
General rule: Acceptance of the goods by the
2. Should the thing sold and delivered
buyer shall not discharge the seller from
produce fruits or income
liability in damages or other legal remedy for
3. Should he be in default, from the
breach of any promise or warranty in the
time of judicial or extrajudicial
contract of sale.
demand for the payment of the price
Exception: But, if, after acceptance of the goods,
the buyer fails to give notice to the seller of VENDEE OWES INTEREST BETWEEN
the breach in any promise of warranty within DELIVERY AND PAYMENT
a reasonable time after the buyer knows, or
ought to know of such breach, the seller shall 1. Should it have been so stipulated
not be liable therefor. 2. Should the thing sold and delivered
produce fruits or income
3. Should he be in default, from the
ARTICLE 1587
time of judicial or extrajudicial
 demand for the payment of the price price, he may immediately sue for the
rescission of the sale.
ARTICLE 1590
Should such ground not exist, the provisions of
Should the vendee be disturbed in the Article 1191 shall be observed
possession or ownership of the thing acquired,
or should he have reasonable grounds to SELLER MAY IMMEDIATELY SUE FOR THE
fear such disturbance, by a vindicatory action or RESCISSION OF THE SALE
a foreclosure of mortgage, he may suspend the
payment of the price until the vendor has The vendor has reasonable grounds to fear the
caused the disturbance or danger to cease, loss of immovable property sold and its price.
unless the latter gives security for the return of Article 1191. The power to rescind obligations is
the price in a proper case, or it has been implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
stipulated that, notwithstanding any such
contingency, the vendee shall be bound to The injured party may choose between the
make the payment. A mere act of trespass shall fulfillment and the rescission of the obligation, with
not authorize the suspension of the payment of the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if
the price. the latter should become impossible.

SUSPENSION OF PAYMENT BY THE VENDEE The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
1. Should the vendee be disturbed in the
This is understood to be without prejudice to the rights of
possession or ownership of the thing third persons who have acquired the thing, in
acquired accordance with articles 1385 and 1388 and the
2. Should he have reasonable grounds to Mortgage Law.
fear such disturbance, by a vindicatory
action or a foreclosure of mortgage ARTICLE 1592

The right to suspend payment exists only In the sale of immovable property, even though it
while the danger or disturbance lasts. Once may have been stipulated that upon failure to
the vendor has caused the cessation of this pay the price at the time agreed upon the
disturbance such as by entering into a settlement rescission of the contract shall of right take
or compromise agreement with the third person place, the vendee may pay, even after the
who posed the danger or disturbance to the expiration of the period, as long as no
vendee’s possession or ownership, the vendee demand for rescission of the contract has
must already pay. been made upon him either judicially or by a
notarial act. After the demand, the court may not
EXCEPTIONS TO SUSPENSION OF PAYMENT grant him a new term.

1. Vendor gives security for the return of The demand is not for the payment of the price
the price in a proper case but for the rescission of the contract.
2. It has been stipulated that, Contemplates (1) a contract of sale of an immovable
property and (2) a stipulation in the contract that failure
notwithstanding any such contingency,
to pay the price at the time agreed upon will cause the
the vendee shall be bound to make the recession of the contract. Buyer can still pay even after
payment the time agreed upon, if the agreement between the
3. Vendor has caused the disturbance or parties has these requisites. Right of the vendee to pay
danger to cease ceases when the seller demands the rescission of the
contract judicially or extrajudicially. In case of an
extrajudicial demand to rescind the contract, it should be
A mere act of trespass shall not authorize the notarized. Hence, the provision does not apply if it is not
suspension of the payment of the price a contract of sale of an immovable property and merely
a contract to sell an immovable property.
ARTICLE 1591
Requires rescission either by judicial action,
Should the vendor have reasonable grounds to notarial act, does not apply to a contract to
fear the loss of immovable property sold and its sell. Moreover, judicial action for rescission of a
 contract is not necessary where the contract manifested an inability to perform the
provides for automotive rescission in case of contract of sale on his part or an
breach. intention not to perform it.

ARTICLE 1593 Although the ownership in the goods has not

passed, if they cannot readily be resold for a
With respect to movable property, the rescission reasonable price, and if the provisions of article
of the sale shall of right take place in the interest 1596, fourth paragraph, are not applicable, the
of the vendor, if the vendee, upon the expiration seller may offer to deliver the goods to the buyer,
of the period fixed for the delivery of the thing, and, if the buyer refuses to receive them, may
should not have appeared to receive it, or, having notify the buyer that the goods are thereafter held
appeared, he should not have tendered the price by the seller as bailee for the buyer.
at the same time, unless a longer period has Thereafter the seller may treat the goods
been stipulated for its payment. as the buyer's and may maintain an
action for the price.
RESCISSION OF THE SALE OF MOVABLE
PROPERTY SHALL OF RIGHT TAKE PLACE The seller may maintain an action against the
buyer for the price of the goods.
1. If the vendee, upon the expiration of the
period fixed for the delivery of the thing, ARTICLE 1596
should not have appeared to receive it
2. Having appeared, he should not have Where the buyer wrongfully neglects or refuses
tendered the price at the same time, to accept and pay for the goods, the seller may
unless a longer period has been maintain an action against him for damages
stipulated for its payment. for non acceptance.

5. ACTIONS FOR BREACH OF CONTRACT OF The measure of damages is the estimated loss
SALE OF GOODS directly and naturally resulting in the ordinary
course of events from the buyer's breach of
ARTICLE 1594 contract.

Actions for breach of the contract of sale of Where there is an available market for
goods shall be governed particularly by the the goods in question, the measure of damages
provisions of this Chapter, and as to is, in the absence of special circumstances
matters not specifically provided for herein, by showing proximate damage of a different amount,
other applicable provisions of this Title. the difference between the contract price and
the market or current price at the time or
ARTICLE 1595 times when the goods ought to have been
accepted, or,if no time was fixed for acceptance,
Where, under a contract of sale, the then at the time of the refusal to accept.
ownership of the goods has passed to the buyer
and he wrongfully neglects or refuses to If, while labor or expense of material
pay for the goods according to the terms of amount is necessary on the part of the seller
the contract of sale, the seller may maintain an to enable him to fulfill his obligations under
action against him for the price of the goods. the contract of sale, the buyer repudiates
the contract or notifies the seller to proceed no
Where, under a contract of sale, the price is further therewith, the buyer shall be liable to the
payable on a certain day, irrespective of delivery seller for labor performed or expenses
or of transfer of title and the buyer wrongfully made before receiving notice of the buyer's
neglects or refuses to pay such price, the seller repudiation or countermand. The profit the seller
may maintain an action for the price would have made if the contract or the sale had
although the ownership in the goods been fully performed shall be considered in
has not passed. But it shall be a defense to awarding the damages.
such an action that the seller at any time
before the judgment in such action has
The seller may maintain an action against the hisobligations thereunder, or has committed
buyer for damages a breach thereof, the seller may totally
rescind the contract of sale by giving notice
DAMAGES of his election so to do to the buyer.
Apples when there has been no delivery of goods yet.
Money claimed by, or ordered to be paid to, a Requires giving notice to the buyer.
person as compensation for loss or injury.
Seller may totally rescind the contract of sale:
MEASURES OF DAMAGES 1. Buyer has repudiated the contract of
sale
Estimated loss directly and naturally resulting 2. Buyer manifested his inability to
in the ordinary course of events from the perform his obligations thereunder
buyer’s breach of contract. 3. Buyer has committed a breach of the
contract of sale.
In the case of breach of warranty of quality, such
loss, in the absence of special circumstances ARTICLE 1598
showing proximate damage of a greater amount,
is the difference between the value of the Where the seller has broken a contract to deliver
goods at the time of delivery to the buyer and specific or ascertained goods, a court may, on
the value they would have had if they had the application of the buyer, direct that
answered to the warranty. the contract shall be performed specifically,
without giving the seller the option of
MEASURES OF DAMAGES WHERE THERE IS retaining the goods on payment of
AN AVAILABLE MARKET FOR THE GOODS damages. The judgment or decree may
be unconditional, or upon such terms and
The difference between the contract price and conditions as to damages, payment of the price
the market or current price at the time or and otherwise, as the court may deem just
times when the goods ought to have been
accepted, or, if no time was fixed for acceptance, SPECIFIC PERFORMANCE
then at the time of the refusal to accept.
The rendering, as nearly as practicable, of a
MEASURES OF DAMAGES FOR promised performance through a judgment or
REPUDIATION OR COUNTERMAND decree; specifically, a court-ordered remedy
that requires precise fulfillment of a legal or
1. Labor performed and expenses incurred contractual obligation when monetary damages
for materials before receiving notice of are inappropriate or inadequate, as when the
the buyer’s repudiation or sale of real estate or a rare article is involved.
countermand Seller committed a breach of contract by not delivering
2. Profit he would have realized if the sale the specific goods to the buyer
had been fully performed.
Buyer applies with the court for the specific performance
to compel the seller to deliver the specific goods
COUNTERMAND
Must be an order from the court for the specific
A contradictory command that overrides or performance.
annuls a previous one.
ARTICLE 1599
An action that has effect of voiding something
previously ordered Where there is a breach of warranty by the seller,
the buyer may, at his election:
A revocation 1. Accept or keep the goods and set
up against the seller, the breach of
ARTICLE 1597 warranty by way of recoupment in
diminution or extinction of the price
Where the goods have not been delivered to the 2. Accept or keep the goods and
buyer, and the buyer has repudiated the contract maintain an action against the seller
of sale, or has manifested his inability to perform
 for damages for the breach of of the price which has been paid, and with
warranty; the remedies for the enforcement of such
3. Refuse to accept the goods, and lien allowed to an unpaid seller by article
maintain an action against the seller 1526.
for damages for the breach of
warranty 5. In the case of breach of warranty of
4. Rescind the contract of sale and refuse quality, such loss, in the absence of
to receive the goods or if the goods special circumstances showing proximate
have already been received, return damage of a greater amount, is the
them or offer to return them to the difference between the value of the goods
seller and recover the price or any part at the time of delivery to the buyer and the
thereof which has been paid. value they would have had if they had
When the buyer has claimed and answered to the warranty
been granted a remedy in anyone of
these ways, no other remedy can REMEDIES OF THE BUYER IN CASE OF
therefore be granted, without BREACH OF WARRANTY BY THE SELLER
prejudice to the provisions of the
second paragraph of Article 1191. 1. Accept or keep the goods and set up
against the seller, the breach of warranty
Where the goods have been delivered to by way of recoupment in diminution or
the buyer, he cannot rescind the sale extinction of the price
if he knew of the breach of warranty 2. Accept or keep the goods and maintain
when he accepted the goods without an action against the seller for
protest,or if he fails to notify the seller damages for the breach of warranty
within a reasonable time of the election to 3. Refuse to accept the goods, and
rescind, or if he fails to return or to offer to maintain an action against the seller
return the goods to the seller in for damages for the breach of warranty
substantially as good condition as 4. Rescind the contract of sale and refuse
they were in at the time the to receive the goods or if the goods
ownership was transferred to the have already been received, return them
buyer. But if deterioration or injury of or offer to return them to the seller and
the goods is due to the breach or recover the price or any part thereof
warranty, such deterioration or injury which has been paid.
shall not prevent the buyer from
returning or offering to return the goods to ALTERNATIVE REMEDIES
the seller and rescinding the sale.Where
the buyer is entitled to rescind the When buyer has claimed and been granted a
sale andelects to do so, he shall cease remedy in anyone of these ways, no other
to be liable for the price upon returning or remedy can thereafter be granted, without
offering to return the goods. If the price or prejudice to the provisions of the second
any part thereof has already been paragraph of Article 1191:
The injured party may choose between the fulfillment
paid, the seller shall be liable to repay so and the rescission of the obligation, with the payment of
much thereof as has been paid, damages in either case. He may also seek rescission,
concurrently with the return of the goods, even after he has chosen fulfillment, if the latter should
or immediately after an offer to become impossible.
return the goods in exchange for
repayment of the price. NO RESCISSION
Where the buyer is entitled to
rescind the sale and elects to do so, if Goods have been delivered to the buyer, he
the seller refuses to accept an offer of the cannot rescind the sale if:
buyer to return the goods, the buyer shall 1. Buyer knew of the breach of warranty
thereafter be deemed to hold the goods when he accepted the goods without
as bailee for the seller, but subject to a protest
lien to secure the payment of any portion 2. Buyer fails to notify the seller within a
reasonable time of the election to
 rescind d. Confusion or merger of rights
3. Buyer fails to return or to offer to return e. Compensation
the goods to the seller in substantially f. Novation
as good condition as they were in at the g. Others
time the ownership was transferred to the 2. Conventional redemption
buyer. 3. Legal redemption

But if deterioration or injury of the goods CONVENTIONAL REDEMPTION

is due to the breach or warranty, such Right to redeem/Pacto de retro sale
deterioration or injury shall not prevent
the buyer from returning or offering to Vendor reserves the right to repurchase the
return the goods to the seller and thing sold with the obligation of returning to
rescinding the sale. the vendee the price of the sale, the expenses
of the contract, and any other legitimate
EFFECT OF RECESSION ON BUYER’S payments made by reason of the sale, the
RIGHTS AND OBLIGATIONS necessary and useful expenses made on the
thing sold and other stipulations which may
1. Buyer shall cease to be liable for the have been agreed upon.
price upon returning or offering to
return the goods. If the price of any part Accidental element in the contract of sale
thereof has already been paid, the seller because it must be clearly stipulated upon.
shall be liable to repay so much thereof Thus the right to redeem must be reserved by the
as has been paid, concurrently with the seller through a stipulation to that effect in the
return of the goods, or immediately after contract of sale.
an offer to return the goods in exchange
for repayment of the price. Inadequacy of selling price is not a ground for
rescinding the contract.
2. Buyer is entitled to rescind the sale if
the seller refuses to accept an officer Created by agreement
of the buyer to return the goods, the
ESSENCE OF CONVENTIONAL REDEMPTION
buyer shall thereafter be deemed to hold
the goods as bailee for the seller, but The essence of a pacto de retro sale is that title
subject to a lien to secure payment of any and ownership of the property sold are
portion of the price which has been paid, immediately vested in the vendee a retro,
and with the remedies for the subject to the resolutory condition of
enforcement of such lien allowed to an repurchase by the vendor a retro within the
unpaid seller. redemption period.

6. EXTINGUISHMENT OF SALE ARTICLE 1602

ARTICLE 1600 The contract shall be presumed to be an

equitable mortgage, in any of the following cases:
Sales are extinguished by the same causes as all 1. When the price of a sale with right to
other obligations, by those stated in the repurchase is unusually inadequate
preceding articles of this Title, and by 2. When the vendor remains in
conventional or legal redemption. possession as lessee or otherwise
3. When upon or after the expiration
CAUSES OF EXTINGUISHMENT OF SALE of the right to repurchase
another instrument extending the
1. Same causes as all other obligations period of redemption or granting a new
a. Payment or performance of period is executed
obligation 4. When the purchaser retains for himself
b. Loss of the thing due a part of the purchase price
c. Condonation or remission of debt 5. When the vendor binds himself to pay
 the taxes on the thing sold sale with right to repurchase shall be
6. In any other case where it may be fairly construed as an equitable mortgage.
inferred that the real intention of the
parties is that the transaction shall In case of doubt, courts are generally inclined
secure the payment of a debt or the to construe a transaction purporting to be a
performance of any other obligation. In sale as an equitable mortgage, which involves
any of the foregoing cases, any money, a lesser transmission of rights and interest over
fruits or other benefits to be received by property in controversy.
the vendee as rent or otherwise shall be
considered as interest which shall be ARTICLE 1604
subject to the usury laws
The provisions of Article 1602 shall also apply to
EQUITABLE MORTGAGE a contract purporting to be an absolute sale.

Although lacking in some formality, form, or ARTICLE 1605

words, or other requisites demanded by a
statute, nevertheless, reveals the intention of In the cases referred to in Articles 1602 and
the parties to charge a real property as 1604, the apparent vendor may ask for the
security for a debt, and contains nothing reformation of the instrument
impossible or contrary to law.
REFORMATION
PRESUMPTIONS or REQUISITES OF
EQUITABLE MORTGAGE An equitable remedy by which a court will
modify a written agreement to reflect the actual
1. Contracting parties entered into a intent of the parties, usually to correct fraud or
contract denominated as contract of mutual mistake in the writing, such as an
sale incomplete property description in a deed.
2. Intention of the contracting parties is to
secure an existing debt by way of Remedy: Correct the instrument so as to make it
mortgage. express the true intent of the parties

CASES WHERE CONTRACT SHALL BE ARTICLE 1606

PRESUMES TO BE AN EQUITABLE MORTGAGE
The right referred to in article 1601, in the
1. Price of a sale with right to repurchase is absence of an express agreement, shall last four
unusually inadequate years from the date of the contract.
2. Vendor remains in possession as lessee
or otherwise Should there be an agreement, the period cannot
3. Upon or after expiration of the right to exceed ten years.
repurchase, another instrument extending
the period of redemption or granting a However, the vendor may still exercise the right
new period is executed to repurchase within thirty days from the time
4. Purchaser retains for himself a part of the final judgment was rendered in a civil action on
purchase price the basis that the contract was a true sale with
5. Vendor binds himself to pay the taxes on right to repurchase.
the thing sold
6. In any other case, may be fairly inferred PERIOD OF REDEMPTION
that the real intention of the parties is that
the transaction shall secure the payment 1. If there is no period of redemption agreed upon
of debt or the performance of any other - Shall last four years from the date of the
obligation contract

ARTICLE 1603 2. If there is an agreement as to period of

redemption
In case of doubt, a contract purporting to be a - Period agreed upon cannot exceed ten
 years RIGHTS TRANSFERRED TO VENDEE

RIGHT TO REPURCHASE WITHIN THIRTY DAYS 1. Mortgage property

2. Receive fruits
“After the courts have decided by a final or
executory judgement that he contract is a pacto A sale with right to repurchase transfers to the
de retro and not a mortgage, the vender (whose buyer all the elements of ownership subject to a
claim as mortgagor has definitely been rejected) resolutory condition.
may still have privilege of repurchasing within 30
days” ARTICLE 1610

Seller must exercise the right within a 30-day The creditors of the vendor cannot make
period, it is not sufficient to manifest the desire to use of the right of redemption against the
repurchase. vendee, until after they have exhausted the
property of the vendor.
Must be an actual and simultaneous tender of
payment, unless of course, there is a definite ARTICLE 1611
refusal to permit repurchase.
In a sale with a right to repurchase, the vendee of
Counted from time of finality of judgement a part of an undivided immovable who acquires
the whole thereof in the case of article 498, may
ARTICLE 1607 compel the vendor to redeem the whole property,
if the latter wishes to make use of the right of
In case of real property, the consolidation of redemption
ownership in the vendee by virtue of the failure
of the vendor to comply with the provisions of ARTICLE 1612
Article 1616 shall not be recorded in the Registry
of Property without a judicial order, after the If several persons, jointly and in the same
vendor has been duly heard. contract, should sell an undivided immovable
For purposes of recording or registration only because property with a right of repurchase, none of them
the ownership is consolidated by operation of law
may exercise this right for more than his
Rationale: Contract may be in reality an equitable respective share.
mortgage and not a pacto de retro sale
The same rule shall apply if the person who sold
ARTICLE 1608 an immovable alone has left several heirs, in
which case each of the latter may only redeem
The vendor may bring his action against the part which he may have acquired.
every possessor whose right is derived from
the vendee, even if in the second contract no ARTICLE 1613
mention should have been made of the right to
repurchase, without prejudice to the provisions of In the case of the preceding article, the vendee
the Mortgage Lawand the Land Registration Law may demand of all the vendors or co-heirs that
with respect to third persons they come to an agreement upon the repurchase
of the whole thing sold;and should they fail to do
ARTICLE 1609 so, the vendee cannot be compelled to consent
to a partial redemption.
Selling was made jointly and in the same contract
The vendee is subrogated to the vendor’s rights
and actions. Rationale: Law is against co-ownership
SUBROGATION ARTICLE 1614
The substitution of one party for another whose Each one of the co-owners of an undivided
debt the party pays, entitling the paying party to immovable who may have sold his share
rights, remedies, or securities that would separately, may independently exercise the right
otherwise belong to the debtor.
of repurchase as regards his own share, and the ARTICLE 1618
vendee cannot compel him to redeem the whole
property. The vendor who recovers the thing sold shall
Selling was made separately receive it free from all charges for mortgages
constituted by the vendee, but he shall respect
ARTICLE 1615 the leases which the latter may have executed in
good faith, and in accordance with the customs of
If the vendee should leave several heirs, the the place where the land is situated
action for redemption cannot be brought against
each of them except for his own share, whether General rule: Vendor recovers the thing sold shall
the thing be undivided,or it has been partitioned receive it free from all charges or mortgages
among them. constituted by the vendee.

But if the inheritance has been divided, and the Exception: Vendor shall respect the leases which
thing sold has been awarded to one of the heirs, the buyer may have executed in good faith, and
the action for redemption may be instituted in accordance with the custom of the place where
against him for the whole. the land is situated.

ARTICLE 1616 ARTICLE 1619

Section 2. Legal Redemption
The vendor cannot avail himself of the right of
repurchase without returning to the vendee the Legal redemption is the right to be subrogated,
price of the sale, and in addition: upon the same terms and conditions stipulated
1. The expenses of the contract, and any in the contract, in the place of one who
other legitimate payments made by acquires a thing by purchase or dation in
reason of the sale payment, or by any other transaction
2. The necessary and useful expenses whereby ownership is transmitted by onerous
made on the thing sold title

OBLIGATION OF VENDOR IN CASE OF LEGAL REDEMPTION

REDEMPTION
Right to be subrogated, upon the same terms
1. Price of the sale and conditions stipulated in the contract, in the
2. Expenses of contract place of one who acquires a thing by:
3. Any other legitimate payments made by 1. Purchase
reason of the sale 2. Dation in payment
4. Necessary and useful expenses made on 3. By any other transaction whereby
the thing sold ownership is transmitted by onerous title

ARTICLE 1617 Created by law.

If at the time of the execution of the sale there In the nature of a mere privilege created partly for
should be on the land, visible or growing fruits, the reason of public policy and partly for the
there shall be no reimbursement for or prorating benefit and convenience of the redemptioner.
of those existing at the time of redemption, if no
Effected against movables and immovables.
indemnity was paid by the purchaser when the
sale was executed.
ARTICLE 1620
Should there have been no fruits at the time of
A co-owner of a thing may exercise the right of
the sale, and some exist at the time of
redemption in case the shares of all the other co-
redemption, they shall be prorated between the
owners or of any of them, are sold to a third
redemptioner and the vendee, giving the latter
person. If the price of the alienation is grossly
the part corresponding to the time he possessed
excessive, the redemptioner shall pay only a
the land in the last year, counted from the
reasonable one.
anniversary of the date of the sale
 If the resale has been perfected, the owner of
Should two or more co-owners desire to exercise adjoining land has a right of redemption
the right of redemption, they may only do so in
proportion to the share they may ARTICLE 1623
respectively have in the thing owned in
common. The right of legal preemption or redemption shall
not be exercised except within thirty days from
ARTICLE 1621 the notice in writing by the prospective vendor, or
by the vendor,as the case may be. The deed of
The owners of adjoining lands shall also have the sale shall not be recorded in the Registry of
right of redemption when a piece of rural land, Property,unless accompanied by an affidavit of
the area of which does not exceed one hectare, the vendor that he has given written notice
is alienated, unless the grantee does not own any thereof to all possible redemptioners.
rural land.
The right of redemption of co-owners excludes
This right is not applicable to adjacent lands that of adjoining owners
which are separated by brooks, drains,ravines,
roads and other apparent servitudes for the Need for notice in writing in three other species of
benefit of other estates. legal redemption:
1. In a case where the share of all other co-
If two or more adjoining owners desire to owners or any of them are sold to a third
exercise the right of redemption at the sametime, person
the owner of the adjoining land of smaller area 2. By owners of adjoining lands when a
shall be preferred; and should bothlands have the piece of rural land not exceeding one
same area, the one who first requested the hectare in a read is alienated
redemption 3. By owners of adjoining lands in the sale of
a piece of an urban land so small and so
RURAL situated that the portion thereof cannot be
used for any practical purpose within a
Country or countryside; rustic setting reasonable time, having been bought
merely for speculation.
Country people, farmers
Purpose: Reduce number of participants until the
Tenement in land adapted to and used for community is terminated, being a hindrance to
agricultural or pastoral purposes. the development and better administration of the
property
Rationale: Foster development of agricultural
areas by adjacent owners who may desire the
increase for the improvement of their own land. 7. RECTO LAW
ARTICLE 1484
PREEMPTION
In a contract of sale of personal property, the
Right to buy before others price of which is payable in installments,the
vendor may exercise any of the following
RIGHT TO PREEMPTION remedies:
1. Exact fulfillment of the obligation,
When the land is about to be resold, the owner of
should the vendee fail to pay;
any adjoining land has a right of preemption.
2. Cancel the sale, should the vendee's
failure to pay cover two or more
REDEMPTION
installments;
Act or instance of reclaiming or regaining 3. Foreclose the chattel mortgage on the
possession by paying a specific price. thing sold, if one has been constituted,
should the vendee's failure to pay cover
RIGHT OF REDEMPTION two or more installments. In this case, he
shall have no further action against
 the purchaser to recover any Provided, That the actual cancellation of
unpaid balance of the price. An the contract shall take place after thirty
Agreement to the contrary shall be void. days from receipt by the buyer of the
notice of cancellation or the demand for
Purposes: rescission of the contract by a notarial act
- To protect both buyers and sellers from and upon full payment of the cash
the effects of defaulting payments surrender value to the buyer.
- To remedy the abuses committed in Downpayments, deposits or options on
connection with the foreclosure of the contract shall be included in the
mortgages for personal properties. computation of the total number of
- Prevents the sellers/lenders from seizing installment payments made.
the mortgaged property, buying it at
foreclosure, and then pursuing the Purposes:
buyers/lendees for the defaulted - To protect buyers from unfair installment
payments. terms and conditions.
- Gives people options to settle defaults
fairly. Governs sales of anything immovable

Governs sales of anything movable

9. THE CONDOMINIUM ACT
PRESIDENTIAL DECREE 957
8. MACEDA LAW
Regulating The Sale Of Subdivision Lots And
REPUBLIC ACT 6552 Condominiums, Providing Penalties For
Realty Installment Protection Act Violations Thereof

In all transactions or contracts involving the sale The primary purpose of this law is to protect
or financing of real estate on installment buyers’ welfare from all types of real estate
payments, including residential condominium misrepresentations.
apartments but excluding industrial lots,
commercial buildings and sales to tenants Aims to control and prevent “reneged on
under Republic Act Numbered Thirty-eight representations and obligations,” “swindling and
hundred forty-four, as amended by Republic fraudulent manipulations,” and “failure to deliver.”
Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years Key elements:
of installments, the buyer is entitled to the 1. National Housing Authority (NHA).
following rights in case he defaults in - In accordance with the terms of
repayment of succeeding installments: this Decree, the National Housing
a. To pay, without additional interest, the Authority shall have sole authority
unpaid installments due within the to control the real estate trade and
total grace period earned by him which is commerce (Title II, Section 3).
hereby fixed at the rate of one month 2. Registration of Projects.
grace period for every one year of - NHA will act on and approve the
installment payments made: Provided, subdivision plan after determining
That this right shall be exercised by the that it complies with the
buyer only once in every five years of the Subdivision Standards and
life of the contract and its extensions, if Regulations in effect at the time
any. the plan is submitted. The
b. If the contract is cancelled, the seller shall registered owner of a subdivision
refund to the buyer the cash surrender lot who plans to convert their
value of the payments on the property property into a subdivision project
equivalent to fifty percent of the total must submit his subdivision plan to
payments made, and, after five years of NHA. The project plan must
installments, an additional five per cent adhere to the rules and
every year but not to exceed ninety per regulations of the National Building
cent of the total payments made: Code (Title II, Section 4).
 3. License to sell. a. Protection against hazards to health and
- Unless the person obtains a safety;
license to sell the project within b. Protection against deceptive, unfair and
two weeks following the unconscionable sales acts and
registration of such project, the practices;
owner or dealer to that has been c. Provision of information and education
issued with a registration to facilitate sound choice and the
certificate shall not be entitled to proper exercise of rights by the
sell any condo unit or subdivision consumer;
lot in the registered project. After d. Provision of adequate rights and means
reviewing the registration of redress; and
statement filed by the owner or e. Involvement of consumer
dealer and all relevant documents representatives in the formulation of
attached, the license to sell will be social and economic policies.
granted to the owner or dealer of
the registered project license to
11. THE PRICE ACT
sell.
4. Performance Bond. REPUBLIC ACT 7581
- Without an adequate performance An Act Providing Protection To Consumers By
bond submitted and approved by Stabilizing The Prices Of Basic Necessities And
the NHA to guarantee the Prime Commodities And By Prescribing
development and upkeep of the Measures Against Undue Price Increases During
roads, gutters, drainage, Emergency Situations And Like Occasions
sewerage, water system, lighting
systems, and full completion of the It is the policy of the State to ensure the
subdivision project or availability of basic necessities and prime
condominium project, no license to commodities at reasonable prices at all times
sell condo units or subdivision lots without denying legitimate business a fair
shall be issued by the NHA under return on investment. It is also a declared policy
Section 5 of this Decree. of the State to provide effective and sufficient
protection to consumers against hoarding,
Exemptions from requiring a license to sell and profiteering and cartels with respect to the
performance bond: supply, distribution, marketing and pricing of said
- The split of land among co-owners and goods, especially during periods of calamity,
co-heirs, which results in the sale of a emergency, widespread illegal price manipulation
subdivision lot. and other similar situations. To these ends, the
- The initial buyer of a subdivision lot selling State shall:
or transferring the lot, as well as any a. Develop, adopt and promulgate measures
subsequent sales of the same lot. to promote productivity in basic
- A mortgagee selling a subdivision lot or a necessities and prime commodities;
condominium unit by or on behalf of the b. Develop an improved and efficient
mortgagee in the regular course of transport and distribution system;
business in order to pay off a legitimate c. Develop, adopt and promulgate measures
debt. to stabilize prices at reasonable levels;
d. Institute appropriate penalties for illegal
price manipulation and other violations
10. THE CONSUMER ACT OF THE PHILIPPINES
of this Act; and
REPUBLIC ACT 7394 e. Establish a mechanism that will readily
protect consumers from inadequate
It is the policy of the State to protect the supply and unreasonable price
interests of the consumer, promote his increase on occasions of calamities,
general welfare, and to establish standards of emergencies and like occurrences.
conduct for business and industry. Towards
this end, the State shall implement measures to
achieve the following objectives: 12. THE PHILIPPINE LEMON LAW
REPUBLIC ACT 10642
An Act Strengthening Consumer Protection In
The Purchase Of Brand New Motor Vehicles

It is hereby declared the policy of the State to

promote full protection to the rights of
consumers in the sale of motor vehicles
against business and trade practices which
are deceptive, unfair or otherwise inimical to
consumers and the public interest.

The State recognizes that a motor vehicle is a

major consumer purchase or investment.
Hence, the rights of consumers should be clearly
defined, including the means for redress for
violations thereof.