Nature and Form of Sales Subject Matter of Sale

● While Article 1458 defines a sale as involving a “determinate” thing, the current Law
Art. 1458. Definition of Sale
on Sales allows the sale of generic items too—as long as they can be identified
or determined later.
Sale - a contract where the Seller obligates himself to: ● Article 1460 explains that an item is considered “determinate” if, at the time of the
a. Transfer the ownership contract, it can be made specific without needing a new agreement.
b. To deliver the possession of a determinate thing
So even if the item is generic when the sale is perfected, the seller must still identify and
set aside the specific item to fulfill their duty to deliver and transfer ownership. That’s why
And the Buyer obligates himself:
the term “determinate” is still accurate—it refers to the required specificity at the time of
a. To Pay a price certain in money or its equivalent performance, not at the time of contract.

Nature of Sale Elements of Contract of Sale

● It is a principal obligation of the Seller to transfer the ownership of the subject
matter of the sale. (a) CONSENT, or meeting of the minds to transfer ownership in exchange for the
price;
● In a contract of sale, the seller has a real obligation — that is, the duty to give (b) SUBJECT MATTER; and
the thing sold to the buyer. This kind of obligation can be enforced by filing a case (c) PRICE, certain in money or its equivalent.
for specific performance, which means the court can order the seller to deliver the
If there is a meeting of the minds — a valid and binding contract of sale exists. Even if
item.
the parties previously signed a fictitious deed of sale or later failed to perform their
obligations, the contract remains valid because the essential elements were present from
● This is different from personal obligations, like a promise to do something (e.g., the start.
paint a wall) or not to do something (e.g., not to sell to someone else). These can't
usually be forced by the court, because making someone do an act against their However, the Supreme Court has, in several cases, referred to sales lacking one or more
will could go against the rule against involuntary servitude. But if the seller of these elements as “void.” The author suggests a better way to describe such a situation
refuses to perform such duties, the buyer can: is not to call it void, but to say that no contract existed at all — because without all three
elements, no sale was ever perfected.
● Have someone else do the act (if possible) and charge the cost to the seller,
or Also, in Manila Container Corp. v. PNB, the Supreme Court clarified that simply giving
● Claim damages for the seller’s refusal. earnest money does not prove that a sale exists if the three essential elements are
missing.
So, in a sale, the focus is on real obligations (to give), which are enforceable by law
through delivery or specific performance. On the other hand, if all three elements are present, but there is a defect (like fraud,
mistake, or force affecting consent), then the contract may be:
For example, Article 1480 of the Civil Code, referring to Article 1165, says that if the item to
be delivered is specific (determinate), the buyer can demand its delivery and also claim ● Voidable, if the defect affects consent; or
damages.
● Void, if it falls under cases listed in Article 1409 (Void or Inexistent Contracts) of
This means the seller cannot choose to just pay damages if the buyer wants the item the Civil Code (e.g., illegal object or cause).
delivered—the buyer has the right to demand actual performance.
Stages in the Life of Sale
1. Policitacion (Negotiation or Preparation Stage) ● Once perfected, parties can already demand performance.
This is the early stage where the buyer and seller are still talking or expressing interest.
● Signatures or written form are not required for validity (only for convenience or to
bind third parties).
No binding contract exists yet — they’re just exploring the possibility of a sale.
● The real price must be agreed upon; if it’s simulated or missing, the contract may
2. Perfection (Birth of the Contract) be void or subject to reformation.
The contract is perfected when both parties agree on the object (what’s being sold)
and the price. ● Conditions like "subject to mortgage approval" may delay perfection.

This is when the sale becomes legally enforceable. 3. Bilateral and Reciprocal

● Both parties have mutual obligations: the seller to deliver and the buyer to pay.
3. Consummation (Fulfillment or End of the Contract)
This is when the parties fulfill their obligations — the seller delivers the item, and the ● There is Reciprocal obligation wherein the duty of one depends on the performance
buyer pays. of the other.

The contract ends or is “extinguished” once both sides have completed what they agreed ● Legal Effects:
to do.
○ The right to rescind is implied if one party fails to perform.
Essential Characteristics of Sale ○ No delay occurs unless the other party is ready and willing.

1. Nominate and Principal ○ Once one performs, the other is in default if they don’t reciprocate.

● Nominate - The contract of sale has a specific name under the law and is ○ Remedies include specific performance or rescission with damages.
governed by the Civil Code.
4. Onerous
● Principal - It is a stand-alone contract, not an accessory to another.
● Sale requires valuable consideration, usually a price in money.
○ Courts look at the intent of the parties and not just the label of the
contract. ● It is not gratuitous (unlike donation).
○ Even if the contract is called something else, if it involves transfer of ● The obligation to pay may be subject to a suspensive period rather than a
ownership for a price, it is governed by the Law on Sales. condition.
○ Example: Even if payment is deferred, the obligation exists.
2. Consensual
5. Commutative
● A sale is perfected by mere consent—when there is a meeting of the minds on the
object and the price. ● Each party exchanges something of value presumed to be equal (though not
necessarily exact).
● It does not require delivery or payment to be valid.
 ● What matters is the subjective belief that the value exchanged is fair. In sale, ownership and obligations arise immediately upon agreement; in contract to
sell, ownership transfer is suspended until a condition (usually full payment) is met.
○ Example: A car sold for ₱200,000, even if market value is ₱500,000, is still
a sale if the seller accepts it knowingly.

● Aleatory contracts (like bets or insurance) involve risk and unequal value—sale is
usually not like that.

In sale, ownership and obligations arise immediately upon agreement; in contract to

sell, ownership transfer is suspended until a condition (usually full payment) is met.

6. Title and not Mode - A mode is the legal means by which dominion or ownership is
Sale requires payment; donation is without payment and based purely on created, transferred or destroyed, but title is only the legal basis by which to affect
generosity. dominion or ownership. Sale by itself does not transfer or affect ownership; the most that
sale does is to create the obligation to transfer ownership. It is tradition (delivery as a
consequence of sale) that actually transfers ownership. [ San Lorenzo Dev. Corp. v. CA ]

SALE DISTINGUISHED FROM OTHER SIMILAR CONTRACTS

● In determining whether a contract is a sale is the substance of the agreement.
● Courts look at the intent of the parties, the elements of the contractual relationship, ○ Barter involves an exchange where the value of the goods or
and the conduct of the parties before, during, and after the execution of the services provided exceeds the money given.
agreement.
● Distinctions under the Civil Code: Article 1468 of the Civil Code provides
● A contract is defined by law according to its essential elements.
rules for distinguishing between sale and barter. If the consideration
involves money and another item, the intention of the parties must be
1. Donation considered. If the value of the non-monetary part of the exchange exceeds
- a gratuitous transfer of ownership where one party disposes of something in the money, it leans towards barter; otherwise, it may still be a sale.
favor of another without receiving a price in return.

Sale, on the other hand, is an onerous contract, meaning it involves a price.

1459 - The thing must be licit and the vendor must have a right to transfer the
While both contracts may involve the transfer of ownership, the ownership thereof at the time it is delivered.
distinguishing factor is that sale requires valuable consideration, while
donation is gratuitous. Additionally, while a sale is perfected by mere - Talks about the lawfulness of the object and right to transfer ownership
consent, a donation, being solemn, must comply with formalities required by - The seller must be the owner of the subject sold. Nemo dat quod non habet (No
law for validity. one gives what they do not have). But the seller only needs to be the owner upon
delivery , and not necessarily upon perfection of the contract of sale.
● A valid sale does not diminish the seller's estate because the subject of the
sale is exchanged for money. However, a donation reduces the estate
because no valuable consideration is received. A sale that appears to have
a simulated price could be considered a donation if the real intention is
for the transfer to be gratuitous.
1460 - 1465 Discusses the object of sale.
● Simulated Sale and Donation: If a contract labeled as a sale is found to
1460 - A thing is determinate when it is particularly designated or physical
have a simulated price (e.g., a nominal amount), it might be reclassified as
segregated from all other of the same class.
a donation governed by the rules on donations.
The requisite that a thing be determinate is satisfied if at the time the contract is
entered into, the thing is capable of being made determinate without the necessity
of a new or further agreement between the parties.
2. Barter
- Involves the exchange of goods or services directly without the use of
- A thing is determinate if at the time the contract is entered into, the thing is capable
money. In contrast to sale, where one party receives a price in exchange for
of being made determinate without the necessity of a new or further agreement
a thing, barter involves a direct exchange of goods.
between the parties. (Art 1460)
Determining the Nature of the Contract:
1461 - Things having a potential existence may be the object of the contract of
sale.The efficacy of the sale of a mere hope or expectancy is deemed subject to the
○ If one of the parties pays with money and the other provides goods
condition that the thing will come into existence.
in exchange, the contract may still be considered a sale, not barter,
even if the exchange seems unequal in terms of money and goods.
The sale of a vain hope or expectancy is void.

Example of things with potential existence that can be a subject of sale :

 1. All of Rankine’s potential harvest for December 2025 - Undivided Interest is also referred to as ideal, abstract or proportionate share
2. The wine that a particular vineyard is expected to produce
Ex. Pogi owns a 1 hectare land may sell the entire land or sell just a portion of the
land by metes and bounds. He can sell his undivided interest (without identifying or
specifically designating the portion sold)
Sales of having potential existence Sale of hope or expectancy (Emptio
- An undivided interest in a thing may be sold by the sole owner which results in a
(Emptio rei speratae - contract of sale of Spei - A purchase in the hope of an
co-ownership. The full owner may sell the usufruct of his land, leaving the naked
future things) uncertain future profit)
ownership to himself.
If the expected thing does not materialize, It does not matter if the expected thing
the sale is not effective materialize or not

Subject to a condition that the thing should It produces effect even though the thing
exist, otherwise, there will be no contract does not come into existence, the subject
by reason of the absence of an essential matter is the hope itself
element, which is the subject matter

Deals with future things Deals with present things

Article 1464. In the case of fungible goods, there may be a sale of an undivided
share of a specific mass, though the seller purports to sell and the buyer to buy a
1462 - The goods which form the subject of a contract of sale may be either existing definite number, weight or measure of the goods in the mass, and though the
goods, owned or possessed by the seller, or goods to be manufactured, raised, or number, weight or measure of the goods in the mass, and though the number,
acquired by the seller after the perfection of the contract of sale, in this Title called weight or measure of the goods in the mass is undetermined. By such a sale the
"future goods." buyer becomes owner in common of such a share of the mass as the number,
weight or measure bought bears to the number, weight or measure of the mass. If
There may be a contract of sale of goods, whose acquisition by the seller depends the mass contains less than the number, weight or measure bought, the buyer
upon a contingency which may or may not happen. (n) becomes the owner of the whole mass and the seller is bound to make good the
deficiency from goods of the same kind and quality, unless a contrary intent
Goods may be existing or future goods. Future goods are those still to be appears.

a. Manufactured or printed; - The article talks about the sale of share in a specific mass and fungible
b. Raised, or future agricultural products; goods
c. Acquired by seller after perfection of contract, or after-acquired property ;
d. Things whose acquisition depends upon a contingency that may or may not happen. Fungible goods - refers to goods that cannot be used without consuming them (ex.
rice)
Traditional Specifications of goods are :
1. If the quantity of the mass is more than the quantity sold, the parties shall become
1. Movable co-owners
2. Tangible 2. If quantity of the mass is less than the quantity sold, the buyer becomes the owner
3. Intangible goods of the whole mass, and the seller is bound to make good the deficiency which
should be of the same kind and quality
Article 1463. The sole owner of a thing may sell an undivided interest therein.
Ex. Pogi owns rice stored in his bodega wherein the exact number is unknown, then ganda Contract of Sale - ordered in the ordinary course of his business manufactures or
buys 100 sacks of rice but it turns out that pogi has an excess quantity of 50 more sacks of procures for the general market
rice. Then ganda becomes a co-owner of two-thirds of the entire mass. However, if pogi
only owns 80 sacks of rice, then ganda will be the owner of the 80 sacks and pogi must Contract of piece of work - manufactured specially for the customer and upon his special
supply the deficit of 20 sacks of rice of the same kind and quality. order and not for the general market.

Article 1465. Things subject to a resolutory condition may be the object of the
contract of sale.
Article 1468. If the consideration of the contract consists partly in money, and partly
in another thing, the transaction shall be characterized by the manifest intention of
the parties. If such intention does not clearly appear, it shall be considered a barter
Article 1466. In construing a contract containing provisions characteristic of both if the value of the thing given as a part of the consideration exceeds the amount of
the contract of sale and of the contract of agency to sell, the essential clauses of the the money or its equivalent; otherwise, it is a sale.
whole instrument shall be considered.
Provides that If the consideration of the contract consists partly in money, and partly in
- Provides that in order to classify between contract of sale and agency to sell, another thing, the transaction shall be characterized by the manifest intention of the
due regard must be given to its essential clauses of the whole instrument parties. If such intention does not clearly appear, it shall be considered a barter if the value
shall be considered. of the thing exceeds the amount of the money or its equivalent; otherwise , it is a sale .

Contract of Sale Agency to Sell Barter - if the value of the thing is more than the monetary consideration

The buyer pays the price The agent delivers the price which he got Sale - if the monetary consideration is more than the value of the thing
from the Buyer
Same amount - It is contract of sale
The buyer after delivery becomes the The agent does not become the owner
owner Article 1469. In order that the price may be considered certain, it shall be sufficient
that it be so with reference to another thing certain, or that the determination thereof
The seller warrants The agent who sells assumes no personal be left to the judgment of a special person or persons.
liability as long as he acts within his
authority and in the name of the principal Should such person or persons be unable or unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently agree upon the price.
Article 1467. A contract for the delivery at a certain price of an article which the If the third person or persons acted in bad faith or by mistake, the courts may fix the
vendor in the ordinary course of his business manufactures or procures for the price.
general market, whether the same is on hand at the time or not, is a contract of sale,
but if the goods are to be manufactured specially for the customer and upon his Where such third person or persons are prevented from fixing the price or terms by
special order, and not for the general market, it is a contract for a piece of work. fault of the seller or the buyer, the party not in fault may have such remedies against
the party in fault as are allowed the seller or the buyer, as the case may be.
- Provides the difference between contract of sale and contract for a piece of
work.
 - Provides that the price is certain, if not, then there is no true consent of The price of items like securities, grains, and liquids is considered certain (and therefore
between the parties. valid in a contract of sale) if it is based on:
- For a price to be certain, it is sufficient that it should be with reference to
another thing certain or that the determination be left to the judgment of a ● The market price on a specific day, or
special person or persons ● The price in a particular exchange or market, or
- General Rule - Price fixed and determined by specified third person is ● A price above or below that market price, as long as the difference is clearly stated.
binding between the parties
- XPN - If the third person acted in bad faith or by mistake.
- Remedy - The courts may fix the price Example:
A trader agrees to buy 100 barrels of oil from a seller at ₱5 less than the price of oil on the
Parties not at fault remedies : Philippine Energy Exchange on May 15, 2025.
Even though the actual price will be known only on that date, this is still considered a certain
1. May demand for fulfillment; or price under Article 1472, because it’s based on an identifiable market price with a definite
2. Rescission of Contract adjustment.

The article provides for instances when we can say that the price is certain : Article 1473. The fixing of the price can never be left to the discretion of one of the
1. When it is stipulated contracting parties. However, if the price fixed by one of the parties is accepted by the
2. When it has reference to another thing certain other, the sale is perfected.
3. When it is fixed by a third person
Article 1474. Where the price cannot be determined in accordance with the preceding
4. When it is fixed by the court articles, or in any other manner, the contract is inefficacious. However, if the thing or
any part thereof has been delivered to and appropriated by the buyer he must pay a
Article 1470. Gross inadequacy of price does not affect a contract of sale, except as it
reasonable price therefor. What is a reasonable price is a question of fact dependent on
may indicate a defect in the consent, or that the parties really intended a donation or
the circumstances of each particular case.
some other act or contract.

- Gross inadequacy of price does not affect the validity of a contract so long as it If a contract of sale doesn't have a determined price and there's no other way to establish it,
is agreed upon by the parties. the contract isn't valid. However, if the buyer has already received and used the item, they
- Except, when it indicate a defect in consent must pay a reasonable price, which depends on the specific facts and circumstances of the
a. Mistake case.
b. Fraud
c. Incapacity Example:
d. Undue Influence A farmer delivers sacks of rice to a buyer without agreeing on the price beforehand. The buyer
e. Force accepts and sells the rice. Even though no price was set, the buyer must pay a reasonable
f. Intimidation price based on the current market value of rice at the time of delivery.
- If there is defect in consent, contract may be annulled thru proper court action
Article 1475. The contract of sale is perfected at the moment there is a meeting of minds
Article 1471. If the price is simulated, the sale is void, but the act may be shown to have upon the thing which is the object of the contract and upon the price.
been in reality a donation, or some other act or contract.
From that moment, the parties may reciprocally demand performance, subject to the
Article 1472. The price of securities, grain, liquids, and other things shall also be provisions of the law governing the form of contracts.
considered certain, when the price fixed is that which the thing sold would have on a
definite day, or in a 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 1476. In the case of a sale by auction:
(1) Where goods are put up for sale by auction in lots, each lot is the subject of a Example:
separate contract of sale. A seller announces, “I reserve the right to bid on this item.” This means they or
someone on their behalf can place bids without violating auction rules.
(2) A sale by auction is perfected when the auctioneer announces its perfection by the
fall of the hammer, or in other customary manner. Until such an announcement is made, Secret seller bidding is illegal and fraudulent.
any bidder may retract his bid; and the auctioneer may withdraw the goods from the
sale unless the auction has been announced to be without reserve.
If no notice is given that the seller can bid, then:
(3) A right to bid may be reserved expressly by or on behalf of the seller, unless
otherwise provided by law or by stipulation. ● The seller cannot bid,
● The auctioneer cannot accept bids from the seller or anyone acting for them,
(4) Where notice has not been given that a sale by auction is subject to a right to bid on ● If they do, the sale may be declared fraudulent.
behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or
induce any person to bid at such sale on his behalf or for the auctioneer, to employ or Example:
induce any person to bid at such sale on behalf of the seller or knowingly to take any In an unannounced auction, the seller secretly asks a friend to place bids to raise the
bid from the seller or any person employed by him. Any sale contravening this rule may price. If a buyer discovers this, they may void the sale due to fraud.
be treated as fraudulent by the buyer.
Article 1477. The ownership of the thing sold shall be transferred to the vendee upon the
Each lot is a separate sale. actual or constructive delivery thereof.

If multiple lots (groups of items) are auctioned, each lot counts as its own contract of sale.

Example:
At an auction, Lot 1 is a car and Lot 2 is a motorcycle. Buying the car doesn't mean you're
Article 1478. The parties may stipulate that ownership in the thing shall not pass to the
also buying the motorcycle—each is a separate deal.
purchaser until he has fully paid the price.
Sale is perfected at the fall of the hammer.

A sale becomes final when the auctioneer announces it (usually by dropping the hammer).
Until that moment:

● A bidder can still withdraw their bid, and

● The auctioneer can cancel the sale, unless it was declared as “without reserve”
(meaning items must be sold to the highest bidder no matter what).

Article 1479. A promise to buy and sell a determinate thing for a price certain is
Example: You bid on a painting. Before the hammer falls, you change your mind and
reciprocally demandable.
retract your bid that's allowed. But if the auction was "without reserve," the
auctioneer can’t cancel just because the price is too low. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is
binding upon the promisor if the promise is supported by a consideration distinct from
Seller can reserve the right to bid. the price.

The seller may bid at their own auction only if this right is explicitly announced or agreed 1. If both parties agree to buy and sell a specific item for a fixed price, either party
upon. can legally demand the other to fulfill the agreement; this is a bilateral promise
 and is enforceable. If the item is lost without the fault of the seller before delivery, the obligation is extinguished,
meaning the seller is not liable anymore.
2. A unilateral promise (only one party commits to sell or buy) is only binding if the
other party gives a separate consideration (something of value) apart from the Article 1480. Any injury to or benefit from the thing sold, after the contract has been
price. perfected, from the moment of the perfection of the contract to the time of delivery, shall
be governed by articles 1163 to 1165, and 1262.
Examples:
This rule shall apply to the sale of fungible things, made independently and for a single
1. Bilateral Promise (Reciprocally Demandable): price, or without consideration of their weight, number, or measure.
Ana and Ben sign an agreement where Ana promises to sell her car to Ben for ₱500,000, and
Ben promises to buy it. Both can legally require the other to fulfill the sale. Should fungible things be sold for a price fixed according to weight, number, or
measure, the risk shall not be imputed to the vendee until they have been weighed,
2. Unilateral Promise with Consideration: counted, or measured and delivered, unless the latter has incurred in delay.
Carlos promises to sell his farm to Dana for ₱2 million, but Dana hasn’t accepted the offer yet.
General Rule (Perfection to Delivery):
To keep the offer open for 30 days, Dana gives Carlos ₱10,000 as "option money."
After a sale is perfected but before delivery, any loss or benefit related to the thing sold is
Carlos is now bound to honor that promise during the 30 days because the option money is
governed by Articles 1163–1165 (duty of care) and 1262 (loss without fault extinguishes
separate from the sale price.
obligation).

Fungible Goods Sold as a Lump Sum: If fungible goods (e.g., rice, oil, sugar) are sold as a
whole and for a single price without regard to weight, number, or measure this general rule
applies. The risk passes to the buyer upon perfection of the contract.

Fungible Goods Priced by Weight/Measure: If the sale is based on weight, number, or

measure, then the risk stays with the seller until the goods are weighed, counted, or measured
and delivered—unless the buyer delays in receiving them.

Article 1480. Any injury to or benefit from the thing sold, after the contract has been
perfected, from the moment of the perfection of the contract to the time of delivery, shall
be governed by articles 1163 to 1165, and 1262
Article 1481. In the contract of sale of goods by description or by sample, the contract
Once a contract of sale is perfected (meaning both parties agree on the object and the may be rescinded if the bulk of the goods delivered do not correspond with the
price), any loss, damage, or benefit related to the item sold before delivery is governed description or the sample, and if the contract be by sample as well as description, it is
by Articles 1163 to 1165 and 1262 — these cover obligations to take care of the item and not sufficient that the bulk of goods correspond with the sample if they do not also
what happens if it is lost. correspond with the description.

Articles 1163–1165: The buyer shall have a reasonable opportunity of comparing the bulk with the
description or the sample.
The seller must take care of the thing sold with due diligence until it's delivered. If they fail to do
so and damage occurs, they can be held liable.

Article 1262: 1. In a sale by description or by sample, the buyer can rescind (cancel) the contract if the
goods delivered don’t match the description or sample.
 2. If the sale is based on both sample and description, the goods must match both — it’s Article 1485. The preceding article shall be applied to contracts purporting to be leases
not enough that they only match the sample. of personal property with option to buy, when the lessor has deprived the lessee of the
3. The buyer must be given a reasonable chance to compare the goods delivered with the possession or enjoyment of the thing.
description or sample before accepting them.
The provisions of Article 1484 (regarding sales of personal property on installment) also apply
to contracts that are leases with an option to buy. Specifically, if the lessor deprives the lessee
of possession or enjoyment of the leased item, the lessee can exercise similar remedies as in a
Article 1482. Whenever earnest money is given in a contract of sale, it shall be sale, such as demanding fulfillment, cancellation, or foreclosure of a chattel mortgage.
considered as part of the price and as proof of the perfection of the contract.
Article 1486. In the case referred to in the two preceding articles, a stipulation that the
installments or rents paid shall not be returned to the vendee or lessee shall be valid
insofar as the same may not be unconscionable under the circumstances.
Article 1483. Subject to the provisions of the Statute of Frauds and of any other
applicable statute, a contract of sale may be made in writing, or by word of mouth, or In cases involving sales on installment or leases with an option to buy (as mentioned in the
partly in writing and partly by word of mouth (expressly) , or may be inferred from the previous articles), a stipulation that the installments or rents paid will not be refunded to the
conduct of the parties (impliedly). buyer or lessee if the contract is canceled is valid, as long as it is not unconscionable
(unreasonably unfair) given the circumstances.

Article 1487. The expenses for the execution and registration of the sale shall be borne
Article 1484. In a contract of sale of personal property the price of which is payable in by the vendor, unless there is a stipulation to the contrary.
installments, the vendor may exercise any of the following remedies:
Article 1488. The expropriation of property for public use is governed by special laws
(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should
the vendee's failure to pay cover two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.

In a sale of personal property on installment, if the buyer fails to pay, the seller has three
legal remedies:

1. Demand full payment of the remaining balance (exact fulfillment).

2. Cancel the sale if the buyer misses two or more installments.
3. Foreclose the chattel mortgage (if one exists) if the buyer misses two or more
installments, but the seller cannot go after the buyer for any unpaid balance — this is
known as the "Recto Law".

Any agreement allowing recovery of the unpaid balance after foreclosure is void.