Law on Sales

5. Onerous – as opposed to gratuitous, because
the thing is sold in consideration of a price and
I. INTRODUCTION vice versa

A. Definition of sale

Art. 1458. By the contract of sale one of the
contracting parties obligates himself to transfer the 6. Principal – it can stand on its own; unlike an
ownership and to deliver a determinate thing, and the accessory contract
other to pay therefor a price certain in money or its
equivalent. C. Kinds of a contract of sale

A contract of sale may be absolute or conditional. 1. Absolute – where the sale is not subject to
(1445a) any condition whatsoever and where title passes
to the buyer upon the delivery of the thing sold.
The definition in Art 1458 brings about the creation of
two sets of obligations: for the seller, (1) to transfer 2. Conditional – where the sale contemplates a
ownership and (2) deliver possession of the subject contingency and in general, where the contract is
matter; for the buyer: to pay the price. Obligations, subject to certain conditions (usually the full
as referred to in the Article, are obligations to give; payment of the purchase price). Conditions are
thus it may be the subject of actions for specific attached to the contract; the title will only pass
performance. (Villanueva) once the conditions have been fulfilled.

B. Characteristics of a contract of sale D. Sale as distinguished from other contracts

1. Nominate – it has a peculiar name and form as 1. sale vs. contract for a piece of work2
prescribed in the law
Art. 1467. A contract for the delivery at a
2. Consensual – it is founded upon and completed certain price of an article which the vendor in the
by mere consent of the contracting parties1 (See ordinary course of his business manufactures or
Article 1475) procures for the 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
Art. 1475. The contract of sale is perfected at the specially for the customer and upon his special
moment there is a meeting of minds upon the thing order, and not for the general market, it is a
which is the object of the contract and upon the price. contract for a piece of work. (n)

From that moment, the parties may reciprocally Art. 1713. By the contract for a piece of work
demand performance, subject to the provisions of the the contractor binds himself to execute a piece of
law governing the form of contracts. (1450a) work for the employer, in consideration of a
certain price or compensation. The contractor
3. Commutative – it is a contract in which each of may either employ only his labor or skill, or also
the contracting parties gives a thing of value and furnish the material. (1588a)
receives an equivalent
Art. 1714. If the contractor agrees to produce
4. Bilateral – it is a contract in which both the the work from material furnished by him, he
contracting parties are bound to fulfill the obligations shall deliver the thing produced to the employer
reciprocally towards each other (i.e. the vendor and transfer dominion over the thing. This
becomes bound to deliver the thing sold and the contract shall be governed by the following
vendee to pay the price for it) articles as well as by the pertinent provisions on

2
CELESTINO V. COLLECTOR: A factory which habitually
makes sash, windows and doors, and sells the goods to the
1
public is a manufacturer. The fact that the windows and
QUIJADA V. CA: Sale being a consensual contract, is doors are made by it only when customers place their
perfected by mere consent, which is manifested the moment orders and according to such form or combination as suit
there is a meeting of the minds as to the offer and acceptance the fancy of the purchasers does not alter the nature of the
thereof on 3 elements: price, subject matter and terms of establishment;
payment. Ownership by the seller on the thing sold at the time of COMMISSIONER V. ENGINEERING: The test of a
perfection of the contract of sale is not an element for its contractor is that he renders service in the course of an
perfection. What the law requires is that the seller has the right to independent occupation, representing the will of his
transfer ownership at the time the thing sold is delivered. employer only as to the result of his work, and not as to the
means by which it is accomplished.

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warranty of title and against hidden defects and the exceeds the amount of the money or its
payment of price in a contract of sale. (n) equivalent; otherwise, it is a sale. (1446a)

Art. 1715. The contract shall execute the work in Art. 1638. By the contract of barter or exchange
such a manner that it has the qualities agreed upon one of the parties binds himself to give one thing
and has no defects which destroy or lessen its value in consideration of the other's promise to give
or fitness for its ordinary or stipulated use. Should the another thing. (1538a)
work be not of such quality, the employer may
require that the contractor remove the defect or Art. 1639. If one of the contracting parties,
execute another work. If the contract fails or refuses having received the thing promised him in
to comply with this obligation, the employer may barter, should prove that it did not belong to the
have the defect removed or another work executed, person who gave it, he cannot be compelled to
at the contractor's cost. (n) deliver that which he offered in exchange, but he
shall be entitled to damages. (1539a)
a) In a contract for work, labor or materials or for a
piece of work, the thing transferred is one not in
Art. 1640. One who loses by eviction the thing
existence and which never would have existed but for
received in barter may recover that which he
the order of the party desiring to acquire it; while in a
gave in exchange with a right to damages, or he
contract of sale, the thing transferred is one which
may only demand an indemnity for damages.
would have existed and been the subject of sale to
However, he can only make use of the right to
some other person, even if the order had not been
recover the thing which he has delivered while
given. (De Leon)
the same remains in the possession of the other
party, and without prejudice to the rights
b) This follows the Massachusetts Rule: a contract for
acquired in good faith in the meantime by a third
the delivery at a certain price of an article which the
person. (1540a)
vendor, in the ordinary course of his business,
manufactures or procures for the general market,
whether the same is on hand at the time or not, is a Art. 1641. As to all matters not specifically
contract of sale. But if the goods are to be provided for in this Title, barter shall be
manufactured specially for the customer and upon his governed by the provisions of the preceding Title
special order and not for the general market, it is a relating to sales. (1541a)
contract for a piece of work. (Baviera)
4. sale vs. dacion en pago
2. sale vs. agency to buy and sell3
Art. 1245. Dation in payment, whereby property
Art. 1466. In construing a contract containing is alienated to the creditor in satisfaction of a
provisions characteristic of both the contract of sale debt in money, shall be governed by the law of
and of the contract of agency to sell, the essential sales. (n)
clauses of the whole instrument shall be considered.
(n) Dacion En Pago Sale
Presupposes a Obligations are
3. sale vs. barter or exchange preexisting debt & created from the
extinguishes the debt perfection of the
Art. 1468. If the consideration of the contract contract
consists partly in money, and partly in another thing, Price is the value of the Fixing of the price is
the transaction shall be characterized by the manifest thing given more freely agreed
intention of the parties. If such intention does not upon
clearly appear, it shall be considered a barter if the (Manresa)
value of the thing given as a part of the consideration
5. sale vs. donation
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QUIROGA V. PARSONS: In the contract in the instant case,
what was essential, constituting its cause and subject matter, was Art. 725. Donation is an act of liberality
that the plaintiff was to furnish the defendant with the beds which whereby a person disposes gratuitously of a
the latter might order, at the stipulated price, and that the
thing or right in favor of another, who accepts it.
defendant was to pay this price in the manner agreed upon.
These are precisely the essential features of a contract of
purchase and sale. There was the obligation on the part of the Under Art 1471, when the price of the contract of
plaintiff to supply the beds, and, on that of the defendant, to pay sale is simulated, the sale may be void but the
their price. These features exclude the legal conception of an act may be shown to have been in reality a
agency or older to sell whereby the mandatory or agent receives donation x x x On the other hand, a purported
the thing to sell it, and does not pay its price, but delivers to the donation may have other considerations placed
principal the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it,
on the donee, thus it becomes critical to

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determine what rule applies (law on sales or law on Where necessaries are those sold and delivered
donations) (Villanueva) to a minor or other person without capacity to
act, he must pay a reasonable price therefor.
6. summation: tests to determine the nature of Necessaries are those referred to in Article 290.
the contract (1457a)

4 Tests Sale = object: Piece of Art. 1490. The husband and the wife cannot
transfer of Work = sell property to each other, except:
ownership object:
service (1) When a separation of property was agreed
(mental, upon in the marriage settlements; or
physical (2) When there has been a judicial separation or
labor) property under Article 191. (1458a)
1. Nature of Ordinary Extra-
business ordinary
Art. 1491. The following persons cannot acquire
2. Existence Does not Depends on
by purchase, even at a public or judicial auction,
of thing order
either in person or through the mediation of
3. Market General Specific
another:
Clientele
4. Statute of Covered Not covered
(1) The guardian, the property of the person or
frauds
persons who may be under his guardianship;
4 Tests (but Sale Agency to Sell (2) Agents, the property whose administration or
the ultimate sale may have been entrusted to them, unless
test is: the consent of the principal has been given;
intention of
the parties) (3) Executors and administrators, the property of
1. Risk of Loss Borne by Borne by the estate under administration;
seller principal, not
agent (4) Public officers and employees, the property
2. Payment Buyer Principal, not of the State or of any subdivision thereof, or of
agent any government-owned or controlled
3. Exclusive Remittance test corporation, or institution, the administration of
Dealership which has been intrusted to them; this provision
4. Return of None Mandatory shall apply to judges and government experts
unsold goods who, in any manner whatsoever, take part in the
sale;

Sale Barter (5) Justices, judges, prosecuting attorneys,
1. Intention of clerks of superior and inferior courts, and other
parties officers and employees connected with the
2. Value of Money > Thing > administration of justice, the property and rights
thing vs. Value thing Money in litigation or levied upon an execution before
of money the court within whose jurisdiction or territory
they exercise their respective functions; this
prohibition includes the act of acquiring by
2 Tests Sale Dacion En Pago assignment and shall apply to lawyers, with
1. Debt None Pre-existing respect to the property and rights which may be
2. Stage of Perfection Extinguishment the object of any litigation in which they may
contract take part by virtue of their profession.

(6) Any others specially disqualified by law.
II. PARTIES TO A CONTRACT OF SALE (1459a)

A. Capacity of parties Art. 1492. The prohibitions in the two preceding
articles are applicable to sales in legal
Art. 1489. All persons who are authorized in this redemption, compromises and renunciations. (n)
Code to obligate themselves, may enter into a
contract of sale, saving the modifications contained in 1. absolute incapacity
the following articles.

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The prohibition shall also apply to The foregoing provisions shall not prejudice the rights persons living together as husband and wife of creditors who acted in good faith. the court shall decide whether or not: b) married persons (as regards contracts between spouses) (1) The objection is proper. Every donation or grant of gratuitous objection or thereafter. between the the objection. that would destroy the system of conjugal partnership. This prohibition also authority of the court or the written consent of the applies to common-law unions4. the indispensable for sustenance. the latter must pay a otherwise unable to participate in the reasonable price therefore. or of within five years from the date of the contract (2) When there has been a judicial separation or implementing such decision. The administration and enjoyment of the marriage. 87. (133a) Art. otherwise. the transaction shall be construed as 1492 in the previous page) a continuing offer on the part of the consenting spouse and the third person. direct or indirect. occupation. the transaction shall be construed as a continuing offer on the part of the Art. except: jointly. the husband's protect the institution of marriage. The administration and enjoyment of the Art. Necessaries are those administration of the conjugal properties. and may be perfected as 1) It is immaterial that no damage is a binding contract upon the acceptance by the other suffered by the owner. give each other on the occasion of any family rejoicing. and moral grounds. 96. "the condition of those who incurred guilt would turn out to be better than those in legal union. clothing. relative incapacity the court or the written consent of the other spouse. other spouse may assume sole powers of education. which is the cornerstone decision shall prevail. In case of disagreement. Either spouse may exercise any legitimate consenting spouse and the third person. 73. the other spouse may there was a judicial separation of property. unless specifically prohibited by law. 1490. the disposition or encumbrance shall be c) special disqualifications (see Articles 1491 and void. These powers do not include disposition or encumbrance without authority of 2. If the benefit accrued prior to advantage. However. subject to recourse to the court (1) When a separation of property was agreed by the wife for proper remedy. It was also designed to prevent the exercise of conjugal partnership shall belong to both spouses undue influence by one spouse over the other. the disposition or encumbrance shall be parties) void. serious. property under Article 191. and profession. enforced against the separate property of the spouse except moderate gifts which the spouses may who has not obtained consent. FORTUN: …if transfers or conveyances between spouses were allowed during Art. (206a) 4 CALIMLIM-CANULLAS V. business or activity without may be perfected as a binding contract upon the the consent of the other. the resulting obligation shall be spouses during the marriage shall be void. and medical treatment. since assume sole powers of administration. The husband and the wife cannot sell community property shall belong to both spouses property to each other. which must be availed upon in the marriage settlements. as well as to jointly. (1458a) In the event that one spouse is incapacitated or There is a potential circumvention of the policy otherwise unable to participate in the administration of the law if sales between spouses are allowed if of the common properties. (Villanueva) other spouse. implementing such decision. (117a) without a valid marriage. In the absence of such authority or a) married persons (as regards contracts with third consent. which must be availed husband and wife without benefit of marriage. The contract is spouse or authorization by the court before the offer is withdrawn by either or both offerors. when necessaries are sold and delivered to a minor or other In the event that one spouse is incapacitated or incapacitated person. the husband's decision shall prevail. In case of disagreement." 4 . administration. and (2) Benefit has occurred to the family prior to the Art. dwelling. In the absence of such authority or consent. However. These powers undue influence is not completely erased by the do not include disposition or encumbrance without separation of property. However. subject to recourse to the court of family law. (165a) In case of disagreement.Those who have the legal capacity to give consent to of within five years from the date of the contract contracts may validly enter into a contract of sale. by the court before the offer is withdrawn by either or both offerors. The prohibitions apply to a couple living as by the wife for proper remedy. The latter may object only acceptance by the other spouse or authorization on valid. 124.

1462. . whose jurisdiction. 1348. including future things. All things which are not outside the commerce of men. 1461 (2). an executor may buy the policy may likewise be the object of a contract. must be existing. Things having a potential existence III. paragraph (5) of the Civil Code. so that the buyer will have to pay the price even if the thing does not 5) Examples of other persons especially actually came into existence . administration is ended. Requisites of a valid subject matter expectancy is deemed subject to the condition that the thing will come into existence. Of course. BATILLER: the purchase by a lawyer of the No contract may be entered into upon future property in litigation from his client is categorically prohibited by inheritance except in cases expressly authorized Art. not buy the property under their morals. do not come within the commerce of men. nor to assignments of the property Roman law designates as emptio rei speratae formerly in litigation when such assignment (purchase of an expected thing). in this their position. and that consequently. which was inheritance except in cases expressly authorized formerly under his administration. public order or public administration. will take effect only after final judgment (compensation of lawyers payable on a Emptio spei – If the parties intend the contract contingent basis. however. however. The goods which form the subject of a be the object of a contract. so that if the thing does not come into existence the contract is considered as not made ad there 4) With regard to the lawyers. . it is called disqualified by law are: (1) aliens purchasing emtio spei (purchase of hope or expectancy”. 7. 3) Although executors and administrators can All services which are not contrary to law. raised. 1461. or goods to be contracts. (1272) Art. such contract is does not apply to other properties of the valid under [Art. in such case. or contingent The sale of a vain hope or expectancy is void. it is what the client. including future things. the agent can No contract may be entered into upon future buy the property of the principal. and to bring not intransmissible may also be the object of the latter and his principal together to contracts. owned not intransmissible may also be the object of or possessed by the seller. future. can not get the share of the Emption rei speratai – If the parties make the heir in the estate until after the contract depend upon the existence of a thing. void as the law seeks to prevent said persons manufactured. consummate the transaction. All rights which are in looking for a buyer or seller. 1491. may prohibition. 1. 1347. the prohibition is no obligation to pay the price. Secs 3 & This contract is. (2) an unpaid seller having a right (Tolentino) of lien…(Art 133 par 5) (Baviera) Art. CC. Consti). because the buyer. 1461. All things which are not outside the BROKERS. plaintiff's purchase of the property in litigation from his client was void and could produce no legal effect 5 . by law. or acquired by the seller from being tempted to take advantage of after the perfection of the contract of sale. All rights which are contract of sale may be either existing goods. unless unconscionable). SUBJECT MATTER may be the object of the contract of sale." trust and confidence in relation to the property under their administration or There may be a contract of sale of goods. 5 RUBIAS V. hereditary rights of an heir to the estate (1271a) under his administration. Impossible things or services cannot be the object of contracts. by law. acquisition by the seller depends upon a contingency which may or may not happen. Art. may Art. (n) 2) Agents can not buy the property of their principalj without the consent of the latter. as their authority consists merely be the object of a contract. private agricultural lands (Art XII. (n) Art. They occupy a position of Title called "future goods. void under Art. good customs. 1347. after the agency is terminated.5 to exist at all events. The efficacy of the sale of a mere hope or A.

1575. All things which are not outside the The requisite that a thing be determinate is commerce of men. 1976. A thing is determinate when it is particularly designated or physical segregated 2. determinate without the necessity of a new or further agreement between the parties. particular kinds Art. and patrimonial property of the State and therefore determinate. death of the decedent so one cannot sell or promise to sell what he expects to inherit from a living person. which MELLIZA V. at the time the contract is entered into. (n) No contract may be entered into upon future inheritance except in cases expressly authorized by a) Determinate v. 1461 of the New that a sale must have for its object a determinate thing. explosives or relative to the principal object of the contract blasting supplies. The rights natural wealth are outside the commerce of to succession are transmitted from the moment of the man. including future things. (n) Art. dynamited fish or other (6) Those where the intention of the parties aquatic animals. determinate if it can be physically segregated. contagious diseases shall be void. is Civil Code. and they are found to be unfit obligation and other circumstances shall be therefor. morals. Under Art. gunpowder.(Article 1465) Art. CITY OF ILOILO: The requirement of the law subject matter is a determinate thing. 6 PICHEL V. (1271a) determined via another agreement. (1271a) political subdivision which are intended for public use or public service or for the development of a) Law prohibits sale of future inheritance. good customs. the creditor cannot demand a thing of A contract of sale of animals shall also be void if the superior quality. dynamite. public order or public policy may It is determinable if it is capable of being likewise be the object of a contract. (1167a) a) The sale of narcotics or dangerous drugs except Art. morals. 1347. of the contract of sale. whose quality and circumstances have not been stated. the object of the sale is capable of being made determinate SIBAL VS. must be determinate c) Things subject to a resolutory condition may be the object of the contract of sale. for public use or service form part of the meaning within the commerce of man. or any wild bird or mammal. The sale of animals suffering from delivery of an indeterminate or generic thing. must be licit from all other of the same class. Neither can the debtor deliver a use or service for which they are acquired has been thing of inferior quality. may be satisfied if at the time the contract is entered the object of a contract. 1968 up to January 1. cover generic things. c) Churches are also outside the commerce of But the law allows an heir to sell his interests in an man. prohibited by law therefore are illicit. (1494a) taken into consideration. The following contracts are inexistent upon prescription. 1409. things having a potential existence may be the object fulfilled as long as. 1246. The purpose of the stated in the contract. VALDEZ: pending crops which have potential without the necessity of a new or further agreement existence may bethe subject matter of sale. public order or public policy may b) Properties belonging to the State or its likewise be the object of a contract. Art. capable of being made All services which are not contrary to law. the thing is capable of being made intransmissible may also be the object of contracts. future things and things in potential existence 6. 3. 4. Determinate has been expanded to can be leased or sold. 1459. particularly designated. between the parties 6 . All rights which are not into. determinate without need of another agreement.All services which are not contrary to law. The thing must be licit and the vendor must have a right to transfer the ownership thereof at a) generic things the time it is delivered. determinable7: a thing is law. ALONZO: The subject matter of the contract of sale in question are the fruits of the coconut trees on the land during 7 the years from September 15. good customs. inheritance d) But public property when no longer intended b) The object of the contract of sale must be licit. or and void from the beginning: rare wild plants protected by law or of tubli or other poisonous plants or fruits. firearms or ammunitions are cannot be ascertained. 1460. When the obligation consists in the Art.

these essential elements had not a sale. 1464. In the case of fungible goods. The goods which form the subject of a 3) In an action affecting the title or the right of contract of sale may be either existing goods. of lading.Generic things could also become subject matters of a 1) Sales of things under litigation entered into by contract of sale provided (1) they have been defendants without the knowledge & approval physically segregated8 / particularly designated. whose litigation & take the property subject to the acquisition by the seller depends upon a contingency outcome of the litigation. or goods to be record in the office of the Registrar of Deeds manufactured. In the case at bar the undertaking of the defendant was 9 to sell to the plaintiff 600 piculs of sugar of the first and second SCHUBACK V. "quedan. raised. 1381. 1981. the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods d) sale of things in litigation IV. the perfection of the contract of sale. dock warrant. or acquired by the seller after of the Province which the property is situated. 1981. 1349. 1463. (2) Neither shall rescission take place or subject matter otherwise requires: when the things which are the object of the contract are legally in the possession of third persons who did (1) "Document of title to goods" includes any bill not act in bad faith. or any other document used in the ordinary course of 8 YU TEK V. in this Title a notice of the pendency of the action. the plaintiff may or possessed by the seller. Now. 5. quantity of subject matter9 though the seller purports to sell and the buyer to buy a definite number. Art. called "future goods. The object of every contract must be goods in the mass. as there is a perfected sale with regard to the "thing" whenever the proof of the possession or control of the goods. quantity is not determinate shall not be an By such a sale the buyer becomes owner in common obstacle to the existence of the contract. if called was made determinate only on December 29. measure bought bears to the number." 4) From the moment of the filing of such notice. rescission cannot take place when the things are legally in the possession of 3 rd b) future goods persons who did not act in bad faith (& without knowledge of defect) Art. (2) they are capable of substitution 2) However. weight or without the need of a new contract between the measure of the mass. Sale by a person not the owner knowledge and approval of the litigants or of competent judicial authority. 7 ." or warehouse receipt or order for the delivery of goods. CA: Although the quantity to be ordered classes. The sole owner of a thing may sell an Art. weight or determinate as to its kind. The following contracts are rescissible: (4) Those which refer to things under litigation if they have been entered into by the defendant without the A. (n) Art. weight or measure of the Art. already concurred. it is clear that the defendant quantity is immaterial in the perfection of a sales contract. unless the context Art. a promise of sale and as of December 24. weight or provided it is possible to determine the same. which from the facts disclosed. We conclude that the contract in the case object and cause. 1465. upon to designate the article sold. 1636. of such a share of the mass as the number. Things subject to a resolutory undivided interest therein. In the preceding articles in this Title governing the sale of goods. article of sale has been physically segregated from all other articles. OBLIGATION OF THE SELLER TO TRANSFER OWNERSHIP Art. weight or measure bought. (n) Leon) c) sale of undivided interest or share e. owned possession of real property." He could only use this generic What is of importance is the meeting of the minds as to the name for the thing sold. (Baviera and De which may or may not happen. If the mass contains less than parties. things subject to a resolutory condition Art. and though the number. show that at bar was merely an executory agreement. and of the litigants or of the court are rescissible. GONZALEZ: This court has consistently held that business in the sale or transfer of goods. The fact that the measure of the goods in the mass is undetermined. There was no delivery under the contract. (1273) the number. 1385. could only say that it was "sugar. there may be a sale of an undivided share of a specific mass. 1462. 3rd persons are charged with notice of the There may be a contract of sale of goods. (n) condition may be the object of the contract of sale.

(n) The term includes growing fruits or crops. as vendee. disposition over the property. 559." (as cited in Hernaez vs. for however short a time. . acquires no better title to the goods than the seller 11 SIY CONG BIEN V. Vicente Marella and Teodoro Santos. it is now a well established principle that where the true owner of property. attributes of ownership and upon which the bank relied. shall affect: quedans. whether insolvency proceedings the owner. with knowledge of his own right. under the contract. Through estoppel an admission or "Order" relating to documents of title means an order representation is rendered conclusive upon the by endorsement on the documents.or authorizing or purporting to authorize the (2) The validity of any contract of sale under possessor of the document to transfer or receive. constitutes "value" where goods or can transfer title thereto to the buyer10. however. The possession of movable property to sell the goods. it is estopped to deny that the bank had a valid title to the Nothing in this Title. and who does not sell them under son. statutory power of sale or under the order of a either by endorsement or by delivery. one who has lost any movable or has 2. 1505. the same being in the latter's actual possession. the owner cannot obtain its in question was never delivered to the vendee by the return without reimbursing the price paid therefor. the car faith at a public sale. acquired in good faith is equivalent to a title. has acquired it in good 10 AZNAR V. Torrens System – PD been unlawfully deprived thereof may recover it from 1529 the person in possession of the same. Art. Commerce and special laws. they will be protected. Nevertheless. the buyer with the intent of delivering the thing. or markets. (3) Purchases made in a merchant's store. his conveyance is deemed valid & his title passes by operation of law to the (3) Goods are in a "deliverable state" within the buyer11 meaning of this Title when they are in such a state that the buyer would. person making it. No one can transfer a better title than what he has over the property sold. goods court of competent jurisdiction. JALBUENZA V. vendor as to complete or consummate the transfer of (464a) ownership by virtue of the contract. ownership thereof. 1431. whether for the goods or one authorized by the owner to sell money or not. took possession of the subject matter thereof by where goods are sold by a person who is not the stealing the same while it was in the custody of the latter's owner thereof. HSBC: Since plaintiff had voluntarily had. "Specific goods" means goods identified and agreed General Rule: upon at the time a contract of sale is made. Recording Laws. be bound to If the owner of the goods is precluded by his take delivery of them. It should be recalled that while there was indeed a contract of sale between Art. Art. and cannot be denied or disproved as against the person relying thereon. recording laws. Subject to the provisions of this Title. allows another owner of goods to dispose of them as if he were the to appear. represented by such document. Estoppel (Art 1505) Title who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts Even if the person who sold the thing was not as they become due. or in "Goods" includes all chattels personal but not things fairs. if he should subsequently acquire have been commenced or not. (n) conduct from denying the seller’s authority to sell. Hernaez) 8 . YAPDIANGCO: In the case on hand. buyer may acquire a better title. and innocent third parties are thus led into dealing with some [such] apparent owner. . although the seller had neither the title nor the authority Art. holds out or any other provision of law enabling the apparent another. (1) The provisions of any factors' act. the former. Only the owner of An antecedent or pre-existing claim. 712 above contemplates that the act be coupled authority or with the consent of the owner. "Quality of goods" includes their state or condition. in accordance with the Code of in action or money of legal tender in the Philippines. LIZARRAGA: Bigelow on Estoppel says: ". documents of title are taken either in satisfaction thereof or as security therefor. as the owner of or as having full power of true owner thereof. If the possessor of a movable lost or which the owner has been unlawfully deprived. Exceptions: (2) A person is insolvent within the meaning of this 1. unless the owner of the goods is by his conduct clothed the person who negotiated the quedans with all the precluded from denying the seller's authority to sell. or.

Purpose of the exception: (1) to protect innocent Where such third person or persons are purchasers who buy at merchant stores. VELASCO: The policy of the law has always been that. has been unlawfully deprived. 2. So long as the goods are still in the possession of the 1st buyer. the latter acquired a does not apply when the sale takes place by virtue of valid title13. ad appears to be a wise and necessary rule not only to facilitate purchased the ring from another person would not bar the commercial sales on movables but to give stabilityto business right of the owner to recover it once the identity and the transactions. having been unlawfully deprived of the diamond ring in question. Pahati. owner’s deprivation are established. Where the seller of goods has a voidable Art. has no application. except as it may indicate time of the sale. unless title was annulled. own risk. But once it has been transferred to an owner or the one authorized by the owner to sell the innocent purchaser for value before the goods in order to pass title over them to the buyer contract is annulled. which provides that the “one who has SUN BROTHERS V. 4. law authorizing sale of patrimonial property to a specific person at auction) or of court to sell (judicial Art 1469. CROMWELL: Price is the sum stipulated Masiclat and his unknown seller took place on Miranda Street as the equivalent of the thing sold and also every incident and not in the public market and this is .g. writ of execution levying upon the debtor’s unable or unwilling to fix it. Court orders recovered by the vendor in an action for annulment. The possession of movable property acquired in good faith is equivalent to a title. unless the parties subsequently agree upon the price. 1506. (Cruz v. provided he buys them in good faith. even in good faith. the courts may fix the price. which case the owner cannot obtain its return without (464a) reimbursing the price. (n) (n) Art. Should such person or persons be sale e. Gross inadequacy of price does not title thereto. contract. but his title has not been avoided at the affect a contract of sale. 14 MASICLAT V. they may still be 3. thereof or as security therefore Validity of sale under statutory power (legal sale – V. where the rights and interests of a vendor lost personal property or who has been unlawfully deprived come into clash with that of an innocent buyer for value. one who has lost any movable or has been unlawfully deprived thereof may recover it from 13 DE GARCIA V. Aznar v. de Garcia who was found in possession of the same. has acquired it in good The only exception the law allows is when there is faith at a public sale. (1447a) Art. CENTENO: The transaction between Ramon INCHAUSTI V. BUSTAMANTE: It appearing that the ring in question was lost or was stolen from the place where the lawful owner deposited it. for intended a donation or some other act or value. Yapdiangco). Seller can transfer a valid title to an innocent principle of law that one deals with an agent at his purchaser for value. or by other execution or subject of money constitutes “value” where goods or foreclosure. the owner cannot obtain its acquisition in good faith of the possessor at a public sale. An antecedent or pre-existing claim. 12 464 of the Civil Code. and without notice of the seller's defect of title. in return without reimbursing the price paid therefor. market or If the third person or persons acted in bad faith or fair12 by mistake. taken into consideration for the fixing of the price put to the Art. 1505 CC. Thus a sale by 4. was entitled to recover it from petitioner Consuelo If the possessor of a movable lost or which the owner S. 559. Nevertheless. invoked by the petitioners. CA: Respondent Angelina D. The rule mere fact that the possessor. the latter of it may recover it from whoever is possessing it.” The must be protected. debit of the buyer and agreed to by him 9 . the person in possession of the same. a power granted by law or by a court. 1470. Hence. is valid even if the owner did not document of titloe are taken in satisfaction authorize or consent to the sale (Baviera). or that the parties really goods. the buyer acquires a good title to the a defect in the consent. Sale by one having a voidable title may be. PRICE14 e. . . the contract shall be property at auction) inefficacious. conclusive. Purchase at a merchant’s store. WON for the sheriff.None in the Phils. market or prevented from fixing the price or terms by fault fair (2) To facilitate commercial sales in movables (3) of the seller or the buyer. Guevara. But NCC relies on the general 1. The general principle that the vendor must be the 3. the case squarely falls under Art. the party not in fault To give stability to business transactions may have such remedies against the party in fault as are allowed the seller or the buyer. as the case B.g. REBULLIDA V.

The fixing of the price can never be left to lesion by more than one-fourth of the value of the discretion of one of the contracting parties. the sale is void but the act The parties merely said there was a price and may be shown to have been in reality a donation. 2. (n) MAPALO V. and parties really intended a donation or some other other things shall also be considered certain. when the act or contract. 1470. 1386. must be real Art. or in a particular exchange or market. or that the Art. 1354. What is a reasonable price is a question (4) Those which refer to things under litigation if of fact dependent on the circumstances of each they have been entered into by the defendant particular case. or in such exchange or market. unless the debtor proves the contrary. 4. if it should not be unspecified and unquantilled services and the undisputably valuable real estate allegedly sold — worth at least proved that they were founded upon another cause P10. The statement of a false cause in contracts shall There was a consideration although it was not render them void if it should not be proven that found in the contract (Real consideration not were founded upon another cause which is true & stated) lawful (1471. The existence of a contract is permanent & 1. The statement of a false cause in between the stipulated price (in each deed) of P1.00 plus contracts shall render them void. or “created” their own price (no consideration some other act or contract (1471) but stated) A. (n) without the knowledge and approval of the litigants or of competent judicial authority. If the price is simulated. are noteriously low indicators of actual value — plainly and unquestionably demonstrates Art. 3. other true and lawful cause having been shown. but void ab initio. and no contract. False Price – there is a true price but it was incurable. Requisites of a valid price 2. If the price is simulated. if the price fixed by one of the parties is accepted by the other. liquids. 1353) 2. 1458. not written down or stipulated in the contract. it is well-known. The price of securities. the things which are the object thereof. grain. not to say enormous. if the latter suffer the lesion stated in the preceding number. the Court finds both said deeds. If the price is simulated. Art. except as it may indicate a defect in the consent. However. Although the cause is not stated in the that they state a false and fictitious consideration. but the act may be shown to have been in reality a Art. 1472. the sale is perfected. (1291a) have been paid has in fact never been paid. or some other act or contract. The following contracts are or when an amount is fixed above or below the price rescissible: on such day. contracts approved by the courts. (1276) which. (n) price fixed is that which the thing sold would have on a definite day. insofar as they purport to be sales. (1296a) BAGNAS V. the sale is void. but the act may be shown to have been in reality a 15 donation. 1471. the contract is inefficacious. Simulated Price15 – There was no price paid. Art. 1353. A contract of sale is null & void and produces no effect whatsoever if the same is without cause or (5) All other contracts specially declared by law consideration or that the price which appears to to be subject to rescission. (1448) (1) Those which are entered into by guardians whenever the wards whom they represent suffer Art. 1471. 1381.500. 1. if the the latter cannot in any other manner collect the thing or any part thereof has been delivered to and claims due them.00 going only by assessments for tax purposes which is true and lawful. 1474. Art. Gross inadequacy of price does not donation. Rescission referred to in Nos. provided said amount be certain. However. it is presumed that it exists and is lawful. 1473. (1449a) (2) Those agreed upon in representation of absentees. disproportion Art. or some other act or contract. CA: upon the consideration alone that the apparent gross. MAPALO: a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase Art. (n) affect a contract of sale. (1277) not merely voidable. must be in money or its equivalent 1. appropriated by the buyer he must pay a reasonable price therefor. 10 . By the contract of sale one of the contracting parties obligates himself to transfer Art. Where the price cannot be determined in accordance with the preceding articles. or in any other (3) Those undertaken in fraud of creditors when manner. the sale is void. 1 and 2 of price which appears thereon as paid has in fact never been Article 1381 shall not take place with respect to paid by the purchaser to the vendor.

(1446a) that the determination thereof be left to the judgment of a special person or persons. Fixing of the price is more or less arrived at with the case may be. If such intention does not clearly appear. (1448) price certain appears therein. as the VSP executed the following day left to the discretion of one of the contracting confirmed. is exchange or market. see case). This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a essential element of a binding agreement to sell personal failure to agree on the price. PHIL. provided said amount be correlative obligation on the part of the latter to pay therefor a certain.The price should be in money or its equivalent 16 (e.g. 1470. or that the parties really intended a donation or some other 3. of fact dependent on the circumstances of each the transaction shall be characterized by the manifest particular case.Property given to the creditor in satisfaction of a agree upon the price. However. But nothing was mentioned about the full purchase parties. Must be certain or ascertainable at time of act or contract. indicate a defect in the consent. . No obligation on the part of Toyota to above or below the price on such day. as 3. . inefficacious. and partly in another thing. Art. Otherwise. (1449a) payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This Court parties is accepted by the other. 1473. debt in money with the PRICE PAID IN ADVANCE is a sale. 1458 of the void. The provision on the downpayment of P100." yet the same article provides that the purchaser may pay "a price certain in money or its equivalent" which means that payment of the price need not be money. the party not in fault obligation contract may have such remedies against the party in fault as are allowed the seller or the buyer. the contract is A contract of sale may be absolute or conditional. (1447a) ample contractual freedom than the value of the thing Art. it shall be sufficient that it be exceeds the amount of the money or its equivalent. unless the parties subsequently 2. the contract shall be barter or an innominate contract. 11 . 17 TOYOTA SHAW V. is always paid in terms of reality a donation. DATION IN PAYMENT SALE Presupposes a prior Obligations are Where such third person or persons are existing credit & created from the prevented from fixing the price or terms by fault extinguishes the perfection of the of the seller or the buyer. the transaction might be unwilling to fix it. 1472. the sale is had already ruled that a definite agreement on the manner of perfected. 1471. or when an amount is fixed not a contract of sale. If the price is simulated. it is a sale. In order that the price may be value of the thing given as a part of the consideration considered certain. liquids. 1. If it was intended for a contract of sale. 1469. However. the sale is 16 REPUBLIC V. it could only refer to a sale on Art. The document (in Exhibit “A”. money and the supposed payment being in kind it is no payment (n) at all. grain. except as it may dation. letters of credit & other negotiable Should such person or persons be unable or instruments). 1475 specifically provides when it is when the price fixed is that which the thing sold deemed perfected. contract of sale and Art. Gross inadequacy of price does not given in affect a contract of sale. The fixing of the price can never be installment basis. What is a reasonable price is a question consists partly in money. it shall be considered a barter if the Art. inefficacious. determined in accordance with the preceding articles. If the third person or persons acted in bad faith or by mistake. (n) perfection17 Art. or in a particular executed and signed by the petitioner's sales representative. (n) intention of the parties. Definiteness as to the price is an property. and the other to pay therefor a price certain in money or Art. or some other act or contract.the ownership and to deliver a determinate thing. If the consideration of the contract therefor. or in such transfer ownership of a determinate thing to Sosa and no exchange or market. or in any other manner. would have on a definite day.000 made no specific reference to a sale of a vehicle. Where the price cannot be its equivalent. if the thing or any part (1445a) thereof has been delivered to and appropriated by the buyer he must pay a reasonable price Art. or otherwise. but the act may be shown to have been in new Civil Code provides that price . if the price fixed by one of the price and the manner the installments were to be paid. CA: Article 1458 of the Civil Code defines a and other things shall also be considered certain. 1468. The price of securities. 1474. the courts may fix the price. RESOURCES: Although Art. so with reference to another thing certain.

Inadequacy of price21 remedies against the party in fault as are allowed the seller or the buyer. such as to certain invoices then in ERENETE V.000 as part of the down-payment that they had to pay they have been entered into by the defendant cannot be considered as sufficient proof of the perfection of any without the knowledge and approval of the purchase and sale agreement between the parties under Art. lesion or inadequacy of cause shall not invalidate a contract. d) by reference to another thing certain Should such person or persons be unable or unwilling to fix it. Such being the situation. 1469. when the down-payment and the installment payments were to (2) Those agreed upon in representation of be paid. parties. The fact. if the latter suffer the lesion stated in been perfected over the lot in question. Except in cases specified by law. Indeed. (1447a) Art. (MCCOLLOUGH V. and other things shall also be considered certain. BEZORE: That the consideration in the existence and clearly identified by the agreement sale was "cheap" is not a ground for the infirmity of the sale. (1449a) from fixing the price or terms by fault of the seller or the buyer. unless there has been fraud. the party not in fault may have such 6. liquids. already ruled before that a definite agreement on the manner of (3) Those undertaken in fraud of creditors when payment of the purchase price is an essential element in the the latter cannot in any other manner collect the formation of a binding and enforceable contract of sale. The fixing of the price can never be If the third person or persons acted in bad faith or by left to the discretion of one of the contracting mistake. 20 Price is certain at the point of perfection by reference to 21 another thing certain. The contract shall be presumed to be BARRETTO V. Manner of Payment must be agreed upon18 Art. then to be subject to rescission. NAVARRO V. or when an amount is fixed certain. The following contracts are rescissible: (1) Those which are entered into by guardians 18 VELASCO V. How price is determined when the price fixed is that which the thing sold would have on a definite day. or in a particular Art. (1448) special person or persons. as the case may be. (1291a) such acceptance did not produce a binding and enforceable contract of sale. the courts may fix the price. The price of securities. (n) c) by reference to definite day. MANILA) invalidate the contract. or that the exchange or market. or that the Art. There was no complete meeting of the minds 19 Art. 1472. claims due them. Art. this Court has the preceding number.4. it being sufficient for the latter purpose that the price be left to the judgment of a specified person. 12 . act or contract. 1355. in any of the following sale that the parties agree upon the thing sold and that the price cases: be fixed. the sale is Where such third person or persons are prevented perfected. grain. 1381. 1473. 5. SANTA MARINA: It is necessary to a perfected an equitable mortgage. therefore. that the petitioners delivered to the respondent the sum (4) Those which refer to things under litigation if of P10. it cannot. unless the e) never by one party parties subsequently agree upon the price. litigants or of competent judicial authority. or in such reference to another thing certain. Gross inadequacy of price does not affect a contract of sale. the contract shall be inefficacious. 1602. In order that the price may be considered exchange or market. 1469. (3) If the third person or persons acted in parties really intended a donation or some other bad faith or by mistake.. 1482 of the new Civil Code. except as it may indicate a defect in the consent. the courts may fix the price. CA: It is not difficult to glean from the whenever the wards whom they represent suffer aforequoted averments that the petitioners themselves admit that lesion by more than one-fourth of the value of they and the respondent still had to meet and agree on how and the things which are the object thereof. AENLLE) or known factors or stipulated Inadequacy of cause in a contract does not of itself formula (MITSUI V. 1470. (n) a) by a third person19 b) by the courts Art. be said that a definite and firm sales agreement between the parties had absentees. SUGAR’S PRODUCERS: When the manner of (5) All other contracts specially declared by law payment of purchase price is discussed after acceptance. it shall be sufficient that it be so with above or below the price on such day. therefore. if the price fixed by one of the parties is accepted by the other. provided said amount be determination thereof be left to the judgment of a certain. particular exchange market20 Art. However. mistake or undue influence.

(1266a) the offer and the acceptance upon the thing and the cause which are to constitute the contract. 1475.'” Thus.The acceptance must be absolute23. FORMATION OF THE CONTRACT OF SALE willing to accept the terms and conditions of the offer. In any of the foregoing cases. 'So long as it is clear that must be plain and unconditional to have the effect of the meaning of the acceptance is positively and unequivocally to converting the offer to sell to a perfect contract. The offer must be certain and the acceptance absolute. (1265a) moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. The contract of sale is perfected at the influence. option contract24 22 VILLONCO V. 1338.The acceptance must be plain and other benefit to be received by the vendee as rent or unconditional. undue Art. 1331. the parties may reciprocally consent. for in that case it would contract is formed. 1326. he would the offerer except from the time it came to his not have agreed to. Unless it appears otherwise. through qualified acceptance constitutes a counter-offer. or fraud is voidable. the acceptance offer and yet be a binding acceptance. in such a case. it was held that the vendor's change in not mean conformity with the offer. Consent is manifested by the meeting of correction. for which he had paid a 13 . 1319.To bind the offeror. offer was made. In order that mistake may invalidate From that moment. the offeree must comply be subject to the usury laws. offer Art. lowest bidder. and the (5) When the vendor binds himself to pay the taxes advertiser is not bound to accept the highest or on the thing sold. Art. intimidation. but mere invitations to make an offer. Business of the parties will vitiate consent only when such advertisements/advertisements for bidders are mere identity or qualifications have been the principal invitations to make an offer. (n) with the conditions of the offer. otherwise shall be considered as interest which shall 3. insidious words or machinations of one of the contracting parties. whether such request is granted or not. BORMAHECO: It is true that an acceptance 23 may contain a request for certain changes in the terms of the ZAYCO V SERRA: In an offer to sell. is presumed 2. does not amount to a DE LA CAVADA V DIAZ: An option contract is a privilege rejection of the offer and the tender of a counter-offer existing in one person. A Art. subject to the provisions of the thing which is the object of the contract. business (3) When upon or after the expiration of the right to advertisements of things for sale are not definite repurchase another instrument extending the period offers. (1262a) (2) When the vendor remains in possession as lessee or otherwise. which is what gives rise a phrase of the offer to purchase. It will not be accept-the offer. Where the acceptance was not in accordance with the terms and conditions of the offer. violence. it should refer to the substance of the demand performance. unless otherwise stated. which change does not to the generation of the contract. the other is induced to enter Acceptance made by letter or telegram does not bind into a contract which. There is fraud when. any money. Art. or to law governing the form of contracts. the offer lapsed even though the offeree later on was VI. (4) When the purchaser retains for himself a part of Art. (1269) knowledge.1) When the price of a sale with right to repurchase is to have been entered into in the place where the unusually inadequate. cause of the contract. or 2. PREPARATORY STAGE c) vices vitiating consent 1. 1330. simply invitations to make proposals. unless the contrary appears. (n) of redemption or granting a new period is executed. a) form of offer22 Mistake as to the identity or qualifications of one The offer must be certain. The contract. 1325. A simple mistake of account shall give rise to its Art. fruits. (n) (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the b) form of acceptance performance of any other obligation. a so if it involves any new proposal. 24 essentially change the terms of the offer. without them. A contract where consent is given through mistake. 1. (1450a) those conditions which have principally moved one or both parties to enter into the contract. Advertisements for bidders are the purchase price.

(NOTE: The significance of this ruling is that it shows become registered. if the mortgage itself. commitments. In the case of a sale by auction: prescription of written contracts is 4 years. Although the the right of first refusal must be the current offer to sell of consideration of P20. the offer may be the thing be determinate and the price withdrawn at any time before acceptance by already fixed. may be entered during the stipulated period. consideration and which gives him the right to buy certain merchandise or certain specified property. a contract of sale has the force of law and they option. of the right to purchase. or in other customary manner. no fixed price is stated in the FULE V CA: Contracts are perfected by mere consent. right of first refusal26 in lots.) into by the parties upon the consummation of the option. may be made in the acceptance. when deviation allowed 2. communicating such withdrawal. if he chooses. When the offerer has allowed the offeree 3. SUBJECT MATTER: an option right or accepted unilateral offer to buy. which gives that it shows that the only importance of a consideration for an him the right to buy during the certain period. EQUATORIAL REALTY DEVELOPMENT.. 14 .000 was referred to as earnest money. PRESTATION: a consideration25 separate and valid and binding contract.g. CONSENT 1. distinct from the purchase price for the option given 2. it From this moment. usage and law. bilateral promise to buy and sell (See thing for a price certain is reciprocally demandable. but merely auctioneer announces its perfection by the fall of secures the privilege to buy. Both parties are bound by his promise. the offer will still be converted into a 3. or an option The rule that “acceptance must be absolute” is right or accepted unilateral offer to sell a not really absolute because certain deviations determinate object for a price certain. may be already included in the reciprocal obligations of the parties in the in keeping with good faith. from another person. contract of lease of the property in case of sale.] (1) Where goods are put up for sale by auction 3. (n) over the property. Although it cannot be legally categorized as an consensual. 1479. in which no separate consideration is required as it is all consequences which. 1324. It gives the right to demand fulfillment of the option is founded upon a consideration. Rather. each lot is the subject of a separate contract of sale. its 26 consideration is likewise entirely different. V MAYFAIR 28 THEATER: In the present case. the parties are bound not only to cannot be an option contract. In a bilateral promise. Even with such including the manner of payment thereof deviations. It is not a sale of property. according to their nature. at any time within the agreed period at a fixed price (2) A sale by auction is perfected when the LIMSON V CA: An option is not of itself a purchase. PARAÑAQUE KINGS ENTERPRISES V CA: The basis of aside from the consideration for the offer. as something contract but does not pass title or dominion paid or promised. Article 1479 supra) An accepted unilateral promise to buy or to sell a 1. [NOTE that the Art. which is distinct and from that which would in accordance with the form required by law. but a sale the hammer. The contract option is that the option cannot be withdrawn by the grantor of option. An executory contract of sale the promise of one is the consideration for the promise of the other. such the seller of offer to purchase of any prospective buyer. sale by auction It must be in writing. INC. Only after could the owner validly offer to sell the property 25 SORIANO V BAUTISTA: An option to buy attached to a real to a third person under the same terms as offered to the estate mortgage is a valid stipulation. except when the 4. the real mortgage itself). Art. Elements of a valid option contract PERFECTION STAGE28 1. Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option. it is more akin to a right of first fulfillment of what has been expressly stipulated but also to refusal. being different from the contract. A promise to buy and sell a determinate 4. An option contract is a privilege existing in one SANCHEZ V RIGOS: (NOTE: The significance of this ruling is person for which he had paid a consideration.900 should the option be the defendant promised to convey the land as soon as they exercised. consideration distinct from the price. was not an earnest money. it is necessary that a certain period to accept. determinate thing for a price certain is binding upon although nothing has been paid or the promissor if the promise is supported by a delivered27. to make up the entire price of P3. 1476. In this case. Therefore. an additional amount having been agreed upon consideration for a promise made by another. and the mortgagor’s grantee 27 promise to sell is supported by the same consideration as that of DE LA CAVADA V DIAZ: A promise made by one party. may be a good support the sale. (1451a) 2. it is nevertheless a valid and binding stipulation between are expected to abide in good faith by their contractual the parties. e. contract. Being contract of lease. The plaintiff promised to pay the the wide range of “consideration” that can validly support an defendant the price in accordance with the terms of their option contract.Art. it was an option money.

repudiation or renunciation of accepts the bid by the fall of the hammer or hereditary rights or of those of the conjugal gavel or in any other customary manner. the When given. it shall be considered as part of the unenforceable. proof of perfection of the contract. to (1) Acts and contracts which have for their employ or induce any person to bid at such sale on object the creation. 1319 at page 11) – purchase money. Art. (1454a) (2) Those that do not comply with the Statute of Frauds as set forth in this number. evidence. Puffing/by-bidding – means employed by from an act appearing in a public document. a contract of sale may be made in or by stipulation. the terms and conditions of the auction sale announced in the notice. (n) auction is subject to a right to bid on behalf of the seller. it shall not be lawful for the seller to bid Art. modification or behalf of the seller or knowingly to take any bid from extinguishment of real rights over immovable the seller or any person employed by him. General rule: form not important announced to be without reserve. of such things in action or pay at the time some part of the 4. and subscribed by the party charged. the would. 2. other power which has for its object an act 3. writing. or partly in writing and partly by word of mouth. 1483. but when a sale is made by where the offer was made auction and entry is made by the auctioneer in 15 . option money) a) Statute of Frauds Art. 1482. sales of real property or of an interest contravening this rule may be treated as fraudulent therein a governed by Articles 1403. unless otherwise provided by law statute. Whenever earnest money is given in a Art. Subject to the provisions of the (3) A right to bid may be reserved expressly by or on Statute of Frauds and of any other applicable behalf of the seller. 1403. No. (4) The cession of actions or rights proceeding 4. he hundred pesos. or the evidences. and the auctioneer may withdraw the goods from the sale unless the auction has been 1. In the Payment of earnest money – considered payment of following cases an agreement hereafter made part of the price.Until such announcement is made. or a secondary evidence of its contents: FOOTNOTE 24) Part of the purchase Distinct consideration (a) An agreement that by its terms is not to be price for an option contract performed within a year from the making Given only when there Given when the sale is thereof.” goods cannot be withdrawn from (3) The power to administer property. unless the buyer accept and may even forfeit it receive part of such goods and chattels. at a price not less than five the balance to pay the balance. Any sale property. 2. unless the may be given as a guarantee that the vendee would same. be in writing. or any the sale after the bid is made. or some of them. Contract is perfected when the auctioneer (2) The cession. or by his agent. 1358. (n) 1405. 2. and by the buyer. or may be inferred (4) Where notice has not been given that a sale by from the conduct of the parties. therefore. 1. earnest money (cf. illegal. not back out. is already a sale not yet perfected When given. thereof. By taking part in the auction and offering appearing or which should appear in a public bidding. or by word of mouth. If auction is announced to be “without reserve. of EARNEST MONEY OPTION MONEY the agreement cannot be received without the (LIMSON V. The following contracts are contract of sale. or should prejudice a third person. The following must appear in a public himself or to employ or induce any person to bid at document: such sale on his behalf or for the auctioneer. partnership of gains. owner to increase the price of the bids. shall be unenforceable by action. CA – writing. chattels buyer is bound to pay be buyer is not bound or things in action. place of perfection (See Art. unless they are ratified: price and as proof of the perfection of the contract. any bidder may FORMALITIES OF THE CONTRACT retract his bid. or some note or memorandum. the buyer voluntarily submitted to document. (d) An agreement for the sale of goods. Exceptions 3. transmission.

The electronic document is transfer of large cattle shall be valid unless the same reliable in the light of the purpose is registered and a certificate of transfer obtained as for which it was generated and in herein provided. the sale shall remained complete and unaltered. When there has been a failure to object to to be in writing. in the normal course of c) sale of large cattle communication. Holdings.P. at the time of the sale. and subscribed by the other document or legal writing. it is a sufficient memorandum. Due execution – may be proved by the than one year. saw it and referred to in No. after its execution and delivery. 529. 2 of Article 1403. of the amount 1. the authority of the agent shall be in writing. Contracts infringing the Statute of Frauds. or any change which arises otherwise. Holdings and City Lite. and made by F. When a sale of a piece of land or any interest therein is through an agent. 1874 provides that when an electronic document if- the sale of the piece of land or any interest therein is through an agent. (e) An agreement of the leasing for a longer period 2. otherwise. or any person who was present and saw it executed and delivered. (n) apart from the addition of any endorsement and any authorized The agent’s authority to sell should be in writing. When there is a note or memorandum legal effect. terms of sale.his sales book. No ii. and Sec. void29. in that– Art. Revised Administrative Code. otherwise. due execution and of the purchasers and person on whose account the subsequent loss of the original instrument must sale is made. 7. 1874. from the time when it was first Holding’s president. The absence of the authority to sell can be as to the integrity of the document determined from the written memorandum issued by F. under them. that requirement is met the presentation of evidence by an electronic document if the said d. the i. price.P. Art. Sales through electronic commerce electronic document maintains its integrity and reliability and can be b) sale of realty through an agent authenticated so as to be usable for subsequent reference. are ratified by the recognized the signatures. names of the terms of the sale. validity or enforceability as any thereof in writing. or by the acceptance of benefit previously confessed the execution thereof. e) RA 8792 -. be void. Final evaluation. or by a person to failure to object to the presentation of oral evidence whom the parties to the instrument had to prove the same. purpose of effecting a valid transfer are made at the same time. Art. storage and display. appraisal and acceptance can only be generated in its final from.Electronic Commerce Act PURPOSE OF STATUTE: to prevent fraud and perjury (pertinent provisions provided infra) in the enforcement of obligations depending for their evidence upon the unassisted memory of witnesses. (b) Paragraph (a) applies whether the requirement therein is in the form of an Registration is made with the municipal treasurer. the authority of i. Sec. requesting Metro Drug’s assistance in finding buyers. or for the sale of real property or of an testimony of the person who executed it. the interest therein. (c) Where the law requires that a document be presented or retained in its 29 CITY LITE REALTY V CA: There was no perfected contract original form. The electronic document has the latter shall be in writing. 1405. Before secondary evidence may be introduced and kind of property sold.P. change. obligation or whether the law simply provides consequences for the document d) secondary evidence not being presented or retained in its original from. 16 . Legal Recognition of Electronic EXCEPTIONS TO STATUTE OF FRAUDS documents. that requirement is met by between F. be proved.Electronic documents shall have the a. There exists a reliable assurance sale shall be void. but large cattle under two years of the light of all relevant age may be registered and branded gratis for the circumstances. or whom. and- party charged or his agent b. person before whom its execution was acknowledged. When there has been partial consummation (a) Where the law requires a document c.

or 17 . or another entity is an information or the integrity of the electronic data communication system. electronic data messages and electronic the information and communication signatures. electronic documents or electronic data (b) Said method is reliable and appropriate messages by electronic notaries. number or other symbol in b. displayed to the person to whom it is to when applicable. character. there are no other reasonable grounds to doubt the integrity of the information (a) The electronic signatures shall be and communication system. device. system or other similar device was substantiating and validating a claimed identity of a operating in a manner that did not affect user. authenticated by proof that a letter. ii. 8. data message or electronic document in any (c) It is necessary for the party sought to be legal proceeding has the burden of proving its bound. including any The person seeking to introduce an electronic relevant agreement. Legal Recognition of Electronic Signatures. in or order to proceed further with the authenticity by evidence capable of supporting a transaction to have executed or provided the finding that the electronic data message or electronic signature.) By evidence that at all material times documents. among other ways. 11. answers back or signature and proved by showing that a prescribed acknowledgement procedures. the the decision to proceed with the transaction integrity of the information and communication authenticated by the same. proceedings who is adverse in interest to electronic document. except the rules or electronic document. as message or electronic document. the electronic document. in the light of all circumstances.- document or electronic data message An electronic signature on the electronic document from a specific point. of documents for their validity. or that the appropriate the party using it. identifying words or written document if the signature is an electronic numbers. That no adopted by such person. That document is capable of being methodology or security procedures. as well as the certificate of necessary for his consent or approval through authentication on printed or hard copies of the the electronic signature. not alterable by the parties interested in security devices. with the provision of this Act shall apply to vary intention of authenticating or approving any and all requirements of existing laws in an electronic data message or on formalities required in the execution electronic document. system in which an electronic data message or electronic document is recorded or stored may Sec. certification authorities.) By showing that the electronic data electronic form representing the persons message or electronic document was named in and attached to or logically recorded or stored by a party to the associated with an electronic data message. content or storage of an electronic Sec. which. (b) The electronic data message or For evidentiary purposes. (d) The other party is authorized and enable to verify the electronic signature and to make In the absence of evidence to the contrary. service for the purpose for which the electronic providers and other duly recognized or appointed document was generated or communicated.Until the Supreme Court by appropriate rules shall have so provided. error or alteration in the communication. electronic a. existed under which- The Supreme Court may adopt such other (a) A method is used to identify the party authentication procedures. or similar procedure. and electronic document is what the person claims it on be. an electronic document electronic document shall be shall be the functional equivalent of a written authenticated by proof that an document under existing laws. shall be authenticated by demonstrating. encryptions. including the use of sought to be bound and to indicate said electronic notarization systems as necessary and party's access to the electronic document advisable. using shall be equivalent to the signature of a person on a algorithms or codes. Authentication of Electronic Data Messages be established in any legal proceeding – and Electronic Documents. when applicable was adopted and employed This Act does not modify any statutory any statutory for the purpose of verifying the rule relating to admissibility of electronic data originator of an electronic data message massages or electronic documents. were employed or be presented: Provided. and follows.. appropriate security procedure. or detecting relating to authentication and best evidence.

a) sale on return constructive delivery thereof. if no time has been fixed. who is not a party to the proceedings and who did not act under the control of the party using the record. property except those of a creditor 18 .) By showing that the electronic data message or (1) When he signifies his approval or acceptance electronic document was recorded or stored in the to the seller or does any other act adopting the usual and ordinary course of business by a person transaction. reserve the right of possession or ownership in the goods until certain conditions have been fulfilled.b) sale on approval sold30 i. trial. Seller may reserve the right of a) sale on approval. within a purchaser until he has fully paid the price. The ownership of the thing sold shall be transferred to the vendee upon the actual or a. on the expiration of such time. 1478. Exceptions until the price is fully paid ii. the seller may. find them satisfactory and order that 1496) type of goods – when the goods are used or when they were retained beyond a. 1477. and that a sale carrier or other bailee for the purpose of without delivery gives the would-be purchaser no rights in said transmission to the buyer. (n) title passes upon full payment or satisfaction of condition passing of legal 1. When there is a contract of sale of ownership therein passes to the buyer: specific goods.c. (2) If he does not signify his approval or acceptance to the seller.c) executory sales right i. but he may revest the ownership in the seller by returning or Art. on the expiration of a reasonable time. title passes on delivery Ownership of thing shall transfer to the vendee upon the ACTUAL or CONSTRUCTIVE DELIVERY of the thing a. Ownership of the thing shall not pass 2. Ownership passes on delivery but buyer Art. 1496. TRANSFER OF OWNERSHIP has been fixed for the return of the goods. The right of possession or 30 ownership may be thus reserved notwithstanding KUENZIE V. or in any other manner time signifying an agreement that the possession is ii. and. What is a reasonable time is a question of fact. Art. the Art. 1502. 1503. Delivery is the method of accomplishing this a. if no time has A. Title passes – in case of goods sent to OR: any manner signifying an agreement that the buyer on the hope that the latter will possession is transferred from vendor to vendee (Art. but retains the goods without giving notice of rejection. (n) c) implied reservation When goods are delivered to the buyer on approval or on trial or on satisfaction. by the terms of the contract. or other similar terms. (n) reasonable time. The ownership of the thing sold is may revest such ownership to the seller acquired by the vendee from the moment it is by returning or tendering goods within delivered to him in any of the ways specified in the time fixed or within a reasonable Articles 1497 to 1501. (n) i. in sale on return. As opposed to a Conditional Sale (where transferred from the vendor to the vendee. Contract of sale constitutes a RIGHT to a reasonable time TRANSFER or ACQUISITION of OWNERSHIP b. or satisfaction possession or ownership in the goods until certain conditions have been Art. General rule title). then if a time VII. The parties may stipulate that tendering the goods within the time fixed in the ownership in the thing shall not pass to the contract. the b) express reservation ownership passes to the buyer of delivery. When goods are delivered to the buyer fulfilled "on sale or return" to give the buyer an option to return the goods instead of paying the price. or. MACKE & CHANDLER: the ownership of the delivery of the goods to the buyer or to a personal property can not be transferred to the prejudice of third persons except by delivery of the property itself. Manner of transfer been fixed.

is that indiviso. Kinds of delivery o authorizes buyer to use such document as proof of ownership a) real delivery  Symbolic delivery may produce the effect of tradition if vendor have had Art. its sale for the following reasons: First. 1499. Civil Code) unless made so by the terms of the contract or by an understanding of the parties. therefore. of the same code: When the sale should be made by means of a public instrument. not as owner but as lessee. interests and participation as to the 1/2 portion pro SPOUSES VELARDE V. if the thing sold cannot be transferred to the possession of With regard to movable property.. When the sale is made through a public ii) Traditio Longa Manu instrument. private respondents as execution was really a formal or symbolical delivery of the sellers did not reserve unto themselves the ownership of property sold and authorized the plaintiff to use the tile of the property until full payment of the unpaid balance of ownership as proof that he was thenceforth the owner of the P225. the EXECUTION thereof shall be equivalent to delivery IF from the deed the iii) Traditio brevi manu contrary does not appear o operates as formal/symbolic delivery Traditio Brevi Manu33 – delivery of movable property takes place when the vendee had the thing already in his possession before the sale 31 BEAN V. CA: The general rule. by the vendee upon actual or constructive delivery thereof 19 . i. the mere execution and delivery of subject property as lessees. CADWALLER: Actual manual delivery of an article took place. when it is placed in the control and the moment of the sale. there is no stipulation giving the property. the ownership of the thing sold is acquired the seller of his obligations under the contract of sale. sellers the right to unilaterally rescind the contract the MASALLO V.00. or if the latter also be made by the delivery of the keys of the place already had it in his possession for any other or depository where it is stored or kept. CESAR: As Matea Crispino admits. (1462a) delivery could have been made  GENERAL RULE: he who purchases “Delivered” – when placed in the control and through a public instrument should be possession of the vendee. conveyance of ownership deemed a “possessor in fact” and this without prejudice to the right of vendor to claim presumption should give way before payment of the price31 proof to the contrary  A person must be in ACTUAL b) constructive delivery POSSESSION to be able to transfer CONSTRUCTIVE POSSESSION through b. 1500. Upon sale to them of the the deed did not constitute a delivery of possession rights. if from the deed the contrary does not may likewise be made by the mere consent or appear or cannot clearly be inferred. agreement of the contracting parties. The parties to the contract may iv) Traditio Constitutum agree when and on what conditions the property in the subject of Possessorium the contract was passed to the prospective owner 32 FLORENDO V. As the contrary does not appear nor is to be inferred portion pro indiviso of the two subject lots is a contract of from the public instrument executed by the defendant. it transfers ownership of the delivery known as traditio brevi manu. and constitutes valid compliance by the Civil Code. not in concept of the execution of public instrument has the same legal effects as lessees anymore but as owners now through symbolic actual or physical delivery. CA: The September instrument the contrary does not appear or may be clearly 15. however. or depositary. 2nd paragraph. inasmuch as the formal delivery de jure was made. its material possession of the vendee. its delivery may the vendee at the time of the sale. petitioners were in possession of the delivered her deed to plaintiff. (1463a) reason. FOZ: It is the material delivery of the property Art.e. 24 she did not have possession of the land when she executed and Prior to the sale. borrower sold is not essential to the passing of the title thereto (art 1450. Under Article 1477 of subject matter to the buyer. (1463a) i) delivery by public instrument32 Traditio Longa Manu – delivery takes place when the thing is placed in the sight of the purchaser  When sale is made through a public so that he can take possession of it at pleasure instrument. that moment the buyer fails to pay within the fixed period. interests and participation as to 1/2 inferred. 1498. they remained in possession. if in said HEIRS OF PEDRO ESCANLAR V. constitutum possessorium. The delivery of movable property contract. There may also be tradition sold which the defendant must make in compliance with the contract.a) symbolic public instrument Art. (n) according to the provisions of article 1462. the execution thereof shall be equivalent to the 33 delivery of the thing which is the object of the contract. 1497.3. 1978 sale of rights. The thing sold shall be understood as such control over the thing sold that at delivered.000. Second. the execution thereof shall be equivalent to the delivery of the thing which is the object of the Art.

s. the second purchaser cannot acquire ownership the goods up to the place of as he bought the property from a mere tenant. 20 . without notice of the facts making the transfer wrongful. or unless contrary buyer. freight” lading he acquires no added right thereby. delivery of the goods to right of possession or ownership may be thus a carrier. and that the not be construed as fixing the place of vendor. where the vendor. the bill of while the vendor is in material possession of lading. f.a. if so. and if he wrongfully retains the bill of ii.“free on board” means that payment of the bill of exchange. and freight charges on again to another.b. by the terms of the contract. by the seller to the buyer under circumstances in which the seller knows or ought to know that it is Where goods are shipped. deed of conveyance. whether named by the buyer or not. title passed to the contract. or to vendee34.o. the buyer is bound the seller bears expenses of to return the bill of lading if he does not honor the bill transportation up to the f. .i. (n) would have passed to the buyer on shipment of the goods. BAUTISTA V SIOSON: Even if the vendor sells the property insurance. is deemed to be in possession thereof by the express will of the contracting parties.b.” price and transmits the bill of exchange and bill of lading together to the buyer to secure acceptance or i. or is indorsed in blank. the seller's property in the goods shall be  GENERAL RULE: Delivery of goods to deemed to be only for the purpose of securing carrier is considered delivery to the performance by the buyer of his obligations under the buyer. where goods are sent purpose of transmission to the buyer.b. and by the bill of lading the usual to insure. When there is a contract of sale of specific goods. and therefore.f. of exchange.”.o. by virtue of a lease agreement with the order of the buyer. the purchaser who acquired the property through goods alongside a vessel at a named delivery or symbolic tradition. with all the consequent effects of a post. the buyer by the consignee named therein. The the goods to the buyer. who by that covenant becomes the lessor. intent appears in the contract of sale Where the seller of goods draws on the buyer for the a. the seller is authorized or required to send goods until certain conditions have been fulfilled. But. is in lawful possession of the leased property. the seller during their transit. (n) Art. insurance. the legal possessor who purchases in good faith. point. If. the however. and continues in possession thereof transportation until he delivers the as such tenant. “f. or to to the buyer as may enable him to insure them the order of the seller or of his agent. and. the ownership during such transit. or goods from the buyer will obtain the the property in the name and representation ownership in the goods.s. converted himself into the lessee delivery to the buyer and is in material possession of the leased property in the name and representation of the purchaser. 1503. if the seller fails to do thereby reserves the ownership in the goods. reserved notwithstanding the delivery of the goods to for the purpose of the buyer or to a carrier or other bailee for the Unless otherwise agreed. f. by means of a constitutum iii. although the bill of of the vendee.a. through such constitutum possessorium connection with fixing the price and will agreement. for value. the bill of lading provides that the vendor remains in possession of the property goods are deliverable to the buyer or to the sold. – “free alongside” means that possessorium agreement converts himself into a tenant or lessee the seller bears the expenses of of the property that he sold. the purchaser. “f.  In traditio constitutum possessorium. by the same covenant. or of the goods. and by the bill of lading the  EXCEPTION: Seller may reserve title by goods are deliverable to order of the buyer or of his the form of the bill of lading with intent agent. the seller may. “c.”. it must  These terms may be used only in be recognized that. Terms. In a case which destination frequently occurs. .“cost. the seller thereby reserves not merely for the sole purpose of a right to the possession of the goods as against the securing payment. Art.i. its lawful owner. and hence. c. Where. in pursuance of a contract of reserve the right of possession or ownership in the sale. on the same date on which the deed of sale is executed.o. provided that such purchaser has received delivery of the bill of lading indorsed by the consignee named v) delivery to common carrier therein.f. signifies that the price quoted 34 includes the costs of the goods. one  Vendee became as lessor. 1523. but possession of the bill of lading is retained to remain the owner for all purposes and by the seller or his agent. the goods shall be deemed to be at his risk except for the form of the bill of lading. the seller must give such notice goods are deliverable to the seller or his agent. buyer at the point of shipment Where goods are shipped. exchange has not been honored.

Should it be immovable destination. to ascertain the rights of the judgment debtor over the b) sale of movables36 property. and. the ownership shall o as to Torrens title: it is belong to the person acquiring it who in good faith enough that purchaser examines the first recorded it in the Registry of Property. A claims contracted subsequent to its recording formal deed of sale was executed in favor of Infante. without knowledge buyer until the latter pays the price of the existence of another alienation by  Mere possession is retained: The seller may the vendor to another consign the goods to the order of the buyer on the latter’s agent but by retaining the bill  POSSESSOR IN GOOD FAITH: one who of lading. registered an adverse claim on the property. the second  Ownership is retained: The seller may buyer must not only show prior consign the goods to himself or to his agent recording of his deed but must have and thus prevent title from passing to the acted in good faith. The deed of sale in favor of Infante 36 was later registered and the latter was thereafter in possession of RIVERA V ONG: Ong Che has a better title to the the lot. burden of proof is on to different vendees. 21 . judgment debtor may have over the property as of the time of levy. and before the registration of the property by Infante. (1473) 1. and is preferred only over 27 Jan 1955 and 4 days later sold the same property to Infante. provided there is d) Sale by virtue of execution or attachment good faith. 1544. the ownership shall be person alleging bad faith transferred to the person who may have first taken o good faith of second possession thereof in good faith. superior title. 1544 (1). Double Sales o good faith is always Art. the ownership place of payment agreed upon by the parties shall be transferred to the person who may have first taken possession thereof in good faith. the ownership shall trace its origin to prior certificates of pertain to the person who in good faith was first in title the possession. shipment. therefore has a better title than the first purchaser. if it o Where price is payable upon proof of should be movable property. then that is the place of property. the ownership shall belong to the delivery to the buyer person acquiring it who in good faith first recorded it in the Registry of Property.  Best indication of the intention of parties as Art. prior registration in good faith is pre-condition to a claims). latest certificate of title issued in the name of his vendor and he need not Should there be no inscription. If the same thing should have to the place of delivery is the manner and been sold to different vendees. then the buyer agrees to accept delivery at the point of shipment c) sale of immovables o Where the price is payable only upon arrival of the goods at the point of Art. in the absence thereof. Carbonell. he thereby prevents the buyer from is not aware that there exists in his title obtaining the goods from the carrier until or mode of acquisition any flaw which price is paid invalidates it 4.] 2. if it should be buyer must continue until his movable property. contract ripens into ownership by tradition or recording Should it be immovable property. 1544 (2). If the same thing should have been sold presumed. the question as to who of the such sales is substituted to or acquires latter acquired ownership depends on the nature of whatever rights. Carbonell registered her adverse claim four days acquired possession by virtue of his purchase. prior jure35 purchaser. upon seeing Infante building a wall around the lot. As there in property (over which he and Rivera had overlapping inscription. Held: The second sale was not valid. He was a purchaser of the articles in good faith. GENERAL RULE: Article 1544 not applicable to If the same thing should have been sold by the owner execution sales because the purchaser at to different buyers. [It is the duty of the a) General Rule – Prior tempore. to the person who presents the oldest title. EXCEPTION: Attachment or execution cannot 35 prejudice prior unrecorded sales made by the CARBONELL V CA: Jose Poncio sold his lot to Carbonell on judgment debtor. title or interests the the thing sold. before bidding. vi) effect of form of bill of lading  To be entitled to priority.

hence. the Register was gained independently of the sale. notice of lis anything to him. the entry number.3. attachment and levy. the vendor remained in possession by mere as required by existing law. material but also symbolic possession which is acquired with appropriate annotation. lease. returning to the registrant or QUIMSON V ROSETE: Possession includes not only person in interest the duplicate of the instrument. The Primary Entry Book shall contain. Primary Entry Book. or registration was done in bad faith. 1529. prior unrecorded sale cannot prejudice execution sales if no third-party claim was (e) For the services to be rendered by the presented before the execution sale took place. on the face of the instrument. Sec. Register of Deeds under this section. the nature of the document. he shall [Third persons are not required to go beyond the collect the same amount of fees prescribed for register and determine the condition of the similar services for the registration of deeds or property. among thereof through the modes of acquiring other particulars. hour result of sale. when the land was sold again to defendant. and the latter may appeal the have the legal right to rely on the face of the Torrens matter to the Commissioner of Land Registration in Certificate of Title and to dispense with the need to inquire accordance with the provisions of Section 117 of this further. Hence.  Mere registration of sale in one’s favor does conveyance. under this section. tolerance of the first vendee. certifying that he has through the execution of a public instrument. 113. It shall be understood that any recording knowledge of facts and circumstances that would impel a made under this section shall be without prejudice to reasonably cautious man to make such inquiry. the vendor did not transmit (d) Tax sale. the file number SANCHEZ V RAMOS: Delivery may be actual or and the date as well as the hour and minute when the constructive.No deed. a third party with a better right. mortgage. as title by of Deeds shall endorse among other things. said official shall 37 advise the party in interest in writing of the ground or NAAWAN RURAL BANK V. the Register of Deeds shall forthwith record the instrument in the manner g) Oldest title provided herein.D. if the contrary does not appear in the deed. shall likewise be admissible to record the “operative act to convey and affect the land”. 22 . the date. after the same shall have been If neither vendee registered the sale in his favor entered in the Primary Entry Book. The prescription38 recording of the deed and other instruments relating to unregistered lands shall be effected by any of f) First in possession in good faith annotation on the space provided therefor in the Registration Book. if made in the form sufficient provides that registration of instruments shall be in law. and the possession of the latter was a mere detainer. the names of the ownership under the Civil Code: tradition as a parties. 39 original of the recorded instruments. if the first sale is evidenced in a public document was received for recording as shown in the instrument. adverse claim and other instruments in the delivery thru the execution of a public instrument.] instruments concerning registered lands. there is delivery of the thing sold. upon the prescription. 38 HANOPOL V PILAPIL: A better right which is unrecorded and which would prevail over a recorded sale is one which (c) After recording on the Record Book. or other voluntary not give him any right over the land: instrument affecting land not registered under the o if the vendor was not the owner of the Torrens system shall be valid. In case the Register of Deeds refuses its administration to record. succession and and minute it was presented and received. e) Unregistered land  Registration requirement is understood to be without prejudice to third party with a better P. EXCEPTION TO THE EXCEPTION: Above rule does nature of involuntary dealings with respect to not apply to lands registered under Act 496 which unregistered lands. possession of the land. except when the party concerned has actual Decree. donation. Recording of instruments right37 relating to unregistered lands. Thus. it appears that it acquired ownership of the land39 is sufficient in law. CA: It is a well-known rule in this jurisdiction that persons dealing with registered land grounds for his refusal. except as between the land parties thereto. The first vendee acquired ownership by pendens. the vendee who was first in possession in good faith (b) If. As the land recorded the instrument after reserving one copy was considered delivered by the execution of the public thereof to be furnished the provincial or city assessor instrument. unless such instrument shall have o if the vendor has already parted with his been recorded in the manner herein prescribed in the ownership before such sale in favor of office of the Register of Deeds for the province or city third party who had previously taken where the land lies. even though the prior sale was unrecorded (a) The Register of Deeds for each province or city  A person having a “better right” would be one shall keep a Primary Entry Book and a Registration who had previously acquired ownership Book. .

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer. before delivery NOTE that the next 3 situations contemplate loss of Art. Public document is not included as there is shall be ineffective. 1406. Where the parties purport a sale of (2) Where actual delivery has been delayed specific goods. This is because delivery thru a public instrument. provided that the title was in proper efficacy of an obligation to give. if the there is good faith. 1494. or Deeds. 1496. RISK OF LOSS OR DETERIORATION knowledge of both parties. the loss was borne by him rules shall be observed in case of the 23 . (n) 2. paying to secure performance by the buyer of his its price in proportion to the total sum agreed upon. (n) a material part so deteriorated in quality as to be substantially changed in character. When a contract is enforceable under his option treat the sale: the Statute of Frauds. General rule substantial change in character Art. (n) price An obligation to deliver a generic thing is not 3. When the conditions have been ROMAN V GRIMALT: The sale was not perfected as the buyer imposed with the intention of suspending the agreed to buy the vessel. c) Options of buyer when there is partial loss and a loss which results in A. 1493. the sale or a receipt for the price. When loss occurs after perfection but extinguished by loss because genus never perishes. (n) the seller. Art. thing had been lost entirely. without the VIII. In an obligation to deliver a generic thing. and a public document is necessary for its registration in the Registry of (1) As avoided. 1504. and as sale nor acquired possession of the land sold. the goods remain at the seller's risk until the ownership 2. This is because ownership is still with him40. The ownership of the thing sold is specific things acquired by the vendee from the moment it is delivered to him in any of the ways specified in 1. the goods are at (1460a) the buyer's risk from the time of such delivery. and the goods without the knowledge through the fault of either the buyer or seller the of the seller have perished in part or have wholly or in goods are at the risk of the party in fault. the contract 3. “Older title” means any document showing acquisition of the land in good faith. except that: contract has been entirely lost. 1263. b) The loss must have occurred before the contract was entered into. it is borne by transferred from the vendor to the vendee. unless the there can be no contract without an contrary can be clearly inferred therefrom object. the contract shall be without any effect. or in any other manner signifying an agreement that the possession is When loss occurred before perfection. like a deed of a) If at the time the sale is perfected. but when the ownership therein is transferred to the buyer the Art. the pursuance of the contract and the ownership in vendee may choose between withdrawing from the the goods has been retained by the seller merely contract and demanding the remaining part. (2) As valid in all of the existing goods or in so 1. sale was divisible. the parties may avail themselves of the right under Article 1357. If at the time the contract of sale is goods are at the buyer's risk whether actual perfected. If neither of the vendees registered their deeds of much thereof as have not deteriorated. Art. in But if the thing should have been lost in part only. When loss occurs at the time of perfection therein is transferred to the buyer. 40 Art. the buyer may at Art. As the vendor failed to perfect his title. O Withdraw from the contract the loss or destruction of anything of the same kind O Buy the remainder at a proportionate does not extinguish the obligation. Unless otherwise agreed. the following form. When loss occurs before perfection Articles 1497 to 1501. the thing which is the object of the delivery has been made or not. has the better right. 1189. obligations under the contract. the binding the buyer to pay the agreed price for the one who can present the oldest title provided goods in which the ownership will pass.

and the stipulation “ownership shall only be transferred upon full Roman law requiring delivery to transfer ownership. Second. providing an incentive to care properly for the goods. but to the payment of the purchase price. goods represented by such document. 44 payment. the obligation shall be extinguished. bear the risk of loss until the goods are delivered. does not relieve him documents of title is that the seller is allowed by fiction of from the obligation to pay the price. The ability to pay in money or legal tender EXCEPTIONS: is never lost through a fortuitous event. His obligation does not pertain to the 2. V TABORA: Despite the loss of the actually or constructively. the vendor being considered the debtor. an obligor should be exempt from liability when the loss occurs in a fortuitous event. delivery. The risk of loss shall be borne by the owner. or goes out of Document of title – a document used in the commerce. DOCUMENTS OF TITLE (2) If the thing is lost through the fault of the debtor. (1122) purchaser or donee. This is because the rule is a books in a fire. or by time. which the seller bears the risk of loss. APPLIANCES V PEREZ: The law allows an agreement which stipulates that (1) where goods are sold and loss. the policy of therein 24 . described therein without having to effect actual the improvement shall inure to the benefit of the delivery thereof (Villanueva) creditor. Art. 43 NORTH NEGROS SUGAR CO. V CIA. Moreover. (n) rules in Article 1189 shall be observed. the absolute had physically delivered them to the buyer. transfer of goods. the title is to remain in the seller until full depositary. Security title42 the pendency of the condition: 3. either by endorsement or by creditor. Negotiable documents of title When loss occurs after perfection but before delivery.improvement. GEN DE 1. TRUST CO. the buyer law to deal with the goods described therein as though he suffers the loss. 1511. himself from paying. the additional right. V NATIONAL BANK: The purpose of the possession of the buyer before payment. IX. Ownership is transferred upon delivery. the risk of loss would be borne by the buyer combination of the common-law rule that the owner although he was not the owner yet. or disappears in such a way that its ordinary course of business in the sale or existence is unknown or it cannot be recovered. the impairment is to be borne by the transfer or receive. payment” was agreed merely to secure the performance by the buyer of his obligation. he such form that it can be negotiated by delivery shall have no other right than that granted to the may be transferred by the holder by delivery to a usufructuary. goods described therein (2) Medium of transferring title and possession over the goods (5) If the thing is improved by its nature. Third. the vendor has fully performed his contract and taken possession and control over the goods described the vendee received what he bargained for. it is understood that the thing is lost when it perishes. loss or deterioration of the thing during 2. This is because the bears the risk of loss (res perit domino). he shall be obliged to pay damages. it was B. The reasons for its validity are: First. such that place of delivery 41 was at the seller’s warehouse. A document of title which is not in (6) If it is improved at the expense of the debtor. as proof of the possession or control of the goods. in the contract. and the buyer and unconditional nature of the vendee’s promise to pay for the may take the document of title as though he had actually goods. A non-negotiable document cannot be negotiated and the endorsement of Art. GENERAL RULES: While under the rule. 1636)44 (4) If it deteriorates through the fault of the debtor. the creditor may choose between the rescission of the The functions of documents of title are (1) obligation and its fulfillment. 1538. [but] (2) the loss or destruction of the property while in PHIL. in which case. In case of loss. this cannot be used by the buyer as a defense to exempt 1. delivery of the subject matter. with indemnity for Evidence of the possession or control of the damages in either case. deterioration or such a document gives the transferee no improvement of the thing before its delivery. Delay through the fault of the buyer or the seller43 – at the risk of the party at fault (1) If the thing is lost without the fault of the debtor. This is because the seller becomes merely a delivered to the buyer. the buyer bears the risk of SUN BROS. When ownership is transferred agreed that loss or damage to the books after delivery to the buyer shall be borne by the buyer. Contrary stipulation41 TABACOS: If there was delay in accepting delivery but there was segregation of goods. (Art. or authorizing or purporting (3) When the thing deteriorates without the fault of to authorize the possessor of the document to the debtor. The buyer does not is under the control and dominion of the vendee. 42 LAWYER’S COOP. (n) 1.

(n) fully as if such bailee had contracted directly with him. 2. if. 1512. by the terms of the document the undertakes to deliver the goods to the bearer. or to the order of any person named in  Endorsed in blank by the another such document is a negotiable document of title. to bearer or to a specified person. A negotiable document of title may be (1) By the owner therefor. Such endorsement may be in for value. it may be again negotiated by (2) The direct obligation of the bailee issuing the the endorsement of such person in blank. deliver the goods to the order of the person to warehouseman or other bailee issuing the same whom the possession or custody of the undertakes to deliver the goods to the order of a document has been entrusted." "non-negotiable." or the like. has placed upon it the 1. and blank. If indorsed to a specified person. Subsequent negotiations him according to the terms of the document as may be made in like manner. 1507. to bearer or document to hold possession of the goods for to another specified person. (n) Art. or negotiated by delivery: (2) By any person to whom the possession or (1) Where by the terms of the document the carrier. But nothing in this Title a better title than his vendor. and in such (1) Such title to the goods as the person case the document shall thereafter be negotiated only negotiating the document to him had or had by the endorsement of such endorsee. or by the fact that the owner of the 25 . (n) to the bearer. or if at the time specified person. 1510. A document of title in which it is stated  Goods are deliverable to By delivery of the that the goods referred to therein will be delivered to bearer document to the bearer. The validity of the negotiation of a negotiable document of title is not impaired by the fact that the negotiation was a breach of TERMS OF THE HOW duty on the part of the person making the DOCUMENT NEGOTIATED negotiation. rights of the vendor words "not negotiable. or bailee issuing the document undertakes to (2) Where by the terms of the document the carrier. 1508. or to the order of any person named in such document. (n) person to whose order the goods were deliverable Negotiable document of title – a document of title in Goods are deliverable to the By indorsement of which it is stated that the goods referred to therein order of a specified person such person will be delivered to the bearer. 1509." "non-negotiable" or the like. warehouseman or other A person to whom a document has been bailee to deliver the goods to bearer. (n) Art. to a specified negotiated acquires person or order of a specified person or which contains words of like import. b) who may negotiate it a) how negotiated Art. or other bailee issuing a document of d) Unauthorized negotiation title or placing thereon the words "not negotiable. A negotiable document of title may be person to whose order the goods were to be negotiated by the endorsement of the person to delivered by the terms of the document had or whose order the goods are by the terms of the had ability to convey to a purchaser in good faith document deliverable. (n) ability to convey to a purchaser in good faith for value and also such title to the goods as the Art. If a document of title which contains an undertaking by a carrier. 1513. warehouseman. rights of the original consignee such document may nevertheless be negotiated by the holder and is a negotiable document of title within Thus. custody of the document has been entrusted by warehouseman or other bailee issuing the same the owner.Art. 1518. any holder may indorse the same acquires thereby: to himself or to any specified person. c) rights acquired by negotiation Where by the terms of a negotiable document of title the goods are deliverable to bearer or where a Art. and such person or a subsequent of such entrusting the document is in such form endorsee of the document has indorsed it in blank or that it may be negotiated by delivery. A person to whom a negotiable negotiable document of title has been indorsed in document of title has been duly negotiated blank or to bearer. a buyer of a document of title may acquire the meaning of this Title. since he acquires contained shall be construed as limiting or defining the rights of the original consignee. the effect upon the obligations of the carrier. A negotiable document of title may be negotiated: Art.

whenever such warranties would deliver the goods without the surrender of the have been implied if the contract of the parties had bill of lading to them. its negotiation be enjoined. UNLESS (2) That he has a legal right to negotiate or transfer 1. 26 . subject to the terms of any agreement with the transferor. (n) delivery. (n) title has been transferred. and But he does not warrant that thereby to acquire the direct obligation of such bailee to hold possession of the goods for him 1. mistake. hence it is not allowable for a carrier to a particular purpose. accident. The endorsement of a document of title shall not make the endorser liable for any failure on a) how transferred the part of the bailee who issued the document or previous endorsers thereof to fulfill their respective Art. accident. the common carrier will fulfill its obligation to the according to the terms of the document. impounded by the court. represented thereby. 1518. A creditor whose debtor is the owner document was deprived of the possession of the same of a negotiable document of title shall be entitled by loss. negotiation enjoined. (n) breach of duty on the part of the person making the negotiation. only the owner of the levied under an execution unless the document document or one to whom possession of the be first surrendered to the bailee or its document has been entrusted may negotiate it. under Art. fraud. warrants: negotiable document cannot be attached or (1) That the document is genuine. 2. all the warranties of a vendor of goods. 1520. or 2. the validity of the be compelled to deliver up the actual possession negotiation of a negotiable document of title is not of the goods until the document is surrendered impaired by the fact that the negotiation was a to him or impounded by the court. or by the fact that the owner of the Art. levied upon. the previous indorsers will fulfill their obligation. such person 3. deliver the goods. A person to whom a document of obligations. mistake. duress. mistake. also acquires the right to notify the bailee who issued the document of the transfer thereof. 1517. duress or conversion. A person who for value negotiates or be attached or levied upon by ordinary legal transfers a document of title by endorsement or process. as against the transferor. or to such aid from courts of appropriate conversion.document was deprived of the possession of the same by loss. or (3) That he has knowledge of no fact which would 3. If goods are delivered to a bailee by subsequently negotiated paid value therefor in good the owner or by a person whose act in conveying faith without notice of the breach of duty. or f) creditor’s right against the goods conversion. the title to them to a purchaser in good faith for theft. and. 1519. If the document is non-negotiable. or 2. the A person who negotiates a document of title warrants title to the goods. carrier. 1514. 1512. (n) 2. 1516. the document be first surrendered to the it. be There is a conflict between Art. 1518 attached by garnishment or otherwise or be since under Art. theft. or for the law to allow been to transfer without a document of title the goods attachment on the goods. including one who assigns for value a claim secured by a document of title unless a contrary Goods in the hands of the carrier covered by a intention appears. 1512 and Art. fraud. impair the validity or worth of the document. and Rationale for the rule: (4) That he has a right to transfer the title to the A negotiable document of title represents the goods and that the goods are merchantable or fit for goods. theft. duress. 1. acquires thereby. accident. The bailee shall in no case However. if the person to whom the document was negotiated or a person to whom the document was Art. while in possession of such bailee. (Baviera) jurisdiction by injunction and otherwise in attaching such document or in satisfying the e) implied warranties claim by means thereof as is allowed at law or in equity in regard to property which cannot readily Art. Non-negotiable documents of title Art. but not negotiated. his right to negotiate it. value would bind the owner and a negotiable (n) document of title is issued for them they cannot thereafter. fraud. the genuineness and validity of the document. or loss.

Art 1524. or any other person who is in the position of a seller. the (2) When a bill of exchange or other negotiable unpaid seller could resell the goods to another or instrument has been received as conditional payment. in The transferee does not acquire a better title than his addition to his other remedies a right of transferor [unlike in a negotiable document of title. – where an order document of title was sold or assigned. As a consequence of his lien over the goods. (n) for the price while he is in possession of them. 1. the transferee acquires a right against may have passed to the buyer. negotiable document of title].Prior to the notification to such bailee by the a) Unpaid seller – if the whole price has not been transferor or transferee of a non-negotiable document paid or tendered. (3) A right of resale as limited by this Title. the title of the transferee to the goods and conditional payment was dishonored by non- the right to acquire the obligation of such bailee may payment or insolvency of the buyer. Subject to the provisions of this Title. endorsement of the transferor is essential for notwithstanding that the ownership in the goods negotiation. the unpaid seller has. Subject to the provisions of this Title. b) rights acquired by transfer of document of title REMEDIES OF AN UNPAID SELLER Art. REMEDIES OF AN UNPAID SELLER a) If ownership over the goods had not yet passed to the buyer: the seller. Lien In Articles 1525 to 1535 the term "seller" includes an agent of the seller to whom the bill of lading has been indorsed. paid. or is directly responsible for the price. the unpaid seller the transferor to compel him to endorse the of goods. Transfer – the assignment of rights of the consignee of a non-negotiable document of (4) A right to rescind the sale as likewise limited title to another by this Title. (n) them is entitled to retain possession of them until payment or tender of the price in the following cases. or any the unpaid seller of goods who is in possession of other person who is in the position of a seller. The seller of goods is deemed to be an b) If ownership had passed to the buyer but the unpaid seller within the meaning of this Title: goods are still in the possession of the seller or are in transit to the buyer: the unpaid seller (1) When the whole of the price has not been paid or could withhold delivery or stop the goods in tendered. without indorsement Where the ownership in the goods has not passed to the buyer. or by b) seller – includes the agent of the seller to a notification to such bailee by the transferor or a whom the bill of lading was endorsed. has: document unless a contrary intention appears. could MEANING OF UNPAID SELLER retain the goods or resell them to another. or otherwise. the insolvency of the buyer. as such. (2) In case of the insolvency of the buyer. (n) X. or when the check received as of title. without court and the condition on which it was received has been order. The negotiation shall take effect as of the time when the (1) A lien on the goods or right to retain them endorsement is actually made. be defeated by the levy of an attachment of execution upon the goods by a creditor of the transferor. and the Art 1526. as owner. resume ownership over them. 1515. with his rights of lien and stoppage in transitu where the ownership has passed to the buyer. namely: 27 . withholding delivery similar to and coextensive where the buyer may acquire a better title]. and may still used the buyer for damages broken by reason of the dishonor of the instrument. Where a negotiable document of title is transferred for value by delivery. a right The law makes a distinction between “negotiation” of stopping the goods in transitu after he has [negotiable document of title] and “transfer” [non- parted with the possession of them. (n) responsible for the price. or a consignor or agent who has himself Art 1527. transit should the buyer become insolvent. without prejudice to his liability for damages for any breach of contract committed by him. or the subsequent purchaser from the transfer of a consignor or agent who had paid the price or is subsequent sale of the goods by the transferor.

(2) Where the goods have been sold on credit. when the buyer of goods is or becomes insolvent. (n) been made under such circumstances as to show an intent to waive the lien or right of retention. (3) Where the buyer becomes insolvent. right to the possession thereof. or If the goods are delivered to a ship. the carrier or other bailee credit. or non-negotiable bill of lading. indicated by the buyer. possession of them. Goods are no longer in transit within the The unpaid seller of goods. unless such part delivery has parted with the possession. The unpaid seller of goods loses his lien (1) From the time when they are delivered to a thereon: carrier by land. If part delivery of the goods has been made to the buyer. or his agent in that behalf. freight train. (n) Art 1531. unless such was possession of the carrier as such or as agent of intended to operate as symbolical delivery of the the buyer. having a lien thereon. whole. wrongful repudiation of the contract. and (2) When the buyer or his agent lawfully obtains the carrier or other bailee continues in possession of the goods. when the goods were delivered to the buyer. consigning them to the buyer under a straight agent in that behalf. whether they are in the only partial delivery was made. or airplane chartered by the buyer. or air. c) Loss of lien: the unpaid seller losses his lien when: (3) If the carrier or other bailee wrongfully 1. (3) By waiver thereof. but 2. and it is immaterial that further or if the term of the credit had expired and the price destination for the goods may have been has not been paid. he delivers the goods to the carrier or other refuses to deliver the goods to the buyer or his bailee. takes bailee for the purpose of transmission to the buyer delivery of them from such carrier or other without reserving the ownership in the goods or the bailee. the remainder of the goods may be stopped in 28 . a) The unpaid seller’s lien implies that he has a right to retain possession of the goods until payment or (2) If. Goods are in transit within the meaning of the preceding article: Art 1529. it is a question depending on the circumstances of the d) It is not lost on the remainder of the goods when particular case. or 2. he may exercise his right of the goods as he would have had if he had never lien on the remainder. until (1) When he delivers the goods to a carrier or other the buyer. Stoppage in Transitu the term of credit has expired. acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in b) If the unpaid seller agrees to sell on credit. or his agent in that behalf. he may possession of them as bailee for the buyer or his refuse to deliver them if the buyer becomes insolvent. or other bailee for the purpose of transmission to the buyer. Where an unpaid seller has made part become entitled to the same rights in regard to delivery of the goods. and he will then Art 1528. e) Revival of lien: the unpaid seller’s lien is (1) Where the goods have been sold without any revived if the goods are returned by the buyer in stipulation as to credit. truck. agent. even if the seller has refused to receive them back. the unpaid seller who has parted with The seller may exercise his right of lien the possession of the goods has the right of notwithstanding that he is in possession of the goods stopping them in transitu. 3. (n) obtains delivery of the goods before their arrival at the appointed destination. goods. (2) If the goods are rejected by the buyer. when he waived his lien. unless he agreed to sell on appointed destination. water. that is to say. (n) resume possession of the goods at any time while they are in transit. after the arrival of the goods at the tender of the whole price. Subject to the provisions of this Title. he may as agent or bailee for the buyer. or his agent in that behalf. Art 1530. meaning of the preceding article: does not lose his lien by reason only that he has obtained judgment or decree for the price of the (1) If the buyer. The lien is not lost by the mere fact that the seller had already obtained judgment for the price.

and subject to this 29 . a negotiable document of title has contract of sale or for any profit made by such resale. he must redeliver the goods to. (n) goods. (n) Art 1533. he shall not obliged to deliver or to rescind shall be relevant in any issue involving justified in delivering the goods to the seller unless the question whether the buyer had been in such document is first surrendered for cancellation. To terminate the transit by delivery to a middleman. An unpaid seller having the right of Art 1532. agent takes delivery of them from the carrier. or where the seller expressly reserves the right of the unpaid seller's right of lien or stoppage in resale in case the buyer should make default. (n) It is not essential to the validity of resale that notice of an intention to resell the goods be given by the a) Old common law remedy which is an seller to the original buyer. as authorized in this article. may prevent a delivery to the any loss occasioned by the breach of the buyer. the giving or failure to give such notice shall be come in possession of the vendee if the later is relevant in any issue involving the question whether or becomes insolvent. Where the goods are of perishable nature. until the buyer or his by the seller to the original buyer. When notice of stoppage in transitu is given by the The transfer of title shall not be held to have seller to the carrier. judgment in making a resale. not to transport. In the latter case the notice. the buyer had been in default for an unreasonable time before the resale was made. a negotiable document of title communicated to the buyer. directly or buyer to give up possession of the whole of the indirectly buy the goods. the seller. It is not expenses of such delivery must be borne by the necessary that such overt act should be seller. or other bailee in possession of been rescinded by an unpaid seller until he has the goods. He cannot. may stoppage in transitu either by obtaining actual rescind the transfer of title and resume the possession of the goods or by giving notice of his ownership in the goods. The seller shall not thereafter effectual. If. by the exercise of but may recover from the buyer damages for reasonable diligence. issued such document. circumstances that the principal. unless the seller has assented seller having a right of lien or having stopped the thereto. b) Goods are considered to be in transit from the time they are delivered to a carrier or other It is not essential to the validity of a resale that notice bailee by the seller for the purpose of of the time and place of such resale should be given transmission to the buyer. however. Such notice may be given should make default. however. or transitu is not affected by any sale. or manifested by notice to the buyer or by some according to the directions of. Subject to the provisions of this Title. an unpaid have made. or other where the buyer has been in default in the payment disposition of the goods which the buyer may of the price for an unreasonable time. default for an unreasonable time before the right (n) of rescission was asserted. contract. negotiation be prior or subsequent to the the buyer acquires a good title as against the original notification to the carrier. been issued for goods.transitu. or other bailee who buyer. no seller's lien or right of but may recover from the buyer damages for any loss stoppage in transitu shall defeat the right of any occasioned by the breach of the contract of sale. The seller is bound to exercise reasonable care and it must be delivery to keep. The other overt act an intention to rescind. unless such part delivery has been under requirement may make a resale either by public such circumstances as to show an agreement with the or private sale. or where the buyer has either to the person in actual possession of the goods been in default in the payment of the price for an or to his principal. (n) Art 1534. to be unreasonable time. He shall not thereafter be liable to the original buyer upon the If. of the seller's claim to a lien or right of stoppage in transitu. The unpaid seller may exercise his right of lien or having stopped the goods in transitu. whether such Where a resale is made. must be given at such time and under such be liable to the buyer upon the contract of sale. goods in transitu may resell the goods. however. But where the right to extension of the lien for the price and entitles resell is not based on the perishable nature of the the unpaid seller to resume possession of the goods or upon an express provision of the contract of goods while they are in transit before the goods sale. but the giving or representing the goods has been issued by the carrier failure to give notice to the buyer of the intention or other bailee. purchaser for value in good faith to whom such document has been negotiated. where he expressly claim to the carrier or other bailee in whose reserved the right to do so in case the buyer possession the goods are. Art 1535.

bailee in whose possession the goods are. may resell the goods and Right of Stoppage. he is entitled a negotiable document of title representing the goods to recover the difference from the original buyer. has been issued by the carrier. the seller. 1. He shall they reached their ultimate destination when the not thereafter be liable to the original buyer buyer rejects them and they remain in the possession upon the contract of sale or for any profit made of the carrier. or when the carrier. having a right of lien or having stopped the goods in transitu. the buyer acquires a good title as against other bailee wrongfully refuses to deliver the goods to the original buyer. It is not essential to the validity of resale that enters into a new contract with the buyer or his notice of an intention to resell the goods be agent. If however. unless such part delivery has been made giving or failure to give such notice shall be under such circumstances as to show an agreement relevant in any issue involving the question with the buyer to give up possession of the whole. but may recover from the buyer damages for any loss occasioned by the breach d) Goods are no longer in transit if the buyer or his of the contract of sale. The seller is bound to exercise reasonable care and judgment in making a resale. if the purchaser fails where the buyer has been in default in the payment to take delivery and pay the price. the transitu. upon arrival of the goods at the ultimate destination. by giving notice of his claim to the carrier or other b) The resale may be in a public or private sale. and if obliged to 30 . an unpaid without need of first rescinding the contract seller having a right of lien or having stopped the judicially. is entitled to resell. He cannot. and subject to 1) Where a negotiable document of title has been this requirement may make a resale either by issued for the goods. the vendor. the latte must redeliver the goods to. 3. a) When the goods are of perishable nature. the latter shall not be It is not essential to the validity of a resale that obliged to deliver the goods unless such document is previous notice of an intention to resell or notice first surrendered for cancellation. or according to the directions of. of the time and place or resale be given to the original buyer. But where the right to resell is not based on the e) If there was partial delivery of the goods to the perishable nature of the goods or upon an buyer. as authorized in this arrived at the ultimate destination but the carrier or article. no seller’s lien or right of public or private sale. (n) purchaser for value in good faith to whom such document has been negotiated. however. the or where the seller expressly reserves the right of purpose is to compensate the seller for loss for resale in case the buyer should make default. or other disposition of the goods which the buyer may have made unless the seller has assented thereto. the remainder of the goods may be stopped in express provision of the contract of sale. seller. of the price for an unreasonable time. The seller is entitled to any profit he When notice of stoppage in transit is given to the may make out of the resale. the seller’s right of stoppage will not be cut off payment. How Exercised-The unpaid seller recover from the buyer damages for breach of may exercise his right by contract. or when the goods Where a resale is made. c) In case he sells them at a loss. given by the seller to the original buyer.) Where the document of title is a straight bill of resale in case the buyer should default in lading. obtaining actual possession of the goods or 2. Where the goods are of perishable nature. Resale d) Damages recoverable: Whether the action is Art 1533. for damages or to recover loss from a resale. mass which was then susceptible of possession. by such resale. stoppage in transitu cannot defeat the rights of any directly or indirectly buy the goods. carrier. or where the seller expressly reserves the right of 2. there is constructive possession of the whole. or breach of contract. the buyer or his agent. agent obtained delivery of the goods even before they reached their ultimate destination. or where the buyer has been in default as the transferee acquires no greater or added rights for an unreasonable length of time.c) Goods are still considered to be in transit even if goods in transitu may resell the goods. whether the buyer had been in default for an Where the buyer has taken some portion of the whole unreasonable time before the resale was made. the unpaid than his transferor. Thus. but the seller cannot buy them directly or indirectly. It is not essential to the validity of a resale that notice of the time and place of such resale f) Sale of goods in transit: the unpaid seller’s right of should be given by the seller to the original lien or stoppage in transitu is not affected by any sale buyer.

Rescission45 Art. (n) intention to rescind. may rescind the each case on the contract. Apart from any such goods. v Benjamin Titman take possession of the goods or for the seller to Corp) 31 . the term “rescind” is equivalent with what is incumbent upon him. express or implied. the seller is bound to send overt act should be communicated to the buyer. The transfer of title shall not be held to have been rescinded by an unpaid seller until he has manifested Where by a contract of sale the seller is bound to by notice to the buyer or by some other overt act an send the goods to the buyer. express or implied. but may recover from the buyer damages for parties when the contract or the sale was made any loss occasioned by the breach of the contract. (1466) (2) return of the title to the undelivered portion of the goods to the seller a) Generally. A. the seller has not default for an unreasonable time before the right of fulfilled his obligation to deliver to the buyer rescission was asserted. party incurs in delay if the other does not comply or is not ready to comply in a proper manner As used in Art. The seller shall not residence. the place of delivery is the seller's buyer has been in default in the payment of the price place of business if he has one. if the vendee has not paid rescission of the contract would accomplish the following results: him the price. which to the knowledge of the sale. The vendor shall not be bound to 45 MERCHANTS REFRIGERATING CORP v TITMAN: A deliver the thing sold. 1. the seller and the right to recover damages for loss delay by the other begins. Place. 1521. the seller may still recover damages from the Art. It is not necessary that such sending them is fixed. were in some other place. 1169. stopped the goods in transitu may rescind the transfer of title and resume ownership in the goods Demand or tender of delivery may be treated as where he expressly reserved the right to do so in ineffectual unless made at a reasonable hour. xxx In reciprocal obligations. An unpaid seller having the right of lien or them to the buyer is a question depending in having stopped the goods in transitu. From the to return of the title over the undelivered goods to moment one of the parties fulfills his obligation. or where the the contrary. payment and delivery of the thing (3) release of the buyer from his obligation to take and pay for the balance of the goods sold are concurrent acts. Whether it is for the buyer to take possession of the goods or of the seller to send Art 1534. the buyer is liable for the difference. DELIVERY OF THE THING SOLD The burden of showing it was exercised is on the vendor. or if no period for the payment (1) termination of the original contract has been fixed in the contract. in default in payment of the price for an unreasonable time. but in case of a contract of sale of thereafter be liable to the buyer upon the contract of specific goods. (1100a) due to breach of contract. Art. the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue Where the goods at the time of sale are in the involving the question whether the buyer had been in possession of a third person. time. Agreement of the quantum meruit to recover what it had delivered to the parties determines whether it is for the buyer to buyer (Merchants Refrigerating Co. PERFORMANCE OF THE CONTRACT e) Due diligence must be exercised to secure the highest price obtainable in the best available market. transfer of title and resume the ownership in the between the parties. or where the buyer has been What is a reasonable hour is a question of fact. and manner of delivery 4. the expenses of and been rescinded by the unpaid seller until he manifests incidental to putting the goods into a deliverable by notice to the buyer or by some overt act an state must be borne by the seller. After rescinding the transfer of title. where he expressly reserved the right to do so contract. then that place is the place of delivery. or usage of trade to in case the buyer should make default. case the buyer defaults. (n) unless and until such third person acknowledges to the buyer that he holds the goods on the a) An unpaid seller having the right of lien or having buyer's behalf. and if not his for an unreasonable time.sell for less than the contract price. 1524. XI. but them within a reasonable time. neither buyer for breach of contract. The transfer of title shall not be held to have Unless otherwise agreed. in consonance with the (4) the unpaid seller would be free to pursue its remedies on rule in reciprocal obligations. 1534. but no time for intention to rescind.

In case of sale of specific goods which. Absent stipulation to the contrary. on the assurance of the plaintiff that the goods were “on the way” when as a matter 4. 1524. The vendee has the obligation to pay the (1129a) expenses incurred by the vendor in the production. All of the fruits of the thing shall pertain to the consideration of which the creditor agreed to the vendee from the time of the perfection of the period. there is NO delivery UNLESS and UNTIL such their person (1) When after the obligation has been ACKNOWLEDGES to the buyer that the holds the contracted. If the sale involves a specific thing. were upon the perfection of the contract. if the vendee has not paid 3. time is not of the essence. the has been fixed in the contract. The vendor is not bound to deliver upon.send them to the buyer. event. The vendor is not bound to deliver the thing sold in case the vendee should lose the right to make use of the stipulated term in the following cases: When time is of essence46 1. 1536. within a reasonable the thing sold in case the vendee should lose the time. When the vendee attempts to abscond REPUBLIC V LITTON: Court ruled for plaintiff. are known to the parties to be in ANOTHER PLACE. When the vendee violates any condition for of fact. DEMAND or TENDER of PAYMENT shall be made him the price. 6. (4) When the debtor violates any undertaking. 5. 8. the seller had done all that guaranties or securities he has promised could be expected when he placed the machinery at the disposal 3. The vendor shall not be bound to deliver the thing sold. When the guaranties or securities given of the buyer on Apr 1919. (1467a) particular transaction Art. or if no period for the payment at a reasonable hour. rules shall be observed: Time is of the essence of the contract whenever the intention of the parties is clear that 1. SELLER unless otherwise stipulated. (3) When by his own acts he has impaired said guaranties or securities after their establishment. gives a guaranty or security for the debt. delivery could hence were lost or destroyed through a fortuitous be made within a reasonable time. nature of the contract itself. the vendor is and when through a fortuitous event they bound to deliver the thing sold and its accessions disappear. order provided that the stipulated delivery period shall not be 32 . gathering and preservation of the fruits. EXPENSES of placing the goods in a (2) When he does not furnish to the creditor the DELIVERABLE STATE shall be borne by the guaranties or securities which he has promised. Where the goods at the time of the sale are in make use of the period: the possession of a THIRD PERSON. or if no time was fixed. unless he gives new equally SOLER v CHELSEY: Defendant cannot be compelled to accept satisfactory guaranties or securities delivery as he gave his consent to the contract. and if exactly at the stipulated day or implied from the none. This assertion was which he was granted the term an essential element of the contract. he becomes insolvent. 5. his residence. (5) When the debtor attempts to abscond. It was shown that the goods were intended for election purposes. contract but he does not acquire a real right over it until they are delivered to him. REASONABLE TIME for delivery is right to make use of the terms as provided in determined by the circumstances attending the Article 1198. Where by agreement. he is bound to send them within the time agreed Art. unless he goods on the latter’s behalf. in 7. When the time of delivery is not fixed in were impaired through the vendee’s acts or the contract. they were not yet shipped at the time. When the vendee does not furnish the 46 SMITH BELL v MATTI: In this case. and the purchase exceeded. at the made time of the sale. the buyer should take delivery of the goods from performance of its terms shall be accomplished the seller’s place of business if he has one. unless he immediately gives new ones and accessories in the condition in which they equally satisfactory. Art. (1466) seller is bound to send the goods to the buyer. the ff. the subject matter or the circumstances under which the contract is 2. The debtor shall lose every right to 4. When the vendee becomes insolvent 2. 1198. the buyer should take delivery When not bound to deliver from such place.

If the buyer accepts or retains that goods delivered. If the quantity delivered is more than further with the entire contract or so immaterial that that agreed upon. Where the seller delivers a quantity less delivery of goods by installments. Where the seller delivers the goods mixed with goods of a different Art. Delivery by installment different description not included in the contract. and retains the goods so delivered. the buyer may reject the breach is severable. for them at the contract rate. the buyer of accordance with the contract and reject the rest. whether the accept delivery of a quantity of goods more or breach of contract is so material as to justify the less than that agreed upon or to accept goods injured party in refusing to proceed further and suing which are of a description different from that for damages for breach of the entire contract. seller is not going to perform the contract in full. it depends in each case on the terms of the contract a) GENERAL RULE: The buyer is not bound to and the circumstances of the case. the buyer may reject the Where there is a contract of sale of goods to be whole of the goods. unless the subject matter 33 . or course of the buyer neglects or refuses without just cause to dealing between the parties. Sale of Goods Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a a. the buyer is bound to pay for them separately. (n) take delivery of or pay for one more installments. the buyer may accept the goods which are in Art. quantity of goods less than he contracted to sell. goods is not bound to accept delivery thereof by installments. knowing that the reject the rest. which are to be separately paid for. Unless otherwise agreed. which provides that the vendee shall lose the benefit however. special stipulation or course of dealing to for compensation but not to a right to treat the whole the contrary. the buyer may otherwise stipulated reject them. no longer holds. unless the subject matter is for damages indivisible. contract as broken. If the buyer accepts must be judicially declared or something which the whole of the goods so delivered he must pay involves suspension of payments. special agreement. NOTE: Art. because the debtor cannot give a Where the seller delivers to the buyer a quantity security or guaranty in such case. in which case. b. If. Delivery of wrong quantity 3. the the buyer may accept the goods which buyer may reject them. “Insolvency” under this buyer shall not be liable for more than the fair article cannot be understood in the sense of a value to him of the goods so received. or agreed upon. after the obligation has been goods delivered before he knows that the seller contracted. if the subject matter is indivisible. unless he gives a is not going to perform his contract in full. 1583. the guaranty or security. delivered by stated installments. 2. regard each breach as severable. (n) REMEDIES: a) GENERAL RULE: the buyer is not bound to accept 1. Where the seller delivers to the buyer a description not included in the contract. If the buyer has circumstances surrounding the case would determine used or disposed of the goods before whether prompt payment or delivery is of the essence knowing the inability of the seller to such that a delay or breach would entitle the deliver the rest. the buyer may reject the whole. EXCEPTION: There is usage of whether the breach is severable. giving rise merely to a claim the excess. the buyer has used or disposed of the of the term when. the buyer shall pay not aggrieved to treat the entire contract as broken OR to more than the fair value of the goods. EXCEPTION: When than that agreed upon.) justify the aggrieved party in refusing to proceed 2. The doctrine of goods larger than he contracted to sell. In the preceding two paragraphs. 1198 he must pay for them at the contract rate. knowing b) In case of a contract that calls for the delivery of the inability of the seller to deliver the the goods at stated intervals which are to be paid for rest. judicially declared insolvency or suspension of payments. or usage of trade. 1467 has been replaced by Art. he becomes insolvent. the therefore in Visayan Distributors v Flores interpreting buyer may accept the goods included in the insolvency in Art 1467 old CC as something which contract and reject the rest. 1522. but if the buyer accepts or are in accordance with the contract. the terms of the contract and the at the contract rate. and the seller makes defective The provisions of this article are subject to any deliveries in respect of one or more installments. SEVERABILITY (NOTE: “fair value” means the price of depends on whether the breach is so material as to the goods in the open market. giving rise to a claim trade.

the vendor shall be bound to deliver all knows that the seller might intend to not fully that is included within said boundaries. and. but if. b. (1472a) If the sale of real estate should be made with a statement of its area. (1471) Art. inferior quality. although there be a greater false representation. but the Art. Rescission is proper. the vendee may Art. contract would itself be an indication that he might its area or number should be designated in the not intend to fully perform. The actions arising from Articles all that is mentioned in the contract. may choose between a proportional reduction of the price and the rescission of the contract. as in such a case. there shall be no increase the purchaser cannot later on allege that the vendor made or decrease of the price. In the sale of real estate. (n) AZARRAGA v GAY: Where the price was for a lump sum and the area which was stated in the contract to be 98 hectares. he shall suffer a reduction in the price.) Nevertheless. If. The provisions of the two preceding 47 articles shall apply to judicial sales. when the inferior value of the EXCEPTION: Where the entire land is not of the thing sold exceeds one-tenth of the price agreed quality stated in the contract. if the vendee would not have bought the immovable had he known of its smaller area of Art. in and divisible contracts. in this case. 1539. 1543. The obligation to deliver the thing sold includes that of placing in the control of the vendee Art. price or rescission of the contract: if price is fixed at a certain rate per unit of measure and The same shall be done. shall only take place at the will of the vendee. see above. accept the area included in the contract and reject the rest. see above. the consent must have been obtained by mistake or fraud (contract may then be voidable. 1539. Where price is at certain rate per unit of a unit of measure or number. (1469a) Art. and had ample opportunity to do so. should this be not possible. in the latter case. 1542. absent any statement to the the contract. part of the land is not of the quality stated in the contract The rescission. should he not be able to do contrary. provided GENERAL RULE: The vendee has to option to that. turned out to be only 60 hectares. PRESUMPTION: Buyer contract. 1540. unit of measure or number. at the rate of a certain price for a. which is b) Delivery by the seller of only a part of an entire indispensable in every conveyance of real estate. or even if the area is correct but quality specified in the contract. in conformity 1539 and 1542 shall prescribe in six months. immovables as sold for a single price. even when the area is the the area is delivered is less than that stated in same. the buyer may The same rule shall be applied when two or more reject the whole. (1470a) there shall be no increase or decrease in the Art. the vendor shall be measure obliged to deliver to the vendee. or less area or number than that stated in the ASIAIN v JALANDONI: There was mutual mistake which contract. but. 34 . if said purchaser accepts a partial delivery when it exceeds the area or number specified in on an entire contract. is indivisible. upon. the vendee in accordance with the terms of the contract. in the case of the preceding article. if any part of the immovable is not of the the contract. all that may have been stated in the The seller is bound to deliver the entire land sold contract. Sale for a lump sum47 there is a greater area or number in the immovable than that stated in the contract. he must pay a) If the sale of real property is for a lump sum. If he accepts the whole area. he may rescind the sale. (The law applies peculiarly to installment so.) proportion to what is lacking in the area or number. 1542. Sale of Immovables the vendee does not accede to the failure to deliver what has been stipulated. made for a purchaser had previously investigated and inspected the lump sum and not at the rate of a certain sum for a condition of the land. unless the contract is rescinded because 3. for the same at the contract rate. if the latter should demand it. the lack in the area be not demand a proportionate reduction of the less than one-tenth of that stated. The buyer would have not have bought the land had he known of the smaller area or inferior quantity. in which case. with the following rules: counted from the day of delivery. was so material as would go into the essence of the contract. 1541. even perform. besides mentioning the boundaries.

Inspections and Acceptance inconsistent with the ownership of the seller 3. become OWNER of the goods on the part of the buyer. delivery of goods to the buyer. whether such terms are indicated by of the breach in any promise of warranty within marking the goods with the words "collect on a reasonable time after the buyer knows. to afford the buyer a reasonable opportunity c. (n) a) The purpose of the notice of breach of warranty is to PROTECT the seller against The buyer is entitled to examine the goods to decide belated damage claims which would prevent the whether he will become the owner. the seller shall examine the goods before the payment of the price. such as making use has had a reasonable opportunity of examining them of them as owner. ROBLE v ARBASA: A vendee of land. 1584. The use d. if. when the seller tenders reject the goods. to enable him to determine whether to accept or Unless otherwise agreed. but not an assent that the goods fulfill the 48 description and terms of the contract. the vendor shall accepted the goods when he intimates to the be bound to deliver all that is included within said seller that he has accepted them. the goods have been delivered to him and he does any act in relation to them which is 4. 1586. which he has not previously examined. acceptance of the goods by the buyer shall not discharge the seller Where goods are delivered to a carrier by the seller. not be liable therefor. he intimates to the seller that the has (Actions prescribe in six months from date of accepted them delivery. He may however waive this right by simply refusing to inspect the goods. 35 . and until the seller from making an adequate and proper examination is completed or waived. he is bound.price. But. a test of goods. upon the terms that the goods shall not be contract of sale. after acceptance of the delivered by the carrier to the buyer until he has paid goods. the vendee shall have the option to demand a reduction in the price in a) The buyer is deemed to have accepted the proportion to the deficiency in the area stated in goods when: the contract or a rescission of the contract 1. from liability in damages or other legal remedy in accordance with an order from or agreement with for breach of any promise or warranty in the the buyer. after the lapse of a reasonable time. or when. the area Art. and he does in the price whether the area so delivered be greater any act in relation to them which is inconsistent or less than that stated in the contract. Breach of warranty of examining the goods for the purpose of ascertaining whether they are in conformity with the Art. as where part of the land rejected them. he is under NO investigation of his alleged liability. agreement of the parties. on request. he retains the c) If the vendor fails to deliver all the land included goods without intimating to the seller that he has within said boundaries. Art. b. The buyer is deemed to have should also be stated in the contract. the buyer fails to give notice to the seller the price. Where goods are delivered to the buyer. or when the boundaries and there shall be no increase or decrease goods have been delivered to him. In the absence of express or implied contract. obligation to accept them. EXCEPTION: Buyer’s right to make to the contrary. when sold in gross or with the description "more or less" with reference to its area. (n) belongs to a third person.) 2. he is not Exercise of acts of ownership over the goods is a deemed to have accepted them unless and until he manifestation of acceptance. making alterations in the for the purpose of ascertaining whether they are in goods or subjecting it to the process of conformity with the contract if there is no stipulation manufacture.48 with the ownership of the seller. b) Acceptance of delivery means an ASSENT to taking them as they are or by any other similar act. 1585. does not thereby ipso facto take all risk of quantity in the land. Manifestation of acceptance b) If besides mentioning the boundaries. Refusal to accept of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency. Right of inspection retains the goods without intimating to the seller that he has rejected them. (n) in the absence of agreement or usage of trade permitting such examination. whether the actual area delivered turned out to be greater or less than that stated in the contract. after the lapse of a reasonable time. he a. but only if necessary. the buyer is not entitled to ought to know of such breach. or delivery." or otherwise.

when the goods are to fear such disturbance. c) In order that the buyer may have a right to Art. the goods suspend payment. or even if there is none. he may suspend accept them. the remedy of the buyer is to demand the payment must be made at the time and place of rescission of the contract or payment of the the delivery of the thing sold. notifies the seller that he refuses to accept them.49 made or not. the price in a proper case. Liability for interest Art. by a vindicatory action delivered to the buyer and he has a right to refuse to or a foreclosure of mortgage. in pursuance of claim. 1504. But such right ceased from the time a compromise the contract and the ownership in the goods has been was reached between the co-owners whereby the vendor 36 . from the time of judicial 1. it is absolutely necessary that remain at the seller's risk until the ownership therein the cause of disturbance or danger be based on is transferred to the buyer. 1588. or it has been b) However. where goods are retained by the seller merely to secure delivered to the buyer. (1501a) Art. 1589. if the thing delivered produces fruits or income. interests. place stipulated in the contract. notwithstanding any such and there was a breach of warranty. where title already passed to the buyer stipulated that. the cause is imputable to the vendor or the buyer's risk whether actual delivery has been his successor in interest. he need not return them. and thereafter. 1582. Art. he is not bound to under the contract. e. he shall be liable as such. the vendee shall be bound to make RESCIND the contract by returning or offering to the payment. the B. thing sold. b) If the third person claims a servitude on the If the time and place should not have been stipulated. or should he have reasonable grounds a) Unless otherwise agreed. or extra-judicial demand for payment (3) Should he be in default. 1589. when the buyer's refusal to accept the goods is without just cause. A mere act of trespass shall not return the goods to the seller and recover the price authorize the suspension of the payment of the which had been paid. Suspension of Payment or extrajudicial demand for the payment of the price. Unless otherwise agreed. If there is no stipulation as specified in the first paragraph of article 1523. 1590. (n) through the fault of either the buyer or seller the goods are at the risk of the party in fault. If he voluntarily constitutes himself a depositary (2) Where actual delivery has been delayed thereof. the unless the latter gives security for the return of former becomes the depository of the rejected goods. 1587. PAYMENT OF PRICE title thereto passes to him from the moment they are placed at his disposal. See above. or if the (2) Should the thing sold and delivered produce fruits buyer incurs in default from the time of judicial or income. (n) Art. Art. refuses to accept the goods. and he refuses to accept performance by the buyer of his obligations them. It is the payment of the price until the vendor has sufficient that the buyer notifies the seller that he caused the disturbance or danger to cease. but it is sufficient if he risk from the time of such delivery. but when the ownership a fact arising before the sale or if it arose after therein is transferred to the buyer the goods are at the sale. Refusal to accept a) “disturbance” or threat of disturbance – must come through a vindicatory action or foreclosure Art. (1502a) . Should the vendee be disturbed in the possession or ownership of the thing acquired. The vendee is bound to accept delivery of mortgage. (1500a) proper indemnity. The vendee shall owe interest for the period between the delivery of the thing and the The buyer shall owe interest on the price from payment of the price. except that: 49 BARENG v CA: The vendee had a right to suspend (1) Where delivery of the goods has been made to payment from the time he was informed of the co-owner’s the buyer or to a bailee for the buyer. the buyer may contingency. Unless otherwise agreed. 1582. the goods are at the buyer's return them to the seller. having the right so to do. price. in the following three cases: the time the thing is delivered up to the time of payment if there is stipulation requiring (1) Should it have been so stipulated. (n) 1. and not through a mere threat or and to pay the price of the thing sold at the time and claim of a third person.

1191. c) In the same case. of such a Otherwise. not mentioned in the agreement. unless there is an express warranty that the that it is a public policy to protect buyers of real- thing is free from all burdens and encumbrances. There is a mere act of trespass when the third person the seller shall refund to the buyer the case claims no right whatever.00. P. In the sale of immovable property. the court may In absolute sales of real property. sec 2. even after he has chosen fulfillment.A. servitude. in accordance with Articles 1385 and 1388 vendee may pay. the vendee may bring the action for R. oppressive conditions One year having elapsed.50 would not have acquired it had he been aware thereof. 1560. to be computed from the execution lots. He may also seek rescission. equivalent to 50% of total payments and an additional 5% for a. he has a right to pay. without additional interests. R.860. as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand. even though it may have been stipulated that upon failure This is understood to be without prejudice to the to pay the price at the time agreed upon the rights of third persons who have acquired the rescission of the contract shall of right take place. 1592.D. 1664.035. if any. 6553. Sale of Real Property unless there be just cause authorizing the fixing of a period. (1483a) provides that in case such buyer defaults in the payment of the succeeding installments. between fulfillment and rescission of the obligation. said has already paid in four (4) years a total of P314. the law requires the seller to demand the resolution of the Art. the Art.51 of damages in either case. to be counted estate on installment payments where the buyer from the date on which he discovered the burden or has paid at least two years of installments. he may ask for the rescission of the contract. have a direct action against the intruder. 23 and 24) unless he should prefer the appropriate indemnity. but the lessee shall made. apartments. even after the expiration of the and the Mortgage Law. servitude. b. The lessor is not obliged to answer for a arrears within a grace period of one month mere act of trespass which a third person may cause for every year of installment payments on the use of the thing leased. (1504a) is a stipulation providing for ipso jure rescission. 6552. the thing. excluding industrial Within one year.A. Art. with the payment cash surrender value to the buyer. in case one of the obligors d) Actual cancellation shall not take place until should not comply with what is incumbent upon him.76 buyer owed interests on the amount from the time of the filing of or P90. Effect of Non-payment every year after five years of the life of the contract and its extensions. the Realty burden or servitude is recorded in the Registry of Installment Buyer Protection Act declared Property. Art. The power to rescind obligations is implied in reciprocal ones. before such stipulation could be given effect. including residential condominiums. the records clearly show that the 37 . after 30 days from receipt by the buyer of the notice of cancellation or demand for rescission by The injured party may choose between the fulfillment a notarial act. (1560a) surrender value of payments made. and only upon full payment of the and the rescission of the obligation. if the contract is cancelled. in case of default in payment. 957 (Secs. when the vendor ACTIVE REALTY v DAROYA: In this case. Also. P224. he may only bring an action b) R. The court shall decree the rescission claimed. in sale or financing of real for damages within an equal period. against onerous and rescission. or sue for damages.835. (1124) period. the buyer could still pay the price nature that it must be presumed that the vendee EVEN after the expiration of the period to pay.76 more than the contract price of the complaint. 2. Neither right can be exercised if the non-apparent a) Approved on 26 Aug 1972. agreed to give to the co-owner two-thirds of whatever he could 51 collect from the buyer. respondent brought an action against the buyer to collect the balance. 3844 as amended. with payment of damages in either the rescission claimed unless there is just cause authorizing the granting of a new period. After the compromise. estate on installments. If the immovable sold should be contract from the buyer judicially or by a notarial encumbered with any non-apparent burden or act. even if there not grant him a new term.A. commercial buildings and lands sold under of the deed. if the 50 DELA CRUZ v LEGAZPI: The injured party may choose latter should become impossible. as in this case.

19 i. the seller warranty as a recoupment in diminution/ may cancel the contract within 30 days from receipt extinction of price by the buyer of the notice of cancellation or demand 3. 2004) contract. If the 2. Breach: the buyer may f) In case of less than two years of installments were 1. instead of decreeing mandated under Art 1545. if any. Where a condition is respondent was entitled to a one-month grace period for every year of installments paid. she had a total grace period of three not performed.52 OLYMPIA HOUSING v PANASIATIC TRAVEL: Unfortunately for petitioner. (n) contract and the forfeiture of the payments already made could not be effected as per the pertinent provision of the aforementioned law. Hence. The judicial resolution of a contract gives rise imposed on perfection on the contract vs condition imposed to mutual restitution which is not necessarily the situation that can on performance of obligation. Layug is basically an action for annulment of Sales . EXPRESS WARRANTIES as a breach of warranty. which gives rise to an action for its breach. rescind + refuse to accept goods. Additionally. accept goods + set up breach of buyer fails to pay within the grace period. the Court. the existence or happening of entitled to pay. also.e. sell or assign his rights. refuse to accept goods and maintain for rescission of the contract by a notarial act. he failed to send a notarized notice of cancellation and described and as warranted expressly or by refund the cash surrender value. a kindred concept of rescission.. it would be incorrect to apply Layug c IAC to the Distinctions according to Villanueva (Law on instant case. a) Warranty – where one party promised that e) Down-payments. pay in advance any installment or the full to a contract of sale is subject to any condition unpaid balance of the price without interest which is not performed. action for damages 4. while failure to rescission (also often termed as resolution). If the other party XII. to be evidenced in a 1. LIM v CA: distinguished condition in various respects. the effects that flow from an 52 affirmative judgment in either case would be materially dissimilar ROMERO v CA. deposits or options in the the contingency or some act fixed by the contract shall be included in the computation of the contract shall be performed. the grace period shall be not less than 60 days damages from the date the installment became due. the buyer shall have the recover price paid right to: 1. accept goods + maintain an action for paid. and failure of life of the contract and its extensions. Distinguished from condition notarial instrument. Where the obligation of either party 3. implication in the contract of sale as a condition of the obligation of the buyer to perform his VALARAO v CA: The Court held that the rescission of the promise to accept and pay for the thing. such party may refuse to proceed with the contract or he may waive performance of the condition. but of installment payments made. Section 3(a) of Maceda Law provided that a Condition – an uncertain event or contingency buyer “…who has paid at least two years of installments is fixed by parties. the availed of by the buyer once in every five years of the promise constitutes a warranty. WARRANTIES has promised that the condition should happen or be performed. the buyer may refuse to proceed months from 31 December 1990 with the contract. may authorize for a just cause the fixing of a period. and failure of which permits the injured hereby fixed at a rate of one month grace period for every year party to treat the contract as at an end. 38 . such first mentioned party may also treat the nonperformance of the condition A. unlike in an action for comply with 2nd only gives other party option to either refuse reconveyance predicated on an extrajudicial rescission to proceed with the sale or to waive the condition as (rescission by notarial act). since the private creates no right of action. or g) During the grace period or before the actual return (or offer to return) goods + cancellation of the contract. Condition Warranty Not only is an action for reconveyance conceptually different from an action for rescission but that. to a third person 2. whereas the instant case before the Court is one for recovery of possession on the thesis of a prior rescission of the contract covering the property. which is contract. like a promise that total number of installments made. update his account Art 1545. Where the ownership in the thing has not petitioner failed to comply with the mandatory twin passed. the buyer may treat the fulfillment by requirements for a valid and effective cancellation under the the seller of his obligation to deliver the same as law. in an action for condition results in failure of contract. without additional interest the unpaid installment which was necessary to the efficacy of the due within the total grace period earned by him. The right to pay the goods are of a certain kind and character or the arrears within the grace period could only be that certain state of facts would exist. or accept the goods and waive performance of the condition. rescission. failure to comply with 1 st arise in an action for reconveyance.

Generally goes into Goes into the 3. Distinguished from false
the root of the performance of such representation54
existence of the obligation, and in fact
obligation may constitute an B. IMPLIED WARRANTIES55
obligation in itself
Must be stipulated by May form part of 1. Implied warranty of title
the parties in order to obligation by contract
form part of an or provision of law, Art 1547. In a contract of sale, unless a
obligation without parties having contrary intention appears, there is:
agreed thereto
May attach itself Whether express or (1) An implied warranty on the part of the seller
either to obligation of implied, relates to that he has a right to sell the thing at the time
seller to deliver subject matter itself or when the ownership is to pass, and that the
possession or transfer to the obligations of the buyer shall from that time have and enjoy the
ownership over seller as to the subject legal and peaceful possession of the thing;
subject matter of sale matter of the sale
(2) An implied warranty that the thing shall be
free from any hidden faults or defects, or any
2. Distinguished from opinion, dealer’s talk charge or encumbrance not declared or known to
the buyer.
Art 1546. Any affirmation of fact or any promise by
This Article shall not, however, be held to render
the seller relating to the thing is an express warranty
liable a sheriff, auctioneer, mortgagee, pledgee,
if the natural tendency of such affirmation or promise
or other person professing to sell by virtue of
is to induce the buyer to purchase the same, and if
authority in fact or law, for the sale of a thing in
the buyer purchase the thing relying thereon. No
which a third person has a legal or equitable
affirmation of the value of the thing, nor any
interest. (n)
statement purporting to be a statement of the seller's
opinion only, shall be construed as a warranty, unless
the seller made such affirmation or statement as an Art 1548. Eviction shall take place whenever by
expert and it was relied upon by the buyer. (n) a final judgment based on a right prior to the
sale or an act imputable to the vendor, the
a) Warranty – an affirmation of fact or any promise vendee is deprived of the whole or of a part of
by seller relating to the thing which has a natural the thing purchased.
tendency to induce the buyer to purchase the same,
relying on such promise of affirmation

b) Opinion/dealer’s talk – an affirmation of the value
of the thing or any statement of the seller’s opinion emptor. A man who relies on such an affirmation does so at
shall not be construed as a warranty, unless the seller his own peril and must take the consequences of his
made such an affirmation as an expert and it was imprudence.
What would make a misrepresentation void: (a) false
relied upon by the buyer
representation is as to matters of fact substantially affecting
buyer’s interest, and not as to matters of opinion, judgment,
Test: whether the vendor assumes to assert a fact of probability or expectation; (b) the party to the contract who
which the buyer is ignorant, in which case it is a has special/expert knowledge takes advantage of the
warranty, or whether it is merely an expression of an ignorance of another to impose upon him the false
opinion or judgment on the part of the seller on a representation.
matter of which the seller has no special knowledge
and on which the buyer may be expected also to have MOLES v IAC: Ordinarily, what does not appear on the
face of the written instrument should be regarded as
an opinion or exercise his judgment.
dealer's or trader's talk; conversely, what is specifically
 “In good condition” v. “Excellent quality” – the represented as true in said document, as in the instant
first relates to the quantity, kind or condition of case, cannot be considered as mere dealer's talk
the goods sold, it is an affirmation of fact or
54
promise, and not a mere expression of an PHIL. MANUFACTURING v. Go JUCCO: An intention to
opinion; the second is not an express warranty deceive or mislead the other party to his prejudice is an
and the purchaser must rely on the implied essential element of fraud. Concealment of facts does not
warranty that the goods are merchantable; mere necessarily amount to false representation, unless there
expression of an opinion53 was an active misstatement of fact or a partial statement of
fact, such that withholding of that which is not stated makes
53 that which is stated absolutely false.
SONGCO v SELLNER: Opinion or dealer’s talk is not
warranty. Opinion or dealer’s talk is the usual or ordinary means 55
used by sellers to get a high price and is understood as affording
to buyers no ground for omitting to make inquiries. Caveat

39

The vendor shall answer for the eviction even though (4) The expenses of the contract, if the vendee
nothing has been said in the contract on the subject. has paid them;

The contracting parties, however, may increase, (5) The damages and interests, and ornamental
diminish, or suppress this legal obligation of the expenses, if the sale was made in bad faith.
vendor. (1475a) (1478)

Art 1549. The vendee need not appeal from the Art 1556. Should the vendee lose, by reason of
decision in order that the vendor may become liable the eviction, a part of the thing sold of such
for eviction. (n) importance, in relation to the whole, that he
would not have bought it without said part, he
Art 1550. When adverse possession had been may demand the rescission of the contract; but
commenced before the sale but the prescriptive with the obligation to return the thing without
period is completed after the transfer, the vendor other encumbrances that those which it had
shall not be liable for eviction. (n) when he acquired it.

He may exercise this right of action, instead of
Art 1551. If the property is sold for nonpayment of
enforcing the vendor's liability for eviction.
taxes due and not made known to the vendee before
the sale, the vendor is liable for eviction. (n)
The same rule shall be observed when two or
more things have been jointly sold for a lump
Art 1552. The judgment debtor is also responsible sum, or for a separate price for each of them, if
for eviction in judicial sales, unless it is otherwise it should clearly appear that the vendee would
decreed in the judgment. (n) 56 not have purchased one without the other.
(1479a)
Art 1553. Any stipulation exempting the vendor from
the obligation to answer for eviction shall be void, if Art 1557. The warranty cannot be enforced until
he acted in bad faith. (1476) a final judgment has been rendered, whereby
the vendee loses the thing acquired or a part
Art 1554. If the vendee has renounced the right to thereof. (1480)
warranty in case of eviction, and eviction should take
place, the vendor shall only pay the value which the
thing sold had at the time of the eviction. Should the Art 1558. The vendor shall not be obliged to
vendee have made the waiver with knowledge of the make good the proper warranty, unless he is
risks of eviction and assumed its consequences, the summoned in the suit for eviction at the instance
vendor shall not be liable. (1477) of the vendee. (1481a)

Art 1555. When the warranty has been agreed upon Art 1559. The defendant vendee shall ask,
or nothing has been stipulated on this point, in case within the time fixed in the Rules of Court for
eviction occurs, the vendee shall have the right to answering the complaint, that the vendor be
demand of the vendor: made a co-defendant. (1482a)

(1) The return of the value which the thing sold had 2. Implied warranty against hidden
at the time of the eviction, be it greater or less than encumbrances or defects57
the price of the sale;
Art 1561. The vendor shall be responsible for
(2) The income or fruits, if he has been ordered to
warranty against the hidden defects which the
deliver them to the party who won the suit against
him; 57
MOLES v IAC : …we have to consider the rule on
(3) The costs of the suit which caused the eviction, redhibitory defects contemplated in Article 1561 of the Civil
and, in a proper case, those of the suit brought Code. A redhibitory defect must be an imperfection or
defect of such nature as to engender a certain degree of
against the vendor for the warranty;
importance. An imperfection or defect of little consequence
does not come within the category of being redhibitory.

INVESTMENTS AND DEV’T INC. v CA: “Implied warranty
56
SANTIAGO LAND v CA: Although in voluntary sales or against hidden faults or defects under Art 1547 of the Civil
transaction, the vendor can be expected to defend his title Code cover only those that make the object of the sale unfit
because of his warranty to the vendees: no such obligation is for the use for which it was intended at the time of the sale,
owed by the owner whose land is sold at execution sale. and that in the sale of agricultural land, the existing tenancy
relationship pertaining thereto cannot be considered as
hidden fault or defect.

40

thing sold may have, should they render it unfit for
the use for which it is intended, or should they Art 1568. If the thing sold should be lost in
diminish its fitness for such use to such an extent consequence of the hidden faults, and the
that, had the vendee been aware thereof, he would vendor was aware of them, he shall bear the
not have acquired it or would have given a lower loss, and shall be obliged to return the price and
price for it; but said vendor shall not be answerable refund the expenses of the contract, with
for patent defects or those which may be visible, or damages. If he was not aware of them, he shall
for those which are not visible if the vendee is an only return the price and interest thereon, and
expert who, by reason of his trade or profession, reimburse the expenses of the contract which
should have known them. (1484a) the vendee might have paid. (1487a)

Art 1569. If the thing sold had any hidden fault
Art 1562. In a sale of goods, there is an implied at the time of the sale, and should thereafter be
warranty or condition as to the quality or fitness of lost by a fortuitous event or through the fault of
the goods, as follows: the vendee, the latter may demand of the
vendor the price which he paid, less the value
(1) Where the buyer, expressly or by implication, which the thing had when it was lost.
makes known to the seller the particular purpose for
which the goods are acquired, and it appears that the If the vendor acted in bad faith, he shall pay
buyer relies on the seller's skill or judgment (whether damages to the vendee. (1488a)
he be the grower or manufacturer or not), there is an
implied warranty that the goods shall be reasonably Art 1570. The preceding articles of this
fit for such purpose; Subsection shall be applicable to judicial sales,
except that the judgment debtor shall not be
(2) Where the goods are brought by description from liable for damages. (1489a)
a seller who deals in goods of that description
(whether he be the grower or manufacturer or not),
Art 1571. Actions arising from the provisions of
there is an implied warranty that the goods shall be
the preceding ten articles shall be barred after
of merchantable quality. (n)
six months, from the delivery of the thing sold.
(1490)
Art 1563. In the case of contract of sale of a
specified article under its patent or other trade name,
Warranties in sale of animals
there is no warranty as to its fitness for any particular
purpose, unless there is a stipulation to the contrary.
Art 1577. The redhibitory action, based on the
(n)
faults or defects of animals, must be brought
within forty days from the date of their delivery
Art 1564. An implied warranty or condition as to the to the vendee.
quality or fitness for a particular purpose may be
annexed by the usage of trade. (n) This action can only be exercised with respect to
faults and defects which are determined by law
Art 1565. In the case of a contract of sale by or by local customs. (1496a)
sample, if the seller is a dealer in goods of that kind,
there is an implied warranty that the goods shall be Art 1578. If the animal should die within three
free from any defect rendering them unmerchantable days after its purchase, the vendor shall be liable
which would not be apparent on reasonable if the disease which cause the death existed at
examination of the sample. (n) the time of the contract. (1497a)

Art 1566. The vendor is responsible to the vendee Art 1579. If the sale be rescinded, the animal
for any hidden faults or defects in the thing sold, shall be returned in the condition in which it was
even though he was not aware thereof. sold and delivered, the vendee being answerable
for any injury due to his negligence, and not
This provision shall not apply if the contrary has been arising from the redhibitory fault or defect.
stipulated, and the vendor was not aware of the (1498)
hidden faults or defects in the thing sold. (1485)
Art 1580. In the sale of animals with redhibitory
Art 1567. In the cases of Articles 1561, 1562, 1564, defects, the vendee shall also enjoy the right
1565 and 1566, the vendee may elect between mentioned in article 1567; but he must make
withdrawing from the contract and demanding a use thereof within the same period which has
proportionate reduction of the price, with damages in been fixed for the exercise of the redhibitory
either case. (1486a) action. (1499)

41

free from any defect rendering them unmerchantable which would not be apparent on reasonable Where the goods have been delivered to the examination of the sample. or if he fails to notify the 3. expressly or by implication. he be the grower or manufacturer or not). (n) immediately after an offer to return the goods in exchange for repayment of the price. In a sale of goods. the contract be by sample as well as description. and if breach of warranty. he cannot rescind the sale if he knew of the breach of warranty when he accepted the goods without protest. (n) buyer. comparing the bulk with the description or the sample. An implied warranty or condition as to the lien to secure payment of any portion of the quality or fitness for a particular purpose may be price which has been paid. Where there is a breach of warranty by (5) In the case of breach of warranty of quality. Where the buyer is entitled to rescind the sale there is no warranty as to its fitness for any particular and elects to do so. Art. such deterioration or injury makes known to the seller the particular purpose for shall not prevent the buyer from returning or which the goods are acquired. and elects to do so. (n) When the buyer has claimed and been granted a remedy in anyone of these ways. it is not sufficient that the bulk of goods correspond with (4) Rescind the contract of sale and refuse to the sample if they do not also correspond with the receive the goods or if the goods have already description. there is an implied warranty that the goods shall be concurrently with the return of the goods. But if deterioration or injury of the goods is due to the (1) Where the buyer. an offer of the buyer to return the goods. the buyer may. Implied warranty of quality seller within a reasonable time of the election to rescind. he shall cease to be liable for the price upon returning or offering to return the (2) Where the goods are brought by description from goods. no other Art 1565. the breach of warranty by way of recoupment value of the goods at the time of delivery to the in diminution or extinction of the price. 1599. (n) 42 . (2) Accept or keep the goods and maintain an Sale by sample or description action against the seller for damages for the breach of warranty. repay so much thereof as has been paid. breach or warranty. (n) remedies for the enforcement of such lien allowed to an unpaid seller by Article 1526. if the seller is a dealer in goods of that kind. prejudice to the provisions of the second there is an implied warranty that the goods shall be paragraph of Article 1191. and with the annexed by the usage of trade. without sample. if the seller refuses to accept purpose. Art 1481. the (n) buyer shall thereafter be deemed to hold the goods as bailee for the seller. the contract may be (3) Refuse to accept the goods. the seller shall be liable to (whether he be the grower or manufacturer or not). buyer and the value they would have had if they had answered to the warranty. unless there is a stipulation to the contrary. In the case of a contract of sale by remedy can thereafter be granted. or of merchantable quality. is the difference between the seller. the seller. there is an implied warranty that the goods shall be reasonably Where the buyer is entitled to rescind the sale fit for such purpose. Art 1563. been received. In the case of contract of sale of a specified article under its patent or other trade name. at his election: such loss. In the contract of sale of goods by description or by sample. as follows: ownership was transferred to the buyer. but subject to a Art 1564. and maintain an rescinded if the bulk of the goods delivered do not action against the seller for damages for the correspond with the description or the sample. in the absence of special circumstances showing proximate damage of a (1) Accept or keep the goods and set up against the greater amount. there is an implied return the goods to the seller in substantially as warranty or condition as to the quality or fitness of good condition as they were in at the time the the goods. or if he fails to return or to offer to Art 1562. return them or offer to return them to the seller and recover the price or any The buyer shall have a reasonable opportunity of part thereof which has been paid. and it appears that the offering to return the goods to the seller and buyer relies on the seller's skill or judgment (whether rescinding the sale. If the price or any part thereof has a seller who deals in goods of that description already been paid.

perform the above duties if he can show that the (3) Retail. manufacturer who gives an express warranty shall: the warranty shall immediately be honored. or importer (1) remedy such consumer product within a liable. the purchaser needs only to present to the Art. presenting the warranty claim to the distributor (4) state what the warrantor will do in the event in the consumer's behalf. its serial number. - 4. under its warranty. covenants. That the distributor of such product or part. among others. readily understandable language and clearly identify the distributor shall likewise immediately honor himself as the warrantor. responsibility without cost to the buyer of (3) state the products or parts covered.For the warranty registration with the manufacturer. Nothing (e) Duration of warranty. . warranty. To this end. in appropriate cases. or importer. form required by the manufacturer. . . producer. Such registration is sufficient minimum standards for warranty. In such case. Additional warranties in sale of The warranty rights can be enforced by consumer products presentment of a claim.operative from moment of legal effect. the express warranty shall be enforceable.In addition to the Civil Code provisions official receipt along with the product to be on sale with warranties. unreasonable use thereof. For this purpose. and address of the buyer. (4) Enforcement of warranty or guarantee. In the case of a retailer other than (2) identify the party to whom the warranty is the distributor. 68. The report made in accordance with this provision shall be equivalent to a (d) Minimum standards for warranties. malfunction or failure to conform to a under the warranty in case of failure of both the written warranty was caused by damage due to manufacturer and distributor to honor the warranty. or importer of the meets the minimum requirements set forth in product sold within thirty (30) days from date of paragraph (d). sale. producer. malfunction or failure to conform to such the distributor to make the report or send them the written warranty. . retailers covered by this Article shall keep a (5) state what the consumer must do to avail of record of all purchases covered by a warranty or the rights which accrue to the warranty. the product warranty. or (2) permit the consumer to elect whether to importer shall relieve the latter of its liability under ask for a refund or replacement without charge the warranty: Provided. No govern the sale of consumer products with warranty: other documentary requirement shall be demanded from the purchaser. warranty shall clearly and conspicuously (1) Sales Report. RA 7394. malfunction or failure to conform to the warranties or guarantees. or importer shall be (c) Designation of warranties. obligated to make good the warranty at the expense The warrantor will not be required to of the distributor.Failure of defect. the warrantor will perform any obligation (6) Contrary stipulations: null and void. Additional Provisions on immediate seller either the warranty card of the Warranties. the retailer shall shoulder the expenses and costs necessary to honor the warranty. producer. . unless otherwise agreed upon. after notice to the lifetime of the product's respective of defect. . as the case may be.All under the warranty. reasonable time and without charge in case of a (2) Failure to make or send report.All written warranties or guarantees issued by a manufacturer.The seller and the therein shall prevent the retailer from proceeding consumer may stipulate the period within which against the distributor or manufacturer. name requirements. or purchase.The retailer shall be subsidiarily liable defect. producer. however.Any seller or seller is the manufacturer's factory or showroom. . stipulations or agreements contrary to the provisions of this Article shall be without (b) Express warranty .A written operative from the moment of sale. the manufacturer shall be continues to have the defect or to malfunction. he shall: to hold the manufacturer. warrantor of a consumer product to meet the producer. If the implied warranty on merchantability 43 . who failed to comply with its obligation to send the where after reasonable number of attempts to sales reports shall be personally liable under the remedy the defect or malfunction. warranty does not meet such minimum model of the product bought. malfunction of failure to conform to the (5) Record of purchases. .All sales made by distributors designate such warranty as: of products covered by this Article shall be reported (1) "Full warranty" if the written warranty to the manufacturer. If the immediate (a) Terms of express warranty. the following provisions shall serviced or returned to the immediate seller. If (1) set forth the terms of warranty in clear and the product was purchased from a distributor. the date of purchase. . the former shall take extended. of a defect. The report (2) "Limited warranty" if the written shall contain.Distributors and written warranty and at whose expense. . and guarantee for such period of time corresponding (6) stipulate the period within which. . the warranty.

and if the provisions of article which are beyond the control of the warrantor or his 1596. The profit the seller would have he wrongfully neglects or refuses to pay for the goods made if the contract or the sale had been fully according to the terms of the contract of sale. xxx when the goods ought to have been accepted. the buyer. the seller following the sale of new consumer products. cancel and contract the price. under a contract of sale. But if deterioration or injury of the goods is absence of special circumstances showing due to the breach or warranty. xxx Where the goods have been delivered to the buyer. Art. BUYER’S WAIVER IN CASE OF BREACH OF or refuses to accept and pay for the goods. SALE OF GOODS necessary on the part of the seller to enable him to fulfill his obligations under the contract of 1. or if he fails to notify the seller within course of events from the buyer's breach of a reasonable time of the election to rescind. the buyer shall be liable to the seller for labor performed or expenses made before Art 1595. XII. however. The thirty-day passed. or if he contract. are not applicable. the injury shall not prevent the buyer from returning or difference between the contract price and the offering to return the goods to the seller and market or current price at the time or times rescinding the sale. the representative. 3. including damages. thereafter held by the seller as bailee for the (2) In case of breach of implied warranty. if the buyer refuses to receive them. in the buyer. the performed shall be considered in awarding the seller may maintain an action against him for the damages. and. irrespective of delivery Any other implied warranty shall endure not less or of transfer of title and the buyer wrongfully than sixty (60) days nor more than one (1) year neglects or refuses to pay such price. perform it. In case the refund of the purchase seller may offer to deliver the goods to the price is elected. or. Remedies of the Seller sale. the seller at any time before the judgment in such consumer may elect to have the goods repaired or its action has manifested an inability to perform the purchase price refunded by the warrantor. Where the buyer wrongfully neglects C. Where. may be extended by conditions reasonable price. the measure of damages is. payable on a certain day. he cannot rescind the sale if he knew of The measure of damages is the estimated loss the breach of warranty when he accepted the goods directly and naturally resulting in the ordinary without protest. Thereafter the seller may treat the goods consumer may retain in the goods and recover as the buyer's and may maintain an action for damages. such deterioration or proximate damage of a different amount. if they cannot readily be resold for a period. fails to return or to offer to return the goods to the seller in substantially as good condition as they were Where there is an available market for the goods in at the time the ownership was transferred to the in question. both will be of Where. the receiving notice of the buyer's repudiation or ownership of the goods has passed to the buyer and countermand. the use of the consumer prior to the discovery of the may notify the buyer that the goods are non-conformity shall be deducted. Action for the price therewith. the WARRANTY seller may maintain an action against him for damages for nonacceptance. In case the contract of sale on his part or an intention not to repair of the product in whole or in part is elected. (n) price of the goods. fourth paragraph. while labor or expense of material amount is A. if no time was fixed for acceptance. BREACH OF CONTRACTS If. then at the time of the refusal to accept. Rescission 44 . – it shall be a defense to such an action that the (1) In case of breach of express warranty. or reject the goods. But (f) Breach of warranties. 1599. (n) and recover from the seller so much of the purchase price as has been paid.accompanies an express warranty. Action for damages Art 1596. the price is equal duration. under a contract of sale. 2. the amount directly attributable to buyer. the warranty work must be made to conform to the express warranty within thirty (30) days by either the Although the ownership in the goods has not warrantor or his representative. may maintain an action for the price although the ownership in the goods has not passed. the buyer repudiates the contract or notifies the seller to proceed no further 1.

at his election: the goods or if the goods have already been received. (3) Refuse to accept the goods.Art 1597. and maintain an he cannot rescind the sale if he knew of the breach of action against the seller for damages for the warranty when he accepted the goods without breach of warranty. recoupment in diminution or extinction of the price. Where there is a breach of warranty by circumstances showing proximate damage of a the seller. payment of the price and otherwise. he shall cease to be liable for do to the buyer. the damages. or immediately after an offer to return the goods in Art 1598. Remedies of the Buyer already been paid. on the application of the buyer. such deterioration or 45 . is the difference between the value of the goods at the time of delivery to the (1) Accept or keep the goods and set up against the buyer and the value they would have had if they seller. a court may. if the seller refuses to accept seller the option of retaining the goods on payment of an offer of the buyer to return the goods. (n) the price upon returning or offering to return the goods. or if he fails to notify the seller within a reasonable time of the election to rescind. no other remedy (2) Accept or keep the goods and maintain an can thereafter be granted. But if deterioration or injury of the goods is part thereof which has been paid. without prejudice to the action against the seller for damages for the provisions of the second paragraph of Article 1191. in the absence of special Art. the buyer may. return them or offer to return in at the time the ownership was transferred to the them to the seller and recover the price or any buyer. due to the breach or warranty. (1490) (3) Refuse to accept the goods. (n) in diminution or extinction of the price. or has manifested his inability to rescinding the sale. perform his obligations thereunder. Where the goods have been delivered to the buyer. (n) price which has been paid. Where the seller has broken a contract to exchange for repayment of the price. or upon such terms and conditions as goods as bailee for the seller. return them or offer to return them to the seller and (1) Accept or keep the goods and set up against recover the price or any part thereof which has been the seller. and with the remedies for the enforcement of such lien allowed to an unpaid seller by Article 1526. or if he (4) Rescind the contract of sale and refuse to fails to return or to offer to return the goods to the receive the goods or if the goods have already seller in substantially as good condition as they were been received. the breach of warranty by way of recoupment had answered to the warranty. and the buyer has repudiated the or offering to return the goods to the seller and contract of sale. but subject to a to damages. 1599. such loss. deliver specific or ascertained goods. from the delivery of the thing sold. The judgment or decree may be buyer shall thereafter be deemed to hold the unconditional. and maintain an action against the seller for damages for the breach 3. protest. 1599. (2) Accept or keep the goods and maintain an action Art 1571. direct that the contract Where the buyer is entitled to rescind the sale shall be performed specifically. Where the goods have not been delivered injury shall not prevent the buyer from returning to the buyer. Where there is a breach of warranty (4) Rescind the contract of sale and refuse to receive by the seller. the seller may totally rescind the Where the buyer is entitled to rescind the sale contract of sale by giving notice of his election so to and elects to do so. Breach of warranty (5) In the case of breach of warranty of quality. the seller shall be liable to repay so much thereof as has been paid. or has committed a breach thereof. When the buyer has claimed and been granted a remedy in anyone of these ways. six months. 1. breach of warranty. Actions arising from the provisions of against the seller for damages for the breach of the preceding ten articles shall be barred after warranty. Rescission of warranty. Art. 2. If the price or any part thereof has 2. Specific performance concurrently with the return of the goods. without giving the and elects to do so. the buyer may. at his election: greater amount. the breach of warranty by way of paid. as lien to secure payment of any portion of the the court may deem just.

Should the vendor have reasonable thereafter be deemed to hold the goods as bailee for grounds to fear the loss of immovable property the seller. or if he fails to notify the seller within a courts. If it cannot be determined which of the reasonable time of the election to rescind. provisions may be invoked. But if deterioration or injury of the goods is Art 1385. In case both parties have committed he cannot rescind the sale if he knew of the breach of a breach of the obligation. together with their fruits. he shall cease to be liable for the Neither shall rescission take place when the price upon returning or offering to return the goods. A cash latter should become impossible. Should such ground not exist. 1192. concurrently with the return of the goods. out only when he who demands rescission can return whatever he may be obliged to restore. (n) in at the time the ownership was transferred to the buyer. legally in the possession of third persons who did the seller shall be liable to repay so much thereof as not act in bad faith. In this case. things which are the object of the contract are If the price or any part thereof has already been paid. the provisions of Article 1191 shall be observed. and each shall bear his seller in substantially as good condition as they were own damages. should the vendee fail to pay. has been paid. 46 . for it requires nonpayment of two or more installments in order that its there be just cause authorizing the fixing of a period. or immediately after an offer to return the In this case. the vendor may exercise any of the following remedies: B. the same shall fails to return or to offer to return the goods to the be deemed extinguished. with the payment 58 of damages in either case. still the law does not apply. even after he has chosen fulfillment. SALE OF MOVABLES ON INSTALLMENT58 difference between the value of the goods at the time of delivery to the buyer and the value they would Art 1484. consequently. and the Mortgage Law. He may also seek LEVY v GERVACIO: CC Art 1454 is aimed at sales rescission. and the price offering to return the goods to the seller and with its interest. the buyer shall Art 1591. SALE OF IMMOVABLES AND THINGS OTHER THAN GOODS (1) Exact fulfillment of the obligation. is the C. he may immediately sue for any portion of the price which has been paid. (1295) Where the buyer is entitled to rescind the sale and elects to do so. in the absence of special circumstances showing proximate damage of a greater amount. in accordance with Articles 1385 and 1388 provisions of the second paragraph of Article 1191. but subject to a lien to secure payment of sold and its price. indemnity for damages may be goods in exchange for repayment of the price. such deterioration or return the things which were the object of the injury shall not prevent the buyer from returning or contract. (1503) (5) In the case of breach of warranty of quality. Art 1191. The power to rescind obligations is implied in reciprocal ones. no other remedy rights of third persons who have acquired the can thereafter be granted. Rescission creates the obligation to due to the breach or warranty. The injured party may choose between the fulfillment and the rescission of the obligation. unless be so considered.When the buyer has claimed and been granted a This is understood to be without prejudice to the remedy in anyone of these ways. in case one of the obligors should (2) Cancel the sale. only one installment was unpaid. (n) property the price of which is payable in installments. (1124) Where the goods have been delivered to the buyer. In a contract of sale of personal have had if they had answered to the warranty. or if he parties first violated the contract. Where the buyer is entitled to rescind the sale and elects to do so. with the remedies for the enforcement of such lien allowed to an unpaid seller by Article 1526. demanded from the person causing the loss. Art. the liability of the first warranty when he accepted the goods without infractor shall be equitably tempered by the protest. payment (in sales with two installments) cannot be considered as a payment in installments. it can be carried rescinding the sale. without prejudice to the thing. should the vendee's failure not comply with what is incumbent upon him. and the rescission of the sale. to pay cover two or more installments. such loss. and even if it can The court shall decree the rescission claimed. if the where the price is payable in several installments. if the seller refuses to accept an offer of the buyer to return the goods.

the giving or failure to give such notice shall be 59 TAJANLANGIT v SOUTHERN MOTORS: It is true that there relevant in any issue involving the question was a chattel mortgage on the goods sold.” and although this Court has returned to the vendee is valid insofar as the construed the word “action” to mean “any judicial or extrajudicial same may not be unconscionable under the proceeding by virtue of which the vendor may lawfully be enabled circumstances (Villanueva citing Delta Motor v. In this the right of resale in case the buyer should make case. there can be no further recovery of the rescission of the sale. when it had already repossessed it. in the payment of the price for an unreasonable Any agreement to the contrary shall be void. The seller is bound to exercise reasonable care and judgment in making a resale. But unconscionable under the circumstances. he may immediately sue for forecloses on the mortgage.(3) Foreclose the chattel mortgage on the thing sold. the latter may likewise avail of the against the additional security put up by a third party to guarantee remedies under Art 1484 (assuming case is one the purchaser’s performance of his obligation. time. or where the buyer has been in default purchaser to recover any unpaid balance of the price. the provisions of renounced any right thereto. It is not essential to the validity of a resale that it was not thereby limited to the proceeds of the sale. Accordingly. and the seller-mortgagee is deemed to have Should such ground not exist. obligation to pay. as authorized in this article.250 of 1. a stipulation that the installments or rents It is not essential to the validity of resale that paid shall not be returned to the vendee or lessee notice of an intention to resell the goods be shall be valid insofar as the same may not be given by the seller to the original buyer. the latter is SPECIALIST: grounds to fear the loss of immovable property likewise bound by the same law. (1454-A-a) Where a resale is made. In the case referred to in two preceding articles. Article 1191 shall be observed. when the lessor has deprived the from the buyer damages for any loss occasioned lessee of the possession or enjoyment of the thing. from having a recourse person. of sale of movables on installment). when the assignee sold and its price. cumulative. The preceding article shall be applied to original buyer upon the contract of sale or for contracts purporting to be leases of personal property any profit made by such resale. Art 1591. should be given by the seller to the original FILINVEST v CA: The remedies IN 1484 are alternative and not buyer. In choosing to sue on the note. Anticipatory breach Sapinoso was a voluntary act on his part and did not result from a “further action” instituted by Northern Motors. an unpaid seller having a right of lien or A-a)59 having stopped the goods in transitu may resell the goods. If the remedy chosen is rescission. It had the right to select among the three remedies established in Art 1484. the deficiency. a stipulation in the NORTHERN MOTORS v SAPINOSO: What Art 1484 (3) contract that the installments paid shall not be prohibits is “further action against the purchaser to recover any unpaid balance of the price. or where the seller expressly reserves failure to pay cover two or more installments. The payment of the sum of P1. (1454. but Southern Motors whether the buyer had been in default for an elected to sue the note exclusively – to exact fulfillment of the unreasonable time before the resale was made. but may recover with option to buy. Where the goods are of perishable if one has been constituted. He shall not thereafter be liable to the Art 1485. Art 1533. after foreclosing When the seller assigns his credit to another the chattel mortgage on the thing sold. SALE OF IMMOVABLES ON INSTALLMENT article because there has not yet been a foreclosure sale resulting in a deficiency. the exercise of one bars the exercise of the others. of the mortgaged good. by the breach of the contract of sale. the buyer acquires a good title as against the original buyer. however. Should the vendor have reasonable When the seller BORBON assigns his credit v SERVICE-WIDE to another person.” there is no occasion at this stage to apply the restrictive provision of the said D. He cannot. should the vendee's nature. to exact recovery of the supposed unsatisfied balance of the Niu Kim Duan. Hence. (1503) 47 . directly or indirectly buy the goods. 213 SCRA 259) purchase price from the purchaser or his privy. (n) where the right to resell is not based on the perishable nature of the goods or upon an express provision of the contract of sale. Art 1486. (n) CRUZ v FILIPINAS INVESTMENTS: The vendor of personal property sold on installment basis is precluded. on notice of the time and place of such resale execution. he shall have no further action against the default. and subject to NONATO v IAC: The corporation is barred from exacting this requirement may make a resale either by payment from Nonato of the balance of the price of the vehicle public or private sale.

rights of third persons who have acquired the at his option. rescission. the seller Conventional redemption – the vendor reserves shall give the buyer a grace period of not less than sixty days the right to repurchase the thing sold. Flores did not follow tender of payment with 62 consignation. 6552 for rescission of the contract has been made upon him either judicially or by a notarial act. Failure to pay installments. it should be construed as a Other causes of extinguishment of obligations. Sec 23. the grace period is effective without further need of resolutory condition. PD 957. (1506) 60 CASA FILIPINAS REALTY v OP: PD 957 to stem the tide of Art. and other rescission of the contract by a notarial act. Art 1592. 3. it was incumbent upon Flores to deposit the amount in granted the vendor by the vendee in a subsequent court. If the buyer fails to obligation of returning the price of the sale the pay the installments due at the expiration of the grace period. CONVENTIONAL REDEMPTION MCLAUGHLIN v CA: Sec 4 of RA 6552 provides: “In case where less than two years of installments were paid. the court may not grant him Realty on Installment61 a new term. Sec 24. – The upon failure to pay the price at the time agreed rights of the buyer in the event of his failure to pay upon the rescission of the contract shall of right the installments due for reasons other than failure of take place. and prescription. even after the the owner or developer to develop the project shall expiration of the period. instrument. with interest thereon at the legal rate. – No with the payment of damages in either case. Since McLaughlin refused to accept the tender of VILLARICA v CA: The right of repurchase is not a right payment. fulfillment of a conferred. with the from the date the installment became due. buyers will tend to be defeated. Such buyer may. (1504a) 4. encumbrances. developer when the buyer. Rescission on Sale on Non-Residential Realty on Installment XIV. develop the subdivision or condominium project according to the approved plans and within the time This is understood to be without prejudice to the limit for complying with the same.” Flores tendered the payments made by reason of the sale. in accordance with Articles 1385 and 1388 including amortization interests but excluding and the Mortgage Law. Section 23 & 2460 The injured party may choose between the fulfillment and the rescission of the obligation. the intent of the law to protect subdivision lot (5) By compensation. 1600. not an obligation of the debtor. and when unconditionally such as annulment. 2. right. are demand either calling for the payment of the obligation or for governed elsewhere in this Code. Non-Forfeiture of Payments. the seller may cancel the contract after thirty days from receipt by the expenses of the contract. but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the 48 . (1124) delinquency interests. Should the notice requirement in Sec 23 be (4) By the confusion or merger of the rights of construed as required to be given before a buyer desists from creditor and debtor. 62 manager’s check after 17 days. He installment payment made by a buyer in a subdivision may also seek rescission. in case one of the obligors should causes as all other obligations. Obligations are extinguished: “fraudulent manipulations perpetrated by unscrupulous (1) By payment or performance: subdivision and condominium sellers and operators. However. such as (2) By the loss of the thing due: failure to deliver titles to buyers or titles free from liens and (3) By the condonation or remission of the debt. (6) By novation. The power to rescind obligations is implied Art. which is well within the 30-day period. if the latter should become to buy shall be forfeited in favor of the owner or impossible. further paying. Sales are extinguished by the same in reciprocal ones. the vendee may pay. 1231. EXTINGUISHMENT OF THE SALE Art 1191. after due notice to the The court shall decree the rescission claimed. and by conventional or legal redemption. RA 6552 “Maceda Law”: Sale of Residential After the demand. owner or developer. the preceding articles of this Title. as long as no demand be governed by Republic Act No. In the sale of immovable property. 61 A. BRICKTOWN DEV’T v TIERRA: When a grace period is provided for in the contract of sale. by those stated in not comply with what is incumbent upon him. desists from further payment unless there be just cause authorizing the fixing due to the failure of the owner or developer to of a period. be reimbursed the total amount paid thing. (1156a) honoring the right. the necessary and buyer of the notice of the cancellation or the demand for useful expenses made on the thing. PD 957. even after he has or condominium project for a lot or unit he contracted chosen fulfillment. even though it may have been stipulated that PD 957.

Distinguished from equitable mortgage Any stipulation to the contrary is null and void) [because in making it appear a pacto de retro Equitable mortgage – one which. or dispose of them. The contract shall be presumed to be an equitable mortgage. fruits. Need not have Must have a separate consideration consideration separate (6) In any other case where it may be fairly inferred in order to be valid and and distinct from that the real intention of the parties is that the effective purchase price transaction shall secure the payment of a debt or the May not be beyond the May be beyond the 10 performance of any other obligation. In any of the 10 year period year period foregoing case. shall order to circumvent the prohibition of pactum last four years from the date of the contract. part of a main contract independent of another of sale. it is necessary that However. and the extension of the period of redemption are vendee a retro became the absolute owner of the thing circumstances which are indicative that the contract is an sold. the usury laws. any money or other Badges of an equitable mortgage63 benefit received as “rents.” Art. including consignment thereof if tender A contract shall be construed as an equitable cannot be made mortgage when any of the circumstance in Art. in in the absence of an express agreement. although lacking in sale. 1602 effectively is present. a new agreement. appear in the form of a sale with pacto de retro. but merely may be created of redemption or granting a new period is executed. time the judgment becomes final. any money. the vendor may still (1) When the price of a sale with right to repurchase exercise the right within 30 days from the is unusually inadequate. the vendor may still exercise the right the right be reserved in the same contract to repurchase within thirty days from the time 64 ADIARTE v TUMANENG: An agreement to repurchase 63 CLARAVALL v CA: The urgent necessity for money of the becomes an option to buy when entered into after the time apparent vendor. 1602.” shall be considered as “interest. commissorium in pledge and mortgage (Art. and the subsequent grant of the right to repurchase is equitable mortgage. the period cannot exceed ten years. The creditor cannot appropriate the things given by Should there be an agreement. the inadequacy of the consideration for the to redeem stipulated had already expired. (2) When the vendor remains in possession as lessee Distinguished from option to buy64 or otherwise. 2208. 49 . way of pledge or mortgage. and contains nothing impossible or contrary brought within 10 years] to law 1) If the agreement is construed to be an equitable mortgage. in any of the following cases: 2) Where the agreement is upheld as a pacto de retro sale. or other benefit to Requires tender of May be exercised by be received by the vendees as rent or otherwise shall payment of amount notice be considered as interest which shall be subject to required by law. cannot exist contract (4) When the purchaser retains for himself a part of unless reserved at the the purchase price. 1606. The right referred to in Article 1601. because then the supposed sale. nevertheless reveals the intention of the parties to charge real property as a security for Remedy: reformation of the instrument [must be debt. Right of redemption Option to buy (3) When upon or after the expiration of the right to Not a separate Principal contract and repurchase another instrument extending the period contract. TORRES v CA: For a sale to be one a retro. Period of redemption Reason for the rule: To curtail the practice of creditors in making their agreement of mortgage Art. time of the perfection of the main contract of (5) When the vendor binds himself to pay the taxes sale on the thing sold. the creditors can do away with foreclosure some formality or other requisites demanded by a proceedings] statute. contract.

Art. in Redemption price – includes the amount of the which case each of the latter may only redeem sale. In a sale with a right to repurchase. In the case of the preceding article. 275 SCRA 267) repurchase. and should preserve the right. the vendee of a part of an undivided immovable 5. jointly and in the same repurchased during the first 10 years.final judgment was rendered in a civil action on the have been agreed upon (Villanueva citing Solid basis that the contract was a true sale with right to Homes v. Reason for the whole property. (1512) period: 4 years from the date of the contract Art. until after they have exhausted the property of Thus. b) It is only when the vendee flatly refused that the vendee may demand of all the vendors or tender of payment is not necessary. possession of the thing until reimbursement is made. should sell an undivided Exercise of the right to redeem 66 immovable with a right of repurchase. with a right of repurchase. as article 498. CA. Consignation of co-heirs that they come to an agreement upon the redemption price in court is not necessary to the purchase of the whole thing sold. until after they have exhausted the 4. contract. (1515) The exercise of redemption is not limited only to the a) Who may redeem total redemption price enumerated in Art 1616 of the 1. jointly and in the same contract. (1514) legitimate payments made by the vendee by reason of such sale. The creditors of the vendor cannot EXCEPTION: when there is a suspensive condition. 1613. against him and consigning the amount in court. but must pay for the useful improvements owner subject to a right of redemption. In the absence of the vendee a they fail to do so. If several persons. the vendor. if the latter wishes to make limitation: A pacto de retro is a suspension of title use of the right of redemption. writing. the latter introduced by the vendee a retro. make use of the right of redemption against the vendee. whereby exercise this right for more than his respective the parties undertook by express agreement to secure to the share. 1611. should sell an undivided immovable The stipulation is void and against public policy. This must be accompanied with an actual or simultaneous tender of payment of the redemption The same rule shall apply if the person who sold price. when no period agreed upon property of the vendor. an immovable alone has left several heirs. in order to end the co-ownership. It includes other stipulations which may 3. the expenses of the contract and other the part which he may have acquired. 1612. His heirs or assigns exclusive. The same rule shall apply if the person vendors a right to repurchase in the month of March of any year who sold an immovable alone has left several after the date of the contract.Vendor CC. none of them may exercise this right for more than his a) A vendor must manifest his right to redeem in respective share. none of them may BANDONG v Austria : The provisions of the contract. were valid and binding upon the heirs. TAYAO v DULAY: Although the stipulation as to the period may be unclear or void. parties for a period of ten years from the date of the contract but wholly without force and effect thereafter. 50 . it is the 10-year period that applies. the right may be exercised by filing a suit compelled to consent to a partial redemption. (1508a) a. Art. may compel the vendor to redeem long as it does not exceed 10 years. when period agreed upon65 who acquires the whole thereof in the case of The period is binding and it may also be extended. 1610. His agent b) The creditors of the vendor cannot make use 65 of the right of redemption against the vendee. by whom exercised GENERAL RULE: Period starts running at the date of the execution of the contract. the latter may retain can be compelled to redeem the whole property. Art. BALUYOT v VENEGAS: The object of the sale cannot be b) If several persons. and the necessary and useful expenses made on the thing by the vendee. a period of redemption was agreed upon. otherwise. 66 GARGOLLO v DUERO: The vendor a retro is not given the sold their interests absolutely to the same option to require the vendee a retro to remove the useful person who previously bought the share of a co- improvement. not the 4-year period. (1513) and it is against public interest to permit such uncertainty to continue for a long time. c) When the co-owners of an indivisible immovable. the vendee cannot be retro. since said legal provision is not restrictive nor 2.

and the thing sold has been awarded to one of the heirs. The vendor may bring his action against the basis that the contract was a true sale with every possessor whose right is derived from the right to repurchase. 1607. 1617. the vendor may still exercise the right whole. LEGAL REDEMPTION c. (1524a)68 faith. whether the judicial order. upon the same terms and conditions stipulated in the Art. the provisions of article 1616 shall not be the action for redemption cannot be brought against recorded in the Registry of Property without a each of them except for his own share. the action Art. Parenthetically. or by there shall be no reimbursement for or prorating of any other transaction whereby ownership is those existing at the time of redemption. indemnity was paid by the purchaser when the sale was executed. 1615. The right of legal pre-emption or sale and some exist at the time of redemption. as the the time he possessed the land in the last year. If at the time of the execution of the sale contract. they redemption shall not be exercised except within shall be prorated between the redemptioner and the thirty days from the notice in writing by the vendee. a) The ownership of the vendee becomes without prejudice to the provisions of the Mortgage absolute and irrevocable by operation of law. If the vendee should leave several heirs. i. Law and the Land Registration Law with respect to third persons.67 vendee. (1517) to repurchase within thirty days from the time final judgment was rendered in a civil action on Art. after the vendor has been duly thing be undivided. effect of redemption Legal redemption – right to be subrogated. 1606. but he shall respect the The right of redemption of co-owners excludes leases which the latter may have executed in good that of adjoining owners. shall receive it free from all charges or mortgages constituted by the vendee. same. or it has been partitioned among heard. effect of non-redemption 681 HERMOSO v CA : It was error for the respondent court to rule that the right of the petitioner to redeem the alienated share had long proscribed. (1510) b) The vendee is not entitled to recover damages by virtue of non-redemption. if no transmitted by onerous title. The deed of sale shall not be counted from the anniversary of the date of the sale. 2. recorded in the Registry of Property. giving the latter the part corresponding to prospective vendor. visible or growing fruits. This finding fails to 51 . d. a) The vendor can eject a lessee only after the respondent in this case. from whom to redeem consolidation of ownership in the vendee by virtue of the failure of the vendor to comply with Art. If he honestly believed that the expiration of the period of lease or of the period for transaction was an equitable mortgage. case may be. and in accordance with the custom of the place where the land is situated. applies and he can still repurchase the property within thirty days from finality of the judgment declaring the transaction b) The vendor a retro is entitled to the return of the as a sale with pacto de retro. In case of real property. (n) them.e. Vendee a retro damages. But if the inheritance has been divided. His agent B.. Art. 1608. it matters not thing with damages for the use and occupation if the what the vendee intended the transaction to be. in the place of one who acquires a there should be on the land. 1618. The vendor who recovers the thing sold redemptioners. When period of legal redemption begins Should there have been no fruits at the time of the Art. the said article redemption. 1623. (1520) 67 ABILLA v GABONSENG: The applicability of Article 1606 rests on the bona fide intent of the vendor a retro. x x x for redemption may be instituted against him for the However. thing by purchase or dation in payment. or by the vendor. His heirs or assigns 3. notwithstanding a From whom to redeem stipulation in the contract for payment of 1. even if in the second contract no mention should have been made of the right to repurchase. the b. unless (1519a) accompanied by an affidavit of the vendor that he has given written notice thereof to all possible Art.

Redemption among co-owners which are separated by brooks.. portion thereof cannot be used for any practical purpose within a reasonable time. area shall be preferred. to consolidate scattered small agricultural lands under one ownership 2) Where the share of a co-owner was merely mortgaged c) When the right is not available o Adjacent lands which are separated by d) Should two or more co-owners desire to exercise brooks. Whenever a piece of urban land have the right of redemption when a piece of rural which is so small and so situated that a major land. are sold to a third If two or more adjoining owners desire to person. (1523a) right of redemption. the owner of the adjoining land of smaller community or vicinity in which it is found. from passing into the hands of a person other than the adjacent owners who can c) When the right is not available make use of the alienated property for the 1) Where the share of the co-owner is sold to development of their own lands another co-owner 2. IAC) This right is not applicable to adjacent lands 1. they had to take one step found. If the price of the alienation is grossly exercise the right of redemption at the same excessive. is a) When the right may be exercised: when a share of alienated [unless the grantee does not own any a co-owner is sold to a third person. under Art 1623. ha. it does not state any particular form thereof. 1622 does deliberately hidden from the petitioners. 1622. be said to be adjoining owners anymore] 2. who is a rural land] stranger. It is a condition precedent to the exercise of of pre-emption at a reasonable price. While the law requires that the notice must be in writing. the owner of the adjoining land of smaller reasonable one. so long as the reasons for a written notice are present. For sometime after the not necessarily refer to the nature of the land itself but to sale. the redemptioner shall pay only a time. 1621. (Villanueva citing Alonzo v. A co-owner of a thing may exercise the benefit of other estates. and should both lands have the same area. the one who first requested Should two or more co-owners desire to exercise the the redemption. is alienated. ravines. after another to find out if the information was true. Urban lands69 Art. The records 69 of the case show that the sale of the brothers’ share was ORTEGA v ORCINE The term “urban” in Art. roads and other apparent servitudes for the Art. drains. Redemption among adjoining owners d) If two or more adjoining owners desire to The law distinguishes between rural and urban lands. having been bought merely for speculation. the right of redemption. to prevent the rural land not exceeding 1 owners until the community is done away with. the one who first requested utilization of lands. 1. It is a period set by law to restrict the right of the person exercising the right of legal redemption. the owner of any adjoining land has a right prescriptive period. they may only do so in proportion to the apparent servitudes for the benefit of share they may respectively have in the thing owned other estates [because owners cannot in common. When the character of the community or vicinity in which it is they somehow heard rumors about it. the petitioners were ignorant about its execution. 1620. roads and other the right. a. exercise the right of redemption at the same The distinction is based on the character of the time. It is not one of prescription. b) Thrust of the law b) Thrust of the law: to reduce the number of co. ravines. unless the grantee does not own Laches seems to be a special exception to notice rule any rural land. drains. is about to be re- take into account that the period of legal redemption is not a sold. 52 . they may only do so in proportion to the share they may respectively have in a) When the right may be exercised: when a the thing owned in common. area shall be preferred. The owners of adjoining lands shall also Art. Rural lands b. and should both lands This is to encourage the maximum development and have the same area. right of redemption in case the shares of all the other co-owners or of any of them. the area of which does not exceed one hectare. (1522a) piece of rural land not exceeding 1 ha. the redemption.

proceedings and the forfeiture which shall be spread upon the records of his office. the debtor shall have a right to conducting the sale shall declare the property extinguish it by reimbursing the assignee for the price forfeited to the Government in satisfaction of the the latter paid therefor. 2. and the interest on the price from the day on thereafter. the credit. . together with interest thereon and the for profit. 1635) owner whose intended use of the land in question appears best justified shall be preferred. It shall be A credit or other incorporeal right shall be considered the duty of the Register of Deeds concerned. or any one for him may or other incorporeal right in litigation is sold. Redemption by a judgment debtor 53 . but if the property be not thus redeemed. the owner whose intended use of the land in question NIRC of 1997. having been the applicant. the applicant estate and aggravate the housing problem. a) Who may redeem b) Thrust of the law: to discourage speculation in real 1. anyone for him 70 SEN PO EK MARKETING v. 1634. 215. also 2) Assignments made to a co-heir or co- at a reasonable price. owner of the credit. shall be subject to repurchase by purpose within a reasonable time. Sec. (Art. to the possessor of a tenement When two or more owners of adjoining lands wish to or land which is subject to the assigned exercise the right of pre-emption or redemption. the owner of the adjoining land shall have a right of redemption. declaration of forfeiture. is about to be resold years from the date of conveyance. When a credit or other incorporeal right in penalties and costs. (1535) Within one (1) year from the date of such a) When the right may be exercised: when a credit forfeiture. the delinquent taxpayer 1. the judicial costs incurred by claim in question and within two (2) days him. (n) Redemption of homestead a) When the right may be exercised: when a piece of CA 141. legal heirs c) When the right is not available: When the urban land is transferred under an “exchange” of properties b) Period of redemption: within 5 years from the [because there is no resale]70 date of conveyance d) When two or more owners of adjoining lands wish Redemption in tax sales to exercise the right of pre-emption or redemption. to transfer the title of the property forfeited to the Government without The debtor may exercise his right within thirty days the necessity of an order from a competent from the date the assignee demands payment from court. to a creditor in payment of his credit. major portion thereof cannot be used for any practical when proper. Sec. the forfeiture shall become absolute. his widow 3. costs of sale. Government for Want of Bidder. When the assignment of a credit was made before any litigation 2. 119. the taxpayer. shall make a return of his which the same was paid. redeem said property by paying to the Commissioner or the latter's Revenue Collection b) Thrust of the law: to discourage speculation in Officer the full amount of the taxes and lawsuits which would make the courts an instrument penalties. Forfeiture to appears best justified shall be preferred. in litigation from the time the complaint concerning upon registration with his office of any such the same is answered. Art. Every conveyance of land urban land which is so small and so situated that a acquired under a free patent or homestead. c) When the right is not available [because the assignee has a valid interest in the right or property Who may redeem assigned] 1. him.In case there is no bidder for real property exposed for sale as Assignment of a chose in action herein above provided or if the highest bid is for an amount insufficient to pay the taxes.If the re-sale has been perfected. his widow or legal heirs within 5 bought merely for speculation. the Internal Revenue Officer litigation is sold. MARTINEZ: Period of redemption: within 1 year from the Article 1622 is not applicable to a lessee trying to buy the land he date of sale is leasing.

his successors-in-interest. each shall be entitled to said Sec. judgment or mortgage on the property the court conditioned that he will pay all the sold. the purchaser at the auction sale concerned whether in a judicial or Real property sold as provided in the last preceding extra-judicial foreclosure shall have the right to section. whichever is earlier. Foreclosure of Real Estate Mortgage. [This provision is judicial foreclosure of real estate mortgage. his successors-in-interest extrajudicial foreclosure. the bank or institution from the sale and custody Rules of Civil Procedure. but not after. The right of judicially. or any part thereof sold separately. the judgment obligor whose property is being sold pursuant to an 2. may be enter upon and take possession of such property redeemed in the manner hereinafter provided.-In case the landholding is sold to a third person without the knowledge of the Period of redemption: within 1 year from the date of agricultural lessee. whether judicially or extra. Sec. Lessee’s Right of 4. the debtor. .in-interest Code 3. therefrom. That the entire Redemption in judicial foreclosure of mortgages landholding sold must be redeemed: Provided. 47. the latter shall have the right the sale to redeem the same at a reasonable price and consideration. shall have the right to 3. Such redeeming enjoining or the restraint of the foreclosure creditor is termed a redemptioner. the debtor Legal right to redeem under the Agrarian Reform 2. Who of said property less the income derived may redeem real property so sold.In right of redemption only to the extent of the area the event of foreclosure. 6. of any mortgage on real estate which is redemption under this Section may be exercised security for any loan or other credit accommodation within two years from the registration of the granted. or on some part thereof. judicial creditor/judgment creditor of the debtor RA 3844. any judicial or judgment creditor of said debtor. In extrajudicial foreclosure of their redemption rights until their expiration. to redeem the property by a) Who may redeem: the lessee who has no paying the amount due under the mortgage deed. or any GENERAL RULE: No right to redeem is granted to junior encumbrancer may redeem the property within the debtor-mortgagor when there has been 1 year from the date of the sale. 12. a) Who may redeem 1. his successors. and all the costs and expenses incurred by b) Period of redemption: within 2 years from the registration the sale 54 . any person having a lien on the property Redemption. proceeding. Sec. and shall have priority over any other right has been sold for the full or partial payment of his of legal redemption. knowledge of the sale to a third person with interest thereon at rate specified in the mortgage. the registration of the certificate of foreclosure sale with the Period of redemption: within 1 year from the date of applicable Register of Deeds which in no case registration of the certificate of sale shall be more than three (3) months after foreclosure. proceedings instituted pursuant to this provision shall be given due course only upon the filing by (b) A creditor having a lien by virtue of an the petitioner of a bond in an amount fixed by attachment. by the immediately after the date of the confirmation of following persons: the auction sale and administer the same in accordance with law. actually cultivated by him. However. juridical persons 1. the mortgagor or debtor whose real property sale. 3135. obligation shall have the right within one year after the sale of the real estate.] EXCEPTION: When the mortgagee is a bank or a banking institution. Rule 39. Any petition in court to (a) The judgment obligor. creditor having a lien by virtue of an redeem the property in accordance with this attachment provision until. taken from Baviera only– not sure if this is the exact wording of the law. subsequent to the lien damages which the bank may suffer by the under which the property was sold. or his successor in enjoin or restrain the conduct of foreclosure interest in the whole or any part of the property. mortgage. further. 27. That where there are two or more RA 8791 (The General Banking of Law of 2000). Owners of Redemption in extrajudicial foreclosure of mortgages property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain Act No. a) Who may redeem Notwithstanding Act 3135. Sec. agricultural lessees. Provided.

merchandise. or his. provisions. for cash or on credit. to mortgage or assignment of all. transferor. without having first delivered to the vendee or provisions or materials in bulk. the provisions of this section wares. in shall not apply. the undersigned authority. wares. purchase or mortgage money of the said memorandum. mortgage or assignment of a stock of goods. or assign any stock of goods. or other evidence of indebtedness for said of every person who shall sell. merchandise. then or mortgagor. at least ten days before the sale. and that the amount set opposite Law. or substantially all. mortgage or assignment of goods. or of all. or agent be a corporation. at to be a sale and transfer in bulk. or may be indebted. This Act shall be known as "The Bulk Sales addresses. as shown upon such sworn to the president. for cash or on credit. to deliver property to the pro rata payment of the bona to such vendee. personally appeared __________________ (vendor. provisions 71 LIWANAG v MENGHRAJ: The constitutional right to dispose or materials. in sworn. provisions or materials. of carry on the business of which said goods. this Act: Provided. mortgagor. and owing by _____________ (vendor or transfer. or purchase price or advance upon mortgage. Inventory. sworn to substantially as hereinafter provided. a part. upon his oath. shall be deemed __________ day of _________. other than as set forth in said statement. merchandise. as the case may be). deposes and states that bulk. which statement shall be verified sold must be redeemed by an oath to the following effect: d) where there are two or more agricultural lessees. in the showing the quantity and. 2. or other evidence therefor. he shall be deemed to have violated or manager of said corporation. 5. wares. issued at ___________ on the day of transfer. and any such sale. _____________ who. — It shall be the duty of of all creditors to whom said vendor or mortgagor every vendor. — Whenever any person shall sell. provisions or materials purchased mortgagor. for or on account of goods. a written statement. merchandise. indebtedness due or owing. bearing cedula No. transfer. or assignor. or mortgagor) together with their Sec 1. The State. — Any sale. assign any stock of goods. from his creditors as shown by verified statements. and prescribing penalties for the violation the foregoing statement contains the names of of the provisions thereof. Statement of creditors. That if such vendor. BULK SALES LAW71 mortgagor. then to a member shall be fraudulent and void. ____________ ACT NO. regular prosecution of the business of the vendor. of the names and addresses Sec. and shall receive any part of the purchase price. the insolvent and fraudulent vendors 55 . owing by said vendor or mortgagor to each of c) Conditions for redemption: the entire landholding said creditors. or sale. of the fixtures and equipment ______________________ used in and about the business of the vendor. agent or representative. vice-president. transferor. is the amount now due and owing. so far as is possible exercise of its police power. seeks to protect such creditor against with the exercise of reasonable diligence. Fraudulent and void sale. — It shall be the duty note. 19____. transferor. transferor. mortgagor. by me being first duly wares. 3. Subscribed and sworn to before me this mortgagor. secretary statement. and that there are wares. and which shall become due Sec. transfer or mortgage mortgagee be a partnership firm. or substantially all. thereof. provisions or materials. then. the sworn statement provided for or its agent or representative any part of the in section three hereof. mortgagee. mortgagor. produces and Sec. mortgagee or to his or its agent or before receiving from the vendee. treasurer. merchandise. provisions or materials are vendor. or materials no creditors holding claims due or which shall otherwise than in the ordinary course of trade and the become due. XV. or agent. The creditor should be inventory thereof and to preserve the same protected in his rights against the debtor. in bulk. or any promissory note. Sale and transfer in bulk. wares. and without applying the purchase price thereof. merchandise. transfer. representative. if such vendee or this Act. PHILIPPINE ISLANDS each shall be entitled to said right of redemption only PROVINCE OR CITY OF _________________} to the extent of the area actually cultivated by him Before me." each of said respective names. or assignor. 4. An act to regulate the sale. transferor or assignor. or. and in that case. or if the fide claim or claims of the creditors of the vendor vendee. together with the amount of assignor. merchandise. or any promissory Sec. to make a full detailed freely of one’s property is not absolute. mortgage. mortgagee. or to become due or transfer or execution of a mortgage upon any stock of goods. bulk. all of the creditors of ________________ (vendor. upon credit or on account of money borrowed. in contemplation of _____________. however. 3952. mortgage. or assignor. the business or trade theretofore conducted by the wares. transfer. mortgagor) to such creditors. mortgagee. transfer or delivers a written waiver of the provisions of this Act mortgage.

the false or untrue statement. transferor or assignor produces and three hereof. of the fixtures and equipment used in and provisions or materials. who shall knowingly or sale and transfer in bulk. merchandise. with the correct amount due and to Act from his creditors as shown by verified become due to each of them. or substantially all. that if such vendor. 7. the business or trade theretofore provisions or materials. Sec. or substantially assignor of any stock of goods. any sale. business shall be registered in the Bureau of Commerce. nor more or mortgagee before receiving the consideration than five years. RA 3952 56 . Any sale. or materials otherwise statement of the vendor. transferor. or any person acting about the business of the vendor. or assignor. a statement. which shall not include the names of all delivers a written waiver of the provisions of this such creditors. mortgagor. COMPLIANCE REQUIREMENT Act shall. personally or by registered mail. delivered. or public officers. relying on the fact corporation. transfer. wares. 6. 10. transfer. all. 9. The provisions of this Act shall be 3. any sale. transfer. be punished by a) delivery of the list of creditors to the vendee imprisonment not less than six months. PEOPLE v WONG: The object of the sale in this case is in the discretion of the court. assignees in Types of transactions covered72 insolvency. mortgagor. mortgagor. provisions or materials. A. transfer. 8. or substantially all. provisions. shall be deemed to have provisions of this section shall not apply. mortgage or five pesos shall be charged to the vendor or assignment of all. in bulk. provisions or materials Sec. name and address is set forth in the verified merchandise. who is hereby empowered. wares. that their stock of merchandise was not to be merchandise. or both such imprisonment and fine. merchandise. for. For the registration of each such sworn statement a fee of 2. It shall be unlawful for any person. shall be deemed to be a mortgagor. wares. acting under judicial 1. as owner of any stock of goods. as provided for in section mortgagor. and in that case. conducted by the vendor. transferor. any sale. or deliver or cause to be made or Act: Provided. or fined in sum not exceeding five 72 thousand pesos. receivers. Sec. etc. in bulk. or on behalf of any such vendor. of Commerce and Industry. or assignment. mortgagor or assignor of each article to be included in the sale. terms conditions of the sale. firm or extended credit to merchants. but kept up and replenished from transfer title to the same without consideration or for time to time (with the extension of credit comes a nominal consideration only. or than in the ordinary course of trade and the assignor. iron works and processes or casts metalsMerchandise – something that is sold everday and is constantly going out of the store and being replaced by other goods. or of the price. transferor. mortgage or process. transferor. 2. 12. of the business or trade theretofore conducted by the vendor. then. merchandise. to about the business of the vendor. Any person violating any provision of this B. upon conviction thereof. transfer. or substantially all. or assignor. mortgagor or transferor. to sold in bulk. violated the provisions of this Act. Sec. assignment of a stock of goods. any sale. in contemplation of this willfully make. in bulk. etc. wares. for sale Sec. however. and notify every creditor whose assignment of a stock of goods. transferor or assignor. This Act shall take effect on its approval. prescribe and adopt from time to time such rules and regulations as may be deemed necessary for the Stock – common use when applied to goods in a proper and efficient enforcement of the provisions of mercantile house refers to those which are kept this Act. Wong’s business was a foundry shop that manufactures Sec. mortgage or administered by the Director of the Bureau of assignment of all. vendor. or of all. The sworn statement containing the names otherwise than in the ordinary course of and addresses of all creditors of the vendor or trade and the regular prosecution of the mortgagor provided for in section three of this Act. wares. a) Thrust of the law: to protect persons who Sec. at least ten days before transferring regular prosecution of the business of the possession thereof. of mortgagor of the stock of goods. mortgage or transfer or mortgage. 11. all. or shall contain any statements.cost price to the vendor. administrators. Any vendor. transferor. or assignor. mortgage or assignment of mortgage. transfer. not covered by the provision alleged to have been infringed. Nothing in this Act contained shall apply to executors. the presupposition of continuance in the business of merchandising) Sec. mortgagor. the fixtures and equipment used in and with the approval of the Department Head.

500. PENALTY: 6 months – 5 years imprisonment.As used in this Act: Category B . engage or invest in globally competitive through the liberalization of the the retail trade business. occupation or up capital of the equivalent in Philippine Pesos of calling of habitually selling direct to the general public Two Million Five Hundred Thousand US Dollars merchandise. Sec. the sale. d) notification to creditors at least 10 days before delivery (c) Sales in restaurant operations by a hotel owner or inn-keeper irrespective of the amount C. RETAIL TRADE LIBERALIZATION ACT Sec. with the DTI. or both. b) The law penalizes any intentional omission of the irrespective of capitalization. repealing for the purpose RA 1180. commodities or goods for consumption. with the Securities and Exchange Commission create more jobs. 2. and for other purposes. .000. with the correct amount due or to become due. Luxury goods shall include. (d) Sales which are limited only to products or mortgage shall be fraudulent and void. to the general public the products payment of the claims of creditors appearing in the manufactured. owned by Filipino citizens. electronics and other personal effects. The law also penalizes any goods which are not necessary for life transfer of title in bulk.00) may be wholly owned by but the restriction of this law shall not apply to the foreigners except for the first two (2) years after following: the effectivity of this Act wherein foreign participation shall be limited to not more than 57 . but are not limited to. as born citizen of the Philippines who has lost his amended. that the restaurant is a) If the purchase or mortgage money is not applied incidental to the hotel business. higher quality if for Filipino citizens and corporations wholly- goods. and pro-rata to the payment of the bona fide claims of the creditors of the vendor/mortgagor. XVI.Enterprises with paid-up capital of hereby liberalized to encourage Filipino and foreign the equivalent in Philippine Pesos of less than investors to forge an efficient and competitive retail Two Million Five Hundred Thousand US Dollars trade sector in the interest of empowering the Filipino (US$2. (a) Sales by a manufacturer. transfer. processed or produced by him if list his capital does not exceed One Hundred Thousand Pesos (P100. . branded or designer < P5. Philippine citizenship but who resides in the Philippines shall be granted the same rights as Sec." Sec. Definition. promote tourism. upon registration that will bring down prices for the Filipino consumer. associations and State to promote consumer welfare in attracting. processed or assembled by a manufacturer through a single outlet. assist small (SEC) and the Department of Trade and Industry manufacturers. b) application of the consideration to the pro-rata or worker.00). wearing apparel. 1. better services and wider choices. corporations formed and organized under the promoting and welcoming productive investments laws of the Philippines may. 5. An act liberalizing the retail trade Has Lost His Philippine Citizenship. Treatment of Natural-Born Citizen Who RA 8762. manufactured. without consideration or for a maintenance and whose demand is generated in nominal consideration only large part by the highest income groups. EFFECTS OF NON-COMPLIANCE of capital: Provided. Trade Liberalization Act of 2000. processor. fine of products such as: jewelry. Title. detailed inventory of the goods sold or mortgaged (b) Sales by a farmer or agriculturist selling the products of his farm.A natural- business.This Act shall be known as the "Retail Filipino citizens for purposes of this Act.500. names of the creditors in the required list. c) preparation of a full. .Enterprises with a minimum paid- (1) "Retail Trade" shall mean any act.000. leisure and sporting goods.00) shall be reserved exclusively consumer through lower prices. laborer. subject to the following retail trade sector. stimulate economic growth and (DTI) or in case of foreign-owned single enable Philippine goods and services to become proprietorships.000. (US$2. Declaration of Policy. 3. the Philippine retail industry is Category A .It is the policy of the owned partnerships. 4. penalty imposable to the debtor clothing and footwear. . categories: Pursuant to this policy.000. Foreign Equity Participation. .Foreign- Sec. or any false or (2) "High-end or luxury goods" shall refer to untrue statement therein.

00). restaurants and sari-sari stores and such from their start of operations.(60%) of total equity. at least thirty percent to a minimum of sixty percent (60%) of the equity (30%) of the aggregate cost of the stock thereof within the first two (2) years from the inventory of foreign retailers falling under effectivity of this Act and thereafter.No be formulated by the DTI. The Inter-Agency Committee on Tariff and which will verify or confirm inward remittance of the Related Matters of the National Economic minimum required capital investment.000. Category C . . door-to-door exchange in the Philippines within eight (8) years selling. allowable foreign participation as herein provided.00) or such retailers has at least one (1) store more maybe wholly owned by foreigners: Provided.Foreign Investors acquiring an annual report on the same to Congress.Enterprises with a paid-up capital of the (b) Five (5) retailing branches or franchises in equivalent in Philippine Pesos of Seven Million Five operation anywhere around the world unless Hundred Thousand US Dollars (US$7.000.The monitoring and regulation of (a) A minimum of Two Hundred Million US Dollars foreign sole proprietorships. Qualifications of Foreign Retailers. (US$200. they may Categories B and C and ten percent (10%) for acquire the remaining percentage consistent with the Category D.000.000. 8.All retail Foreign Retailers. partnerships. US Dollars (US$50. Public Offering of Shares of Stock.00) per store may The DTI is hereby authorized to pre-qualify all be wholly-owned by foreigners.00) net worth in its parent associations or corporations allowed to engage in corporation for Categories B and C. and Fifty Million retail trade shall be the responsibility of the DTI.500. that in no case shall the investments for US Dollars (US$25. Unless the foreign investor has The DTI shall keep a record of qualified foreign notified the SEC and the DTI of its intention to retailers who may. the full amount of the prescribed minimum capital. shall be made in the Philippines. Promotional of Locally Manufactured peso equivalent of Two Million Five Hundred Thousand Products. the of their equity to the public through any stock use of sales representatives. parent corporation for Category D. Foreign Investors Acquiring Shares of Stock retailers of high-end or luxury goods and render of Local Retailers. shall be allowed to luxury products with a paid up capital of the engage in retail trade in the Philippines. shares from existing retail stores whether or not publicly listed whose net worth is in excess of the Sec.For ten (10) years after the US Dollars (US$2.000. 10.000. . that a detailed list of prohibited activities shall hereafter Sec.Enterprises specializing in high-end or the entry of Filipino retailers. the Philippines. and Hundred Thirty Thousand US Dollars (US$830. . foreign retailer shall be allowed to engage in retail trade in the Philippines unless all the following Sec. qualifications on capitalization and track record prescribed in this section. capitalized at a minimum of Twenty-Five Million however.000. 6. . equivalent in Philippine Pesos of Two Hundred Fifty Thousand US Dollars (US$250. other similar retailing activities: Provided. 7.00) net worth in its This shall include resolution of conflicts.500. Failure retail stores shall secure a certification from the Bangko Sentral ng Pilipinas (BSP) and the DTI.00). The actual use in Philippine operations of ensure that the parent retail trading company of the inwardly remitted minimum capital requirements the foreign investor complies with the shall be monitored by the SEC. repatriate its capital and cease operations in the establish retail stores in the Philippines. 11. (d) Only nationals from. upon compliance with law. . countries which allow Category D . Rules and qualifications are met: Regulations. or judicial entities formed or incorporated in. before they are allowed to conduct business The foreign investor shall be required to maintain in in the Philippines. establishing a store in Categories B and C be less than the equivalent in Philippine Pesos of Eight (c) Five (5)-year track record in retailing. subject to the provisions of this Act.00) may purchase only up effectivity of this Act.000.000. foreign retailers. . 58 . It shall Philippines. Development Authority (NEDA) Board shall formulate and regularly update a list of foreign Sec. Prohibited Activities of Qualified Sec. Implementing Agency.000. Sec.Qualified foreign retailers trade enterprises under Categories B and C in which shall not be allowed to engage in certain retailing foreign ownership exceeds eighty percent (80%) of activities outside their accredited stores through equity shall offer a minimum of thirty percent (30%) the use of mobile or rolling stores or carts. 9.

in addition to the penalty prescribed herein. Republic Act No.1 seeks a complete ban on aliens. 14. . holdings. and by a fine of not less than EXCEPT: the value of the right franchise or privilege. executive E. 12) Sec. 1180. .Any person who shall be b) SEC Opinion No. shall be evidence of a violation of this The Retail Trade Law read in connection with the Anti-Dummy Act Act. Separability Clause. and a fine of not less than One Million pharmacy by a hospital) within the purview of Pesos (P1. suffer C. RIGHTS OF FORMER NATURAL-BORN In the case of associations. Penalty — In all cases in which any (15) days after its approval and publication in at least constitutional or legal provisions requires two (2) newspapers of general circulation in the Philippine or any other specific citizenship as a Philippines.000. 59 . CATEGORIES OF RETAIL TRADE dismissal and permanent disqualification from public ENTERPRISES (Sec. sales limited only to products manufactured. RULES ON FOREIGN RETAILERS IN THE orders. he shall be deported be given the same rights as Filipino citizens with immediately after service of sentence. he shall. as amended. and all other laws.00).If any provision of this CA 108 (Anti-Dummy Act). PENALTY CLAUSE (Sec.g. any citizen of the A.000 pesos 2. Sec. TRADE IN THE PHILIPPINES (Sec. Effectivity. B. operation of (8) years. at the time of the acquisition of his processed or assembled by the manufacturer holdings in the corporations or associations in a single outlet irrespective of capitalization referred to in section two of this Act. president.Republic Act No. occupation or calling of purpose of evading such provision. partnerships or FILIPINOS corporations. franchises in force and effect. 11. commodities or goods for consumption by imprisonment for not less than five nor more than fifteen years. Sec. D. series of 2003: Engaging found guilty of violation of any provision of this Act in the selling of merchandise as an incident to shall be punished by imprisonment of not less than the primary purpose of a corporation does not six (6) years and one (1) day but not more than eight constitute retail trade (e. If the Filipino respect to this law. F. franchise or privilege. rules and regulations or parts thereof PHILIPPINES inconsistent with this Act are repealed or modified accordingly. sales by a manufacturer. Penalty Clause. the NEDA and the BSP.The DTI. directors. in coordination with the SEC. 3018.000. laborer which is enjoyed or acquired in violation of the or worker of products made by him if his provisions hereof but in no case less than P5000. managers and other Natural-born Filipinos who have lost their officers responsible for the violation. 13. the penalty shall be imposed upon its partners. 8) as amended. or privileges. 15. If the offender citizenship but who reside in the Philippines shall is not a citizen of the Philippines. no real or personal property. SCOPE AND DEFINITION OF RETAIL TRADE73 Philippines or of any other specific country who allows his name or citizenship to be used for the Retail Trade – any act. . offender is a public officer or employee. shall be punished merchandise.This Act shall take effect fifteen Sec. Repealing Clause. 1. HOW ALIENS MAY INVEST IN RETAIL Sec. . requisite for the exercise or enjoyment of a right.000. processor. capital is less than or equal to 100. and any alien habitually selling direct to the general public or foreigner profiting thereby.. sales by a farmer or agriculturist of the The fact that the citizen of the Philippines or of products of his farm any specific country charged with a violation of 3. An act to punish Act shall be held unconstitutional.00) but not more than Twenty the Act (Villanueva) Million Pesos (P20. 12.000. this Act had. shall formulate and issue the implementing a) “General public” : activities of seller must be rules and regulations necessary to implement this Act such that the target clientele are not only a within ninety (90) days after its approval. the other acts of evasion of the laws on the provisions not otherwise affected thereby shall remain nationalization of certain rights. 1. 5) office. credit or other assets the 73 value of which shall at least be equivalent to said KING v HERNAEZ : There is no distinction between control and non-control positions with respect to employment of aliens. particular person or group of persons. is hereby repealed.

fifteen years and by a fine of not less than the value of the right. The exercise. privilege. whether corporation profiting thereby or involved therein. in order that a corporation or enjoyed or acquired in violation of the provisions association may exercise or enjoy a right. association not otherwise qualified under the twenty-five per centum of any fine imposed shall Constitution. and the property or business requires that.Sec. Reward to informer. it shall be unlawful to associations engaging in partially nationalized falsely simulate the existence of such minimum stock activities shall be allowed in proportion to their or capital as owned by such citizens. or to corporations or 2-A hereof. 4 enjoyed or acquired in violation of the provisions hereof but in no case less than P5000. permits or allows the use. privilege. Simulation of minimum capital stock — In all penalty imposed herein. to intervene in the management. as an officer. shall constitute a prima facie Constitution or the laws to citizens of the Philippines evidence of violation of the provisions of Section or of any other specific country. not less than a certain per centum of its election of aliens as members of the board of capital must be owned by citizens of the Philippines or directors or governing body of corporations or of any other specific country. or in any other way. or the provisions of the existing laws. — In case of property or business to a person. October 30. 2. resulting in the conviction of any person or operation. Any person. be dissolved. That the privilege. managers or persons in charge of corporations. franchise or privilege enjoyed or acquired in violation of the provisions hereof but in no case Approved. That the president. 3. Unlawful use. corporation. franchise.3 and directors or trustees of corporations or associations convicted of a violation of this section Sec. or accrue to the benefit of the informer who in any manner permits or allows any person. 2-A. the exercise or Constitution or the laws to citizens of the enjoyment of which is expressly reserved by the Philippines. exploitation or enjoyment thereof by a person. transfers or conveys said right. who shall business. The president or managers such entities. or existing laws to acquire. forfeit such right. the exercise or enjoyment in its name or under its control. a right. and any person who Government. Any violation of the provisions of this shall be punished by imprisonment of not less than Act by the spouse of any public official. associations or partnerships violating the provisions of this section shall be criminally liable in lieu thereof: Provided. the exercise and enjoyment of which are voluntarily take the initiative of reporting to the expressly reserved by the Constitution or existing proper authorities any violation of the provisions laws to citizens of the Philippines or of any other of this Act and assist in the prosecution. Sec. administration or control thereof. of which is expressly reserved by the privilege. That any person. for the purpose allowable participation or share in the capital of of evading said provision. This Act shall take effect upon its imprisonment for not less than five nor more than approval. exploit ascertained and named in the judgment of the or enjoy a right. cases in which a constitutional or legal provision franchise. If the informer is a dummy. property or court. less than five thousand pesos: Provided. and shall be exempted from the knowingly aids. such public official. however. shall be cause for the dismissal of less than the value of the right. 2-B. franchise or of this Act: And provided. property or business. having property or business. employee or laborer therein with or he shall be entitled to the reward hereof in the without remuneration except technical personnel sum equivalent to twenty-five per centum of the whose employment may be specifically authorized by fine actually paid to or received by the the Secretary of Justice. finally. Sec. and by a fine not live together. upon requisites prescribed by a the Constitution or the laws proper court proceedings. 3-A.5 associations at least sixty per centum of the capital of which is owned by such citizens. 6 consummation or perpetration of any of the acts herein above enumerated shall be punished by Sec. 2-C. franchise. in addition to the 60 . 1936. use. franchise. specific country. franchise or privilege.2 Sec. Any corporation or association violating corporation or association not possessing the any of the provisions of this Act shall. Exploitation or enjoyment — relationship with an alien of a right. privilege. 4. possession or control by a Filipino citizen having a common-law Sec. or leases. or association which. of the Philippines. corporation or conviction under the provisions of this Act. assists or abets in the planning penal liabilities provided for in this Act. if both five nor more than fifteen years. corporation or association shall. further. privilege. not furnishes to the Government original information possessing the qualifications required by the leading to said conviction and who shall be Constitution.

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