Definition in English: Earnest money is money given in a contract of sale as proof of the perfection of the contract and, unless the parties validly stipulate otherwise, forms part of the purchase price. Its legal effect depends on the agreement and the surrounding facts, not merely the label on a receipt.
Paliwanag sa Filipino: Paunang bayad na bahagi ng presyo — Halagang ibinibigay bilang patunay na nabuo ang bentahan at karaniwang ibinibilang sa presyo.
Before paying or signing
- Compare earnest money, down payment and option money — identify what the payment is for before deciding your next step
Keep the proposed agreement, receipt, payment terms and messages together while you compare the arrangements.
Legal basis
Civil Code Article 1482. The rule must be read together with applicable amendments and controlling Supreme Court decisions.
What this term means
- Earnest money generally indicates that a sale has been perfected.
- It is ordinarily credited toward the purchase price.
- It differs from option money, which is separate consideration supporting an option to buy.
Example
A buyer pays part of the agreed price after the parties settle on the property and price. If the payment is earnest money, it ordinarily confirms the perfected sale and is applied to the balance.
Related civil law terms
Contract Of Sale · Option Money · Rescission
What to read next
Whether earnest money can be refunded · Earnest money vs down payment vs option money · Earnest money under Article 1482 · Browse contracts content · Return to the Civil Law Glossary
Important note
This glossary entry is an educational explanation of Philippine civil law. The English definition states the primary legal concept. The Filipino explanation is provided to make the concept easier to understand and is not an official translation of the Civil Code, Rules of Court or Supreme Court decisions. Consult the controlling legal text and qualified counsel for a specific dispute.
Jurisdiction: Philippines
Last reviewed: September 2026