Rabajante Notes Sales

SALES AND LEASE REVIEWER
(by Diory Rabajante)

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SALES
* CONTRACT OF SALE, defined (Art. 1458, CC)

One of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the
other to pay therefor a price certain in money or its equivalent.
* SOURCES OF RIGHTS / OBLIGATIONS (Art. 1156)

1. Law
2. Contracts
3. Quasi – Contracts
4. Acts or omissions punished by law; and
5. Quasi – delicts
A contract of sale is a contract and is, therefore, a source of obligations. It has the force of law between the contracting parties,
which should be complied with in good faith. (Art. 1159)
* CHARACTERISTICS OF A CONTRACT OF SALE
1. Nominate - law gave it a name, i.e . “SALE”
2. Principal - can stand on its own, unlike an accessory contract
3. Bilateral - imposes obligation on both parties

a. obligation of seller – transfer ownership & deliver
b. obligation of buyer – pay price
Consequence of being bilateral: power to rescind is implied in bilateral contracts (Art. 1191)
4. Onerous – imposes valuable consideration

Consequence: all doubts in construing contract to be resolved in greater reciprocity of interest
5. Commutative – a thing of value is exchanged for equal value

Subjective Test: as long as parties believe in all honesty that he is receiving equal value then it complies with the test &
would not be deemed a donation; but must not be absurd.
• Inadequacy of price or aleatory character not sufficient ground to cancel contract of sale;
• sale may be annulled based on vice of consent regarding inadequacy but not on inadequacy per se
6. Consensual – a contract of sale is perfected by mere consent.
7. Title & not a mode – title gives rise to an obligation to transfer; it is not a mode w/c actually transfers ownership.
On its own, sale is not a mode which transfers ownership. It creates an obligation to transfer ownership. It is the delivery
that transfers ownership.
* CONTRACT OF ABSOLUTE SALE VS. CONTRACT OF CONDITIONAL SALE

A contract of sale may be absolute or conditional. (Art. 1458)
True Test:
A contract of sale gives rise to two obligations: for the seller, to transfer the ownership of and deliver a determinate thing;
for the buyer, the payment of the price.
If the condition is imposed on the seller’s obligation to transfer the ownership of and deliver the thing, there is a conditional
sale. Note that the essence of sale is the acquisition of ownership.
However, if the condition is imposed on the buyer’s obligation to pay the price, the sale is still absolute. Payment of the
purchase price is part of the consummation stage (not perfection stage) of the contract of sale. Perfection of the contract of sale
is not affected by the fact that payment is subject to conditions, it being the case that a contract of sale is perfected by mere
consent.
HYPOTHETICAL QUESTIONS:
1. A and B entered into a contract of sale whereby A obliges himself to transfer the ownership of and deliver a certain piano
to B for P5,000. A and B further agreed that the piano will be delivered to B immediately after the execution of the
contract, and that B is given ten days to pay the price. The ownership is, however, reserved to A until the full payment
of the purchase price. Was the contract of sale entered into by A and B absolute?
by Diory Rabajante
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No. The contract of sale between A and B was conditional because there was a condition imposed on A’s obligation to
transfer the ownership of the piano. B’s ownership of piano is automatically transferred to the buyer by operation of
law upon fulfillment of a suspensive condition which is the payment of the purchase price.
2. A and B entered into a contract of sale whereby A obliges himself to transfer the ownership of and deliver a certain piano
to B for P5,000. They further agreed that payment of the price by B is subject to the condition that B will receive money
from C. Is the contract of sale entered into by A and B absolute?
Yes. The condition is imposed only on the payment of the price.
Jurisprudential Doctrines:
People's There was no perfected sale of a lot when it was conditionally or contingently awarded
Homesite & subject to the approval by the city council of the proposed consolidation subdivision plan and
Housing Corp. vs the approval of the award by the valuation committee and higher authorities. When the plan
CA was approved, the Mendozas should have manifested in writing their acceptance of the award
for the purchase of the lot just to show that they were still interested in its purchase, although
the area was reduced. Yet, they did not do so. Article 1475 of the NCC provides that “the
contract of sale is perfected at the moment there is a meeting of the minds..." Under the facts
of this case, there was no meeting of minds on the purchase of Lot 4 with an area of 2,608.7
square meters at P21 a square meter.
As to the conditional nature of the sale, Article 1181 of the NCC states that “in conditional
obligations, the acquisition of rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event which constitutes the condition.
Dignos vs CA A deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale"
where nowhere in the contract in question is a proviso or stipulation to the effect that title to
the property sold is reserved in the vendor until full payment of the purchase price, nor is
there a stipulation giving the vendor the right to unilaterally rescind the contract the moment
the vendee fails to pay within a fixed period. In this case, there is no such stipulation
reserving the title of the property on the vendors nor does it give them the right to unilaterally
rescind the contract upon non-payment of the balance thereof within a fixed period.
Furthermore, all the elements of a valid contract of sale under Article 1458 of the Civil Code,
are present.
* CONTRACT OF SALE VS. CONTRACT TO SELL
CONDITIONAL CONTRACT OF SALE CONTRACT TO SELL

Failure to pay is a resolutory condition which puts Failure to pay is a positive suspensive condition
an end to the transaction
Title passes to the vendee after compliance with Ownership is retained by the seller
his obligation
After delivery, ownership is loss, unless it is Delivery does not affect loss of ownership
rescinded
First element (consent) is present albeit Ownership not automatically transferred to the buyer
conditioned upon the happening of contingent (even if there has been previous delivery to him)
event which may or may not occur, in effect, upon fulfillment of suspensive condition (i.e. full
contract of sale is automatically perfected without payment of purchase price). Seller still has to convey
further act having to be performed by the seller title to prospective buyer by entering into a contract
of absolute sale.
With respect to sale to third person: With respect to sale to third person:
- Upon fulfillment of suspensive condition, - No double sale (bec no previous sale of
sale becomes absolute which affects seller’s property despite fulfillment of suspensive
title condition)
- 3P becomes buyer in bad faith if - 3P not a buyer in bad faith
possesses contrastive or actual knowledge of - Prospective buyer cannot seek relief of
defect in seller’s title reconveyance of property, but only sue under Art
- Second buyer cannot defeat the first 19 (unjustified disregard of right)
buyer’s title
* CONTRACT OF SALE VS. CONTRACT FOR A PIECE OF WORK
Article 1713: By the contract for a piece of work the contractor binds himself to execute a piece of work for the
employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill or
also furnish the material.
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Article 1467:
CONTRACT OF SALE A contract for the delivery at a certain price of an article which the 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
CONTRACT FOR A PIECE OF WORK if the goods are to be manufactured specially for the customer AND upon his special
order, and not for the general market. Here, service is the Subject Matter
BUT:
THERE CAN BE NO CONTRACT FOR PIECE-OF-WORK FOR PAST SERVICE RESULTING IN THE CREATION OF THE OBJECT
(ALWAYS A SALE)
JURISPRUDENTIAL DOCTRINES:
Celestino Co. vs Collector When a factory accepts a job that requires the use of extraordinary or
additional equipment, or involves services not generally performed by it,
it thereby contracts for a piece of work.
- In the case at bar, the orders exhibited were not shown to be special.
They were merely orders for work — nothing is shown to call them
special requiring extraordinary service of the factory. The factory sold
materials ordinarily manufactured by it — sash, panels, mouldings — to
Teodoro & Co., although in such form or combination as suited the fancy
of the purchaser. Such new form does not divest the the factory of its
character as manufacturer. Neither does it take the transaction out of
the category of sales under Article 1467 above quoted, because although
the Factory does not, in the ordinary course of its business, manufacture
and keep on stock doors of the kind sold to Teodoro, it could stock
and/or probably had in stock the sash, mouldings and panels it used
therefor (some of them at least).
Commissioner vs Engineering and The distinction between a contract of sale and one for work, labor and
Supply Company materials is tested by the inquiry whether the thing transferred is one
not in existence and which never would have existed but for the order of
the party desiring to acquire it, or a thing which would have existed and
has been the subject of sale to some other persons even if the order had
not been given.
If the article ordered by the purchaser is exactly such as the plaintiff
makes and keeps on hand for sale to anyone, and no change or
modification of it is made at defendant's request, it is a contract of sale,
even though it may be entirely made after, and in consequence of, the
defendants order for it.
The word "contractor" has come to be used with special reference to a
person who, in the pursuit of the independent business, undertakes to
do a specific job or piece of work for other persons, using his own means
and methods without submitting himself to control as to the petty
details.
IMPORTANCE OF DISTINCTION
• Difference in the rules governing both contracts (e.g. tax rates and other charges are lower for contractors) and
application of SoF
• Inchausti v Cromwell - SC adopted Massachusetts rule that the test whether the thing transferred is one not in existence
and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have
existed and been subject of sale to some other person, even if the order had not been given.
• True test of a Contractor – he renders service in the course of an independent occupation, representing the will of his
employer only as to the result of his work, and not as to the means by which it is accomplished (Luzon Stevedoring
Co v Trinidad and La Carlota Sugar Central v Trinidad).
• More examples of CONTRACT OF SALE:
o future sale of articles which he is habitually making although at the time not made or finished
article ordered is exactly such as plaintiff makes and keeps on hand for sale to anyone and no change or modification of it is
made at defendant’s request although made after and in consequence of, defendant’s order for it
* CONTRACT OF SALE VS. CONTRACT OF AGENCY TO SELL
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Article 1868: By a contract of agency, a person binds himself to render some service or to do something in representation or on
behalf of another, with the consent or authority of the latter.
Article 1466: In construing a contract containing provisions characteristic of both the contract of sale and of the contract of
agency to sell, essential clauses of the whole instrument shall be considered.
SALE CONTRACT OF AGENCY TO SELL

Buyer pays the price Agent does not pay
Buyer acquires ownership over the object of the Agent does not acquire ownership
contract
Seller warrants Agent does not warrant, unless he agrees
Essence of sale: transfer of title or agreement to Essence of agency: delivery to the agent of the goods not as
transfer it for the price paid or promised the agent’s property but of the principal who remains the owner
and has the right to control the sales by the agent, fix the price
and terms, demand and receive the proceeds of the sales less
the agent’s commission
Quiroga vs Parsons Where the price of the objects is paid within the terms fixed without any other consideration
Hardware Co. and regardless as to whether the objects are sold, the contract is one of sale.
(In order to classify a contract, due regard must be given to its essential clauses. A contract
is what the law defines it to be, and not what it is called by the contracting parties.)
- In the case at bar, it shows that the cause and subject matter which are to furnish the
defendant with beds and in turn, pay for the stipulated price, are precisely the essential
features of contract of purchase and sale. There was an obligation on the part of the plaintiff
to supply beds and on defendant’s part, to pay the price which in turn, excludes the legal
conception of an agency.
- In an agency, there is an order to sell whereby the agent receives a thing to sell it and he
is not required to pay its price but is required to turn over to the principal the price he obtains
for the sale. If he does not succeed in selling it, he will have to return the thing. This is not the
case of the matter in the case at bar. By virtue of the contract between the plaintiff and the
defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within
the term fixed, without any other consideration and regardless as to whether he had or had
not sold the beds. Hence, the contract by and between the parties is one of purchase and sale.
Kerr vs Lingad The transfer of title or agreement to transfer it for a price paid is the essence of sale. If such
transfer puts the transferee in the position of an owner and makes him liable for the agreed
price, the transaction is a sale. On the other hand, the essence of an agency to sell is the
delivery to an agent, not as his property, but as the property of his principal, who remains the
owner and has the right to control sales, fix the price and terms, demand and receive the
proceeeds less the agent's commission upon sales made.
- In the case at bar, the relationship between the petitioner and US Rubber International is
one of brokerage or agency because of the following contractual stipulations:
*that petitioner can dispose of the products of the Company only to certain persons or
entities and within stipulated limits, unless excepted by the contract or by the Rubber
Company (Par. 2);
*that it merely receives, accepts and/or holds upon consignment the products, which remain
properties of the latter company (Par. 8);
*that every effort shall be made by petitioner to promote in every way the sale of the
products (Par. 3);
*that sales made by petitioner are subject to approval by the company (Par. 12);
*that on dates determined by the rubber company, petitioner shall render a detailed report
showing sales during the month (Par. 14);
*that the rubber company shall invoice the sales as of the dates of inventory and sales
report (Par. 14);
*that the rubber company agrees to keep the consigned goods fully insured under insurance
policies payable to it in case of loss (Par. 15);
*that upon request of the rubber company at any time, petitioner shall render an inventory
of the existing stock which may be checked by an authorized representative of the former
(Par. 15); and
*that upon termination or cancellation of the Agreement, all goods held on consignment
shall be held by petitioner for the account of the rubber company until their disposition is
provided for by the latter (Par. 19).
* CONTRACT OF SALE VS. DACION EN PAGO
Article 1245: Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall
be governed by the law of sales.
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• There is a novation of the contract of loan into a contract of sale when creditor agrees to accept a thing in payment
of the debt.
• If thing given in payment turns out to belong to another, creditor’s remedy governed by law on sales not on loan.
SALE DACION EN PAGO

No pre-existing credit Pre-existing credit
Gives rise to obligations Extinguishes obligations
Cause or consideration is the price from the Cause or consideration from the viewpoint of the person
viewpoint of the seller; or the obtaining of the offering the dation in payment is the extinguishment of his
object, from the viewpoint debt; from the viewpoint of the creditor is the acquisition of
the object offered in lieu of the original credit
Greater freedom in the determination of the price Less freedom in determining the price
Giving of the price may generally end the Giving of the object in lieu of the credit may extinguish
obligation of the buyer completely or partially the credit (depending on the
agreement)
* CONTRACT OF SALE VS. BARTER
Article 1638: By a contract of barter or exchange, one of the parties binds himself to give one thing in consideration
of the other’s promise to give another thing.
Article 1468: if the consideration of the contract consists partly in money and partly in another thing, the transaction
shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be
considered a:
BARTER: if value of the thing given as part of the consideration > amount of the money or its equivalent
• Because the true cause of the contract for the other party is the thing transferred and not the money.
SALE: if
 value of thing < amount of money or its equivalent

 value of thing = value of money
“Manifest intention” – judged by the parties contemporaneous and subsequent acts
“Exceeds the amount of money” – CC does not provide to what extent the value of the thing given as a consideration should
exceed the amount of money given for the contract to be considered as a barter
* CONTRACT OF SALE VS. LEASE
Article 1643: In the lease of things, one of the parties binds himself to give to another, the enjoyment or use of a
thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than 99
years shall be valid.
Article 1484: Vendor’s alternative remedies in a contract of sale of personal property price of which is payable in
installments:
1. Exact fulfillment of obligation in case of failure to pay (specific performance)

2. Cancel sale in case of failure to pay two or more installments
3. Foreclose the chattel mortgage
Article 1485: Art 1484 is also applicable to contracts purporting to be leases of personal property with option to
buy, when lessor has deprived lessee of the possession or enjoyment of thing.
• So-called rents must be regarded as payment of prince in installments since due payment of the agreed amount
results in the transfer of title to the lessee
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Jose v. Barrueco, 67 Phil 747 – The total rents being equal to the value of the thing leased, the SC
(1939) considered the transaction as one of sale.
* PARTIES TO A CONTRACT OF SALE

(DISQUALIFICATIONS)
Article 1489: All persons authorized in this Code to obligate themselves, may enter into contract of sale, saving the
modifications contained in the following articles.
Where necessaries are sold and delivered to a minor or other person without capacity to act, he must pay a reasonable
price therefor. Necessaries are those referred to in Art 290 (now Art 194 of FC)
 Cf Art 1399,CC: obligation of incapacitated person who entered into contract to restitute that which he
has benefited from
Article 234, Family Code: Emancipation takes place by the attainment of majority. Unless otherwise provided, majority
commencies at the age of 18 years (RA 6809).
Article 44: The following are juridical persons:
(1) The State and its political subdivision

(2) Other corporations, institutions and entities for public interest or purpose, created by law;
their personality beings as soon as they have been constituted according to law
(3) Corporations, partnerships and associations for private interest or purpose to which the
law grants a juridical personality, separate and distinct from that of each shareholder, partner or
member.
Article 46: Juridical persons may acquire and possess property of all kinds, as well as incur obligations and bring civil or
criminal actions, in conformity with the laws and regulations of their organization.
Article 36(6), Corporation Code: Every corporation incorporated under this Code has the power and capacity:
6. In case of stock corporations, to issue or sell stocks to subscribers and to sell stocks to subscribers and to
sell treasury stocks in accordance with the provisions of this Code; and to admit members to the corporation if
it be a non-stock corporation;
a. Absolute Incapacity
Article 1327: The following cannot give consent to a contract:
(1) Unemancipated minors

(2) Insane or demented persons and
(3) Deaf-mutes who do not know how to write
Article 1328: Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunkenness
or during a hypnotic spell are voidable.
Article 1390: The following contracts are voidable or annullable, even though there may have been no damage to
the contracting parties:
(1) One of the parties is incapable of giving consent (want of capacity)

(2) Consent is vitiated by mistake, violence, intimidation, undue influence or fraud (vitiated
consent)
These contracts are binding, unless they are annulled by a proper court action. They are susceptible of ratification.
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Article 1393: Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if with
knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a
right to invoke it should execute an act which necessarily implies an intention to waive his right.
Article 1397: The action for annulment of the contracts may be instituted by all who are thereby obliged
principally or subsidiarily. However, persons who are capable cannot allege the incapacity of those with whom they
contracted; nor can those who exerted intimidation, violence or undue influence or employed fraud or caused mistake
base their action upon these flaws of the contract.
Article 1399: When the defect of the contract consists in the incapacity of one of the parties, the incapacitated
person is not obliged to make any restitution except insofar as he has been benefited by the price or thing received
by him.
Article 1489: (refer above)
Article 194, Family Code: Support comprises everything indispensable for sustenance, dwelling, clothing,
medical attendance, education and transportation in keeping with the financial capacity of the family.
The education of the person to be supported referred to in the preceding paragraph shall include his schooling or training
for some profession, trade or vocation, even beyond the age of majority. Transportation shall include expenses in going
to and from school, or to and from place of work.
“Necessaries”: indispensable for support according to the social position of the family.
b. Relative Incapacity
Articles 1490: Husband and wife cannot sell property to each other, except
1. When separation of property was agreed upon in marriage settlements

2. When there has been judicial separation of property under Art 191
REASON FOR THE RULE
• Prevent commission of fraud or prejudice to third persons

• Prevent one from unduly influencing the other
• Avoid indirect donations
Article 1492: The prohibitions in the two preceding articles are applicable to sales in:
1. Legal redemption
2. Compromises
3. Renunciations
Article 73, Family Code: Either spouse may exercise any legitimate profession, occupation, business or activity without
the consent of the other. The latter may object only on a valid, serious and moral grounds.
In case of disagreement, the court shall decided, WON:
1. Objection is proper
2. Benefit has accrued to the family prior to the objection (resulting obligation shall be enforced against
the separate property of the spouse who has not obtained consent) or thereafter.
Foregoing provisions shall not prejudice the rights of creditors who acted in good faith.
Article 96, Family Code: The administration and enjoyment of the community property shall belong to both spouses
jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for
proper remedy, which must be availed of within five years from the date of the contract implementing such decision.
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In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common
properties, the other spouse may assume sole powers of administration. These powers do not include disposition or
encumbrance without authority of the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed
as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either
or both offerors.
Prohibition can be taken advantage of only by persons who bear such a relationship to the spouses making the transfer or to the
property itself that such transfer interferes with their rights or interest.
c. Specific Incapacity
Article 1491: The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another: [GAEP-JS]
(1) The guardian, the property of the person or persons who may be under his guardianship;
o Actual collusion is hard to prove between purchaser and guardian, but such fact can be deduced from the
very short time between the two sales and the relationship between them.
(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent
of the principal has been given;
o Incapacity to buy rests on the fact that greed might get the better of the sentiments of loyalty and
disinterestedness which should animate an administrator or agent.
o A broker does not come within the prohibition because he is a mere go-between or middleman between the
seller and the buyer, bringing them together to make the contract themselves.
(3) Executors and administrators, the property of the estate under administration;
o But an executor can buy the hereditary rights of an heir to the estate under his administration (Naval v
Enriquez)
(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any
government-owned or controlled corporation, or institution, the administration of which has been entrusted
to them; this provision shall apply to judges and government experts who, in any manner whatsoever,
take part in the sale;
o Intended not only to move remove any occasion for fraud but also to surround them with the prestige
necessary to carry out their functions by freeing them from all suspicion which although unfounded, tends
to discredit the institution by putting into question the honor of said functionaries.
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers
and employees connected with the administration of justice, the property and rights in litigation or
levied upon an execution before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any litigation in which they
may take part by virtue of their profession.
o Law intends to avoid improper interference by a judge in a thing levied upon or sold by his order (Gan
Tingco v Pabinquit).
o Incapacity of SC or CA Justice extends to properties or rights in litigation in their territorial jurisdiction.
o CFI Judge can buy properties in litigation pending outside his territorial jurisdiction.
o Prohibition likewise extends to properties levied upon an execution before the court within whose territorial
jurisdiction they exercise their respective functions.
o As to lawyers: curtail any undue influence of the lawyer on his client on account of their confidential
association.
o Violation of this prohibition also constitutes a breach of professional ethics.
o No prohibition if client assigns to the lawyer after the judgment has been rendered and became final.
Contingent fee of lawyer maybe annotated as an adverse claim on property awarded to client.
(6) Any others specially disqualified by law.
• Such contracts made in violation of this provision are void for public policy. They cannot be ratified neither can the
right to set up the defense of illegality be waived.
• REASON FOR THE RULE:
1. The persons occupy fiduciary relationship with the owner of properties mentioned
2. Prevent them from being tempted to take advantage of their position
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Mercado and Mercado vs The courts have laid down the rule that the sale of real property made by minors who have
Espiritu already passed the ages of puberty and adolescence and are near the adult age when they
pretend to have already reached their majority, while in fact they have not, is valid, and they
cannot be permitted afterwards to excuse themselves from compliance with the obligaiton
assumed by them or to seek their annulment. This doctrine is entirely in accord with the
provisions of the Rules of Court (Rule 131, Sec. 1) and the principle of estoppel.
Sia Suan vs Alcantara The ruling in Mercado case is affirmed.
To bind a minor who represents himself to be of legal age, it is not necessary for his vendee
to actually part with cash, as long as the contract is supported by a valid consideration. Since
appellee's conveyance to the appellants was admittedly for and in virtue of a pre-existing
indebtedness (unquestionably a valid consideration), it should produce its full force and effect
in the absence of any other vice that may legally invalidate the same. It is not here claimed
that the deed of sale is null and void on any ground other than the appellee's minority.
Appellee's contract has become fully efficacious as a contract executed by parties with full
legal capacity.
The circumstance that, about one month after the date of the conveyance, the appellee
informed the appellants of his minority, is of no moment, because appellee's previous
misrepresentation had already estopped him from disavowing the contract. Said belated
information merely leads to the inference that the appellants in fact did not know that the
appellee was a minor on the date of the contract, and somewhat emphasizes appellee's had
faith, when it is borne in mind that no sooner had he given said information than he ratified
his deed of sale upon receiving from the appellants the sum of P500.
Uy Sui Pin vs Cantollas The sale from Uy Siu Pin to his wife Chua Hue is null and void not only because the former
had no right to dispose of the land in controversy in view of the existence of the contract but
because such sale comes within the prohibition of article 1458 of the Civil Code.
Maharlika Pub. Co. vs It is a policy of the law that public officers who hold positions of trust may not bid directly or
Tagle indirectly to acquire prop properties foreclosed by their offices and sold at public auction.
Article XIII, Section 1 of our Constitution states that: Public office is a public trust. Public
officers and employees shall serve with the highest degree of responsibility, integrity, loyalty
and efficiency, and shall remain accountable to the people.
A Division Chief of the GSIS is not an ordinary employee without influence or authority. The
mere fact that he exercises ample authority with respect to a particular activity, i.e.,
retirement, shows that his influence cannot be lightly regarded.
The point is that he is a public officer and his wife acts for and in his name in any transaction
with the GSIS. If he is allowed to participate in the public bidding of properties foreclosed or
confiscated by the GSIS, there will always be the suspicion among other bidders and the
general public that the insider official had access to information and connections with his
fellow GSIS officials as to allow him to eventually acquire the property. It is precisely the need
to forestall such suspicions and to restore confidence in the public service that the Civil Code
now declares such transactions to be void from the beginning and not merely voidable. The
reasons are grounded on public order and public policy. Assuming the transaction to be fair
and not tainted with irregularity, it is still looked upon with disfavor because it places the
officer in a position which might become antagonistic to his public duty.
Bautista vs Montilla
Rubias vs Batiller The purchase by a lawyer of the property in litigation from his client is categorically
prohibited by Article 1491, paragraph (5) of the Philippine Civil Code, and that consequently,
plaintiff's purchase of the property in litigation from his client (assuming that his client could
sell the same since his client's claim to the property was defeated and rejected) was void and
could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which
provides that contracts "expressly prohibited or declared void by law are inexistent” and that
"these contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived."
Fornilda vs RTC The fact that the property in question was first mortgaged by the client to his lawyer and
only subsequently acquired by the latter in a foreclosure sale long after the termination of the
case will not remove it from the scope of the prohibition for at the time the mortgage was
executed the relationship of lawyer and client still existed, the very relation of trust and
confidence sought to be protected by the prohibition, when a lawyer occupies a vantage
position to press upon or dictate terms to a harassed client. To rule otherwise would be to
countenance indirectly what cannot be done directly.
Director of Lands vs Article 1491 prohibits only the sale or assignment between the lawyer and his client, of
Abada property which is the subject of litigation.The prohibition in said article applies only to a sale
or assignment to the lawyer by his client of the property which is the subject of litigation. In
other words, for the prohibition to operate, the sale of the property must take place during the
pendency of the litigation involving the property.
A contract for a contingent fee is not covered by Article 1491 because the tranfer or
assignment of the property in litigation takes effect only after the finality of a favorable
judgment. In the instant case, the attorney's fees of Atty. Fernandez, consisting of one-half
(1/2) of whatever Maximo Abarquez might recover from his share in the lots in question, is
contingent upon the success of the appeal. Hence, the payment of the attorney's fees, that is,
the transfer or assignment of one-half (1/2) of the property in litigation will take place only if
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the appeal prospers. Therefore, the tranfer actually takes effect after the finality of a favorable
judgment rendered on appeal and not during the pendency of the litigation involving the
property in question. Consequently, the contract for a contingent fee is not covered by Article
1491.
Krivenko vs Register of Aliens are disqualified to purchase agricultural lands (1987 Consitution, Art. XII, Secs. 3 and
Deeds 7). Our lands form part of our heritage thus we should preserve them. We need to nationalize
them otherwise foreigners might end up owning them which would make a mockery out of our
independence. They can lease lands if they wish or if they really want to own land, they can
always acquire Filipino citizenship.
Sarsosa vda. de Barsobia Where a land is sold to an alien who later sold it to a naturalized Filipino, the sale to the
vs Cuenco latter cannot be impugned. In such case, there would be no no more public policy to be served
in allowing the FIlipino seller of his heirs to recover the land as the same is already owned by
a qualified person.
Herrera vs Luy Kim Guan Where a land is sold to an alien who later sold it to a Filipino, the sale to the latter cannot be
impugned. In such case, there would be no no more public policy to be served in allowing the
FIlipino seller of his heirs to recover the land as the same is already owned by a qualified
person.
Vicente Godinez vs Fong Prescription may never be invoked to defend that which the Constitution prohibits. However,
Pak Luen where a land is sold to an alien who later sold it to a Filipino, the sale to the latter cannot be
impugned. In such case, there would be no no more public policy to be served in allowing the
FIlipino seller of his heirs to recover the land as the same is already owned by a qualified
person
Jacobus Bernard Hulst vs Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, foreign
PR Builders, Inc. nationals can own Philippine real estate through the purchase of condominium units or
townhouses constituted under the Condominium principle with Condominium Certificates of
Title. It expressly allows foreigners to acquire condominium units and shares in condominium
corporations up to not more than 40% of the total and outstanding capital stock of a Filipino-
owned or controlled corporation. Under this set up, the ownership of the land is legally
separated from the unit itself. The land is owned by a Condominium Corporation and the unit
owner is simply a member in this Condominium Corporation. As long as 60% of the members
of this Condominium Corporation are Filipino, the remaining members can be foreigners.
* ELEMENTS OF A CONTRACT OF SALE
* CONSENT
-See Perfection Stage
A contract of sale is perfected by mere consent. (Art. 1475)
Consent = meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. (Art.
1319)
ELEMENTS OF CONSENT:
1. Subjects / Contracting parties
2. Concurrence of offer and acceptance (Arts. 1319 - 1326)
3. Legal Capacity of the Contracting parties (Arts. 1327 – 1329)
4. The consent must be intelligent, free and spontaneous (Arts. 1330 – 1336)
* SUBJECT MATTER
ELEMENTS OF SUBJECT MATTER

1. It must be existing, future, or subject to resolutory condition. (It must be at least a “possible” subject matter)
2. It must be licit.
3. It must be determinate or determinable.
POSSIBLE THING -
EMPTIO SPEI – sale of a mere hope or expectancy (e.g. sale of a sweepstake ticket for P100 where the buyer purchases
the ticket with the hope that upon the draw the ticket would win him a million pesos. The object of sale here is not the prize,
but rather the ticket or the chance to win)
EMPTIO REI SPERATAE – sale of a thing with potential existence, subject to a suspensive condition that the thing will
come into existence. If the subject matter does not come into existence, the contract is deemed extinguished as soon as the
time expires or if it has become indubitable that the event will not take place. (e.g. sale of pending crops)
LICIT –
A thing is licit and may be the object of a contract when it is not outside the commerce of men, and all rights which are not
intransmissible.
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Examples of void sale due to being illicit:

- Sale of animals suffering from contagious diseases (Art. 1575)
- Sale of animals if the use or service for which they are acquired has been stated in the contract, and they are found to
be unfit therefor (Art. 1575)
- Sale of future inheritance. (Art. 1347)
DETERMINATE OR AT LEAST DETERMINABLE

(Art. 1460) A thing is determinate when it is particularly designated or physically segregated from all others of the same
class.
A thing is determinable (and this satisfies the requirement that the thing be determinate as per Art. 1458) when the
following concur:
(a) If at the time the contract is entered into, the thing is capable of being made determinate; and
(b) Without the necessity of a new or further agreement between the parties.
Martin vs Reyes Property or goods which at the time of the sale are not owned by the seller but which
thereafter are to be acquired by him, cannot be the subject of an executed sale but may
be the subject of a contract for the future sale and delivery thereof, even though the
acquisition of the goods depends upon a contingency which may or may not happen. In
such case, the vendor assumes the risk of acquiring the title and making the conveyance,
or responding in damages for the vendee's loss of his bargain.
Melizza vs City of The requirement of the law that a sale must have for its object a determinate thing, is
Iloilo fulfilled as long as, at the time the contract is entered into, the object of the sale is
capable of being made determinate without the necessity of a new or further agreement
between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific
mention of some of the lots plus the statement that the lots object of the sale are the ones
needed for city hall site; avenues and parks, according to the Arellano plan, sufficiently
provides a basis, as of the time of the execution of the contract, for rendering determinate
said lots without the need of a new and further agreement of the parties.
Appellant however fails to consider that the area needed under that plan for city hall site
was then already known; it could be determined which, and how much of the portions of
land contiguous to those specifically named, were needed for the construction of the city
hall site.
National Grains The object of the contract, being the palay grains produced in Soriano's farmland and
Authority vs IAC the NFA was to pay the same depending upon its quality. The fact that the exact number
of cavans of palay to be delivered has not been determined does not affect the perfection
of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the
quantity is not determinate shall not be an obstacle to the existence of the contract,
provided it is possible to determine the same, without the need of a new contract between
the parties." In this case, there was no need for NFA and Soriano to enter into a new
contract to determine the exact number of cavans of palay to be sold. Soriano can deliver
so much of his produce as long as it does not exceed 2,640 cavans.
Pichel vs Alonzo A valid sale may be made of "the wine a vine is expected to produce; or the grain a field
may grow in a given time; or the milk a cow may yield during the coming year; or the
wool that shall thereafter grow upon a sheep; or what may be taken at the next cast of a
fisherman's net; or the goodwill of a trade, or the like. The thing sold, however, must be
specific and identified. They must be also owned by the vendor at the time.
Domingo Realty vs The object of a contract, in order to be considered as "certain," need not specify such
CA object with absolute certainty. It is enough that the object is determinable in order for it to
be considered as "certain."
-In the instant case, the title over the subject property contains a technical description
that provides the metes and bounds of the property of petitioners. Such technical
description is the final determinant of the extent of the property of petitioners. Thus, the
area of petitioners’ property is determinable based on the technical descriptions contained
in the TCTs.
*Art. 1459 provides that the seller must have the right to transfer the ownership at the time the thing is delivered. Hence, it
is not required that the seller is the owner of the thing at the moment of the perfection of the contract of sale.
GEN. RULE: The owner need not be the owner of the thing at the time of perfection.
EXCEPTION: Conchita Nool vs CA and Cavite Development Bank vs Lim
Cavite Development In the case at bar, a contract of sale was perfected. The sum of P30,000.00,
Bank, et al vs Cyrus although denominated in the offer to purchase as "option money," is actually in the
Lim, et al. nature of earnest money or down payment when considered with the other terms of
the offer. Contracts are not defined by the parties thereto but by principles of law. In
determining the nature of a contract, the courts are not bound by the name or title
given to it by the contracting parties.
- However, a legal obstacle has rendered it impossible in the case at bar, to perform
its obligation. The sale to Lim of the property mortgaged by Rodolfo is deemed a
nullity for CDB never acquired a valid title to the property because the foreclosure
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sale, in which CDB has been awarded the property is also a nullity since the
mortgagor is not the real owner of the said property.
Conchita Nool vs CA Article 1505 of the Civil Code provides that "where goods are sold by a person who
is not the owner thereof, and who does not sell them under authority or with consent
of the owner, the buyer acquires no better title to the goods than the seller had,
unless the owner of the goods is by his conduct precluded from denying the seller's
authority to sell." Here, there is no allegation at all that petitioners were authorized
by DBP to sell the property to the private respondents. Jurisprudence, on the other
hand, teaches us that "a person can sell only what he owns or is authorized to sell;
the buyer can as a consequence acquire no more than what the seller can legally
transfer." As petitioners "sold" nothing, it follows that they can also "repurchase"
nothing. In this light, the contract of repurchase is also inoperative — and by the
same analogy, void.
1. A brought B to the place where A’s property is located. A told B that the size of his land is as big as far as B’s eyes can
see. A offered to sell this land to B for P500k. B accepted the offer. Is there a perfected contract?
Yes. The subject matter is determinable or capable of being made determinate without the need for a new or further
agreement between A and B.
2. In 1911, the sale of alcoholic drinks to members of the non-Christian tribes is prohibited. During that time, A sold B (a
member of the non-Christian tribe) an alcoholic drink. In 1912, Congress passed a law decriminalizing the sale of
alcoholic drinks to members of non-Christian tribes. Is the sale between A and B valid?
No. The contract of sale is still void for being illegal. The validity of the contract is determined as of the time it is
perfected.
3. A sold B a very old lottery ticket (dated 1965). Is the sale valid?
It is void as it is a sale of vain hope. However, if the lottery ticket is a collector’s item, there is a valid sale.
* PRICE
Why should the price be certain?
What is the meaning of “or its equivalent”?

This means that there is certainty as to the price but what is given as payment is an object (e.g. P50k worth of Maggi
noodles)
Simulated price vs Simulated contract?
• Article 1249 is applicable only to negotiable instruments issued by a person other than the debtor. (?) {See Diory’s codal for
comments}
ELEMENTS OF PRICE
1. Real (not simulated)
2. Certain or Ascertainable
3. In money or its equivalent
4. Manner of payment must be agreed upon
1. A offered to sell his parcel of land to B. B accepted the offer. However, there is no agreement as to the price. A
appointed C to fix the price. C fixed the price at P500k. Is there a perfected contract?
No, there is none. There must be an agreement as to the price.
2.
* STAGES IN THE LIFE OF A CONTRACT OF SALE
* NEGOTIATION STAGE (OPTION CONTRACT, RIGHT OF FIRST REFUSAL)
What is an option contract?

Option Contract vs Contract of Sale?
Is an option contract necessary to have a perfected contract of sale?
Can there be an option contract without a consideration?
Option Contract vs Right of First Refusal?
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Option Contract vs Earnest Money?
1. On 1 June 2009, A offered to sell a parcel of land to B for P500k. B was given a period to accept the offer (up to 1 July
2009). B said he will give the consideration on 30 August 2009. Rule the case.
2009). On 2 July 2009, B accepted the offer. Rule the case.
2009). On 2 June 2009, B accepted the offer. Rule the case.
2009). On 2 June 2009, B accepted the offer. However, on 3 June 2009, A said that he is no longer interested in selling
the land. Rule the case.
2009). On 2 June 2009, A wanted to withdraw the offer, but he was unable to communicate the withdrawal to B. B
accepted the offer on 3 June 2009. Rule the case.
2009). They further agreed that should B give P5k, A will not withdraw the offer prior to the expiration of the period
given to B. On 2 June 2009, B offered to A the P5k consideration. A, however, said that he would not accept the P5k as
he is willing to enter into an option contract with B even without the payment of P5k. Rule the case.
Jurisprudential Doctrines:
Southwestern Sugar and When an option is not supported by a separate consideration, it is

Molasses Co. vs Atlantic void and can be withdrawn notwithstanding the acceptance made
Gulf & Pacific Co. (1955) previously by the offeree.
Atkins Kroll & Co. vs Cua Upon accepting the offer, a bilateral promise to sell and to buy
Hien Tek (1958) ensues; the buyer assumes ipso facto the obligations of a purchaser,
and not merely the right subsequently to buy or not to buy. The
concurrence of both acts – the offer and the acceptance – generates a
binding contract of sale.
Navarro vs Sugar A consideration in an option to buy is essential for a perfection of a
Producers, Inc. (1961) contract. In the case at bar, the sale lacks the most essential element-
the manner of payment of the purchase price, therefore there was no
complete meeting of the minds of the parties necessary for the
perfection of a contract of sale. Consequently, defendant was justified
in withdrawing its offer to sell the molasses in question.
Sanchez vs Rigos (1972) If acceptance is made before withdrawal, it constitutes a binding
contract of sale allthough the option is given without consideration.
Before acceptance, the offer may be withdrawn as a matter of right.
Be that as it may, the offerer cannot revoke, before the period has
expired, in an arbitrary manner the offer without being liable for
damages which the offeree may suffer under Article 19 f the Civil
Code.
This view has the advantage of avoiding a conflict between Article
1324 and Article 1479, in line with the cardinal rule of statutory
construction that, in construing different provisions of one and the
same law or code, such interpretation should be favored as will
reconcile or hamonize said provisions and avoid a conflict between the
same. The decision in Soutwestern case considers Article 1479 as an
exception to Article 1324, and exceptions are not favored unless the
intention to the contrary is clear, and it is not so insofar as said two
articles are concerned.
(The doctrine laid down in the Atkins case is reaffirmed, and, insofar
as inconsistent therewith, the view adhered to in Southwestern case
should be deemed abandoned or modified.)
Rural Bank of Paranaque The commitment by a bank to resell a property within a specified
vs CA (1985) period, although accepted by the party in whose favor it was made,
was considered an option not supported by a consideration. Lacking
such consideration, the option was held void pursuant to
Southwestern Sugar and Molasses Co. case.
Natino vs IAC (1991) Citing Rural Bank of Paranaque, Inc. case, the Supreme Court held
that the promise made by the President of a bank to allow the
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petitioners to buy (or to re-sell them) the foreclosed property (not

redeemed since the offer took place after the expiration of the
redemption period) at any time they have money is not binding on the
bank because it was a promise unsupported by a consideration distinct
from the re-purchase price.
Ang Yu Asuncion vs CA Rules where a period is given to the offeree within which to accept:
(1994) 1. If the period itself is not founded upon or supported by a
separate consideration, the offerer is still free and has the right
to withdraw the offer before its acceptance, or if an acceptance
has been made, before the offeror’s coming to know of such
fact, by communicating that withdrawal to the offeree. (this is in
accordance with Sanchez doctrine)
2. The right to withdraw, however, must not be exercised
whimsically or arbitrarily; otherwise, it could give rise to a
damage claim under Article 19 of the Civil Code.
3. If the period has a separate consideration, a contract of option
is deemed perfected, and it would be a breach of that contract
to withdraw the offer during the agreed period.
4. The option, however, is an independent contract by itself, and it
is to be distinguished from the projected main agreement
(subject matter of the option) which is obviously yet to be
concluded. If, in fact, the optioner-offeror wwithdraws the offer
before its acceptance (exercise of option) by the optionee-
offeree, the latter may not sue for specific performance on the
proposed contract (object of the option) since it has failed to
reach its own stage of perfection. The optioner-offeror,
however, renders himself liable for damages for breach of the
option.
5. In these cases, care should bo taken of the real nature of the
consideration given, for if in fact, it has been intended to be part
of the consideration for the main contract with a right of
withdrawal on the part of the optionee, the main contract could
be deemed perfected; a similar instance would be an earnest
money in contract of sale that can evidence its perfection.
Nietes vs CA (1972) Notice of the exercise of the option need not be coupled with actual
payment of the price, so long as this is delivered to the owner of the
property upon performance of his part of the agreement.
* PERFECTION STAGE (OFFER AND ACCEPTANCE)
A contract of sale is perfected by mere consent. (Art. 1475)
Consent = meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. (Art.
1319)
ELEMENTS OF CONSENT:
5. Subjects / Contracting parties
6. Concurrence of offer and acceptance (Arts. 1319 - 1326)
7. Legal Capacity of the Contracting parties (Arts. 1327 – 1329)
8. The consent must be intelligent, free and spontaneous (Arts. 1330 – 1336)
ELEMENTS OF OFFER:
1. Complete
2. Definite as to the certainty of price and identity of the object
3. Intentional
Mirror Image theory – The person making the offer may fix time, place, and manner of acceptance, all of which must be
complied with. (Art. 1321)
Cognition theory – the offer is deemed accepted when the acceptance has come to the knowledge of the offeror.
*Form of offer
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Article 1319: Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain, and the acceptance absolute. A qualified acceptance
constitutes a counter-offer.
Article 1325: Unless it appears otherwise, business advertisements are of things for sale are not definite offers,
but mere invitation to make an offer.
Article 1326: Advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound
to accept the highest or lowest bidders unless the contrary appears.
* Form of acceptance
Article 1319: Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain, and the acceptance absolute. A qualified acceptance
constitutes a counter-offer.
Acceptance must be plain and unconditional. Any condition necessarily involves a new proposal, which must be accepted by
the other party to give rise to a binding agreement. Acceptance must be in accordance with the terms and conditions of the
offer to effectively bind the offeror.
*The object need not be owned by the seller at the time of perfection. It is sufficient that the seller has the right to transfer
the ownership of the object at the time of delivery.
EXCEPTION to this rule: CDB vs Lim and Nool vs CA
Cavite In the case at bar, a contract of sale was perfected. The sum of
Development Bank, P30,000.00, although denominated in the offer to purchase as "option
et al vs Cyrus Lim, money," is actually in the nature of earnest money or down payment when
et al. considered with the other terms of the offer. Contracts are not defined by the
parties thereto but by principles of law. In determining the nature of a
contract, the courts are not bound by the name or title given to it by the
contracting parties.
- However, a legal obstacle has rendered it impossible in the case at bar, to
perform its obligation. The sale to Lim of the property mortgaged by Rodolfo
is deemed a nullity for CDB never acquired a valid title to the property
because the foreclosure sale, in which CDB has been awarded the property is
also a nullity since the mortgagor is not the real owner of the said property.
Conchita Nool vs CA Article 1505 of the Civil Code provides that "where goods are sold by a
person who is not the owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer acquires no better title to
the goods than the seller had, unless the owner of the goods is by his conduct
precluded from denying the seller's authority to sell." Here, there is no
allegation at all that petitioners were authorized by DBP to sell the property to
the private respondents. Jurisprudence, on the other hand, teaches us that "a
person can sell only what he owns or is authorized to sell; the buyer can as a
consequence acquire no more than what the seller can legally transfer." As
petitioners "sold" nothing, it follows that they can also "repurchase" nothing.
In this light, the contract of repurchase is also inoperative — and by the same
analogy, void.
1. A offered to transfer the ownership of and deliver a piano to B for P5k. B accepted the offer. However, before
delivery by A and payment by B, A sold the piano to C. Rule the case.
2. A offered to sell a bag of shabu to B for P500k. B accepted the offer. Is there a perfected contract of sale?
3. A (15 years old) bought a kilo of rice from B for P35. Is the sale perfected?
4. A owns Lot 1. B, a stranger to A, sold Lot 1 to C. Is the sale between B and C perfected?
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5. A wanted to sell his only car for P500k. He advertised this in a newspaper. B read the advertisement, and thereafter
went to A to purchase the car. A, however, told B that he is no longer interested in selling the car. Can B compel A
to sell the car?
6. B offered to sell a parcel of land to A, and told the latter that the acceptance should be made only on the 3rd day
after the offer was communicated. Furthermore, B said that the acceptance of the offer should be sent through fax.
A was very much interested to buy the land, so he sent B an e-mail message on the 3rd day after the offer was
communicated, informing B that he is accepting the offer. Was there a perfected contract of sale?
*CONSUMMATION STAGE
EXTINGUISHMENT OF OBLIGATIONS
Obligations are extinguished:
1. by payment or performance
2. by loss of the thing due
3. by condonation or remission
4. by confusion or merger of the rights of creditor and debtor
5. by compensation
6. by novation
Other causes of extinguishment of obligations, such as annulment, rescission, fulfillment of a resolutory condition, and
prescription, are governed elsewhere in this Code.
*For purposes of extinguishing an obligation, payment and performance of the obligation are the same. (Arts. 1232 and
1233)
* Question: In a contract of sale, is delivery of the property the only means to transfer ownership? See Article 1434
(Estoppel: the seller is not the owner of the thing)
EFFECT OF ESTOPPEL
Hypothetical Question: A owns Lot 1. B, a stranger to A, sold Lot 1 to C. Thereafter, B was able to purchase Lot 1 from A.
Who has the better right to Lot 1? (Stated differently, who owns Lot 1?)
(Art. 1434) When a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or grantor
acquires title thereto, such title passes by operation of law to the buyer or grantee.
* FORMATION OF CONTRACTS
* Article 1483: Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale
may be made:
1. In writing
2. Word of mouth
3. Partly in writing and partly by word of mouth
4. May be inferred from the conduct of parties
*If notary public is not authorized – deed of sale of land is still valid because public instrument is not even essential for the
validity of the sale (Sorfano v Latono)
*The only purpose of the Statute of Frauds is to prove the existence of contracts. It cannot be made to apply to contracts
which are not executory.
* Can there be a reformation of an oral contract of sale?

An oral contract of sale cannot be reformed.
* Electronic Commerce Act
Section 7, Republic Act No. 8792, Electronic Commerce Act: Legal Recognition of Electronic Documents. – Electronic documents
shall have the legal effect, validity or enforceability as any other document or legal writing, and -
(a) Where the law requires a document to be in writing, that requirement is met by an electronic document if the said
electronic document maintains its integrity and reliability and can be authenticated so as to be usable for subsequent
reference, in that -
(i) The electronic document has remained complete and unaltered, apart from the addition of any
endorsement and any authorized change, or any change which arises in the normal course of
communication, storage and display; and
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(ii) The electronic document is reliable in the light of the purpose for which it was generated and in the light of
all the relevant circumstances.
(b) Paragraph (a) applies whether the requirement therein is in the form of an obligation or whether the law simply provides
consequences for the document not being presented or retained in its original form.
(c) Where the law requires that a document be presented or retained in its original form, that requirement is met by an
electronic document if -
(i) There exists a reliable assurance as to the integrity of the document from the time when it was first
generated in its final form; and
(ii) That document is capable of being displayed to the person to whom it is to be presented: Provided, That no
provision of this Act shall apply to vary any and all requirements of existing laws on formalities required in
the execution of documents for their validity.
For evidentiary purposes, an electronic document shall be the functional equivalent of a written document under existing laws.
This Act does not modify any statutory rule relating to the admissibility of electronic data messages or electronic documents,
except the rules relating to authentication and best evidence.
Section 8, Republic Act No. 8792, Electronic Commerce Act Legal Recognition of Electronic Signatures. - An electronic signature
on the electronic document shall be equivalent to the signature of a person on a written document if that signature is proved by
showing that a prescribed procedure, not alterable by the parties interested in the electronic document, existed under which -
(a) A method is used to identify the party sought to be bound and to indicate said party’s access to the electronic document
necessary for his consent or approval through the electronic signature;
(b) Said method is reliable and appropriate for the purpose for which the electronic document was generated or
communicated, in the light of all the circumstances, including any relevant agreement;
(c) It is necessary for the party sought to be bound, in order to proceed further with the transaction, to have executed or
provided the electronic signature; and
(d) The other party is authorized and enabled to verify the electronic signature and to make the decision to proceed with the
transaction authenticated by the same.
Section 11, Republic Act No. 8792, Electronic Commerce Act Authentication of Electronic Data Messages and Electronic
Documents. - Until the Supreme Court by appropriate rules shall have so provided, electronic documents, electronic data
messages and electronic signatures, shall be authenticated by demonstrating, substantiating and validating a claimed identity of
a user, device, or another entity in an information or communication system, among other ways, as follows:
(a) The electronic signature shall be authenticated by proof that a letter, character, number or other symbol in electronic
form representing the persons named in and attached to or logically associated with an electronic data message,
electronic document, or that the appropriate methodology or security procedures, when applicable, were employed or
adopted by a person and executed or adopted by such person, with the intention of authenticating or approving an
electronic data message or electronic document;
(b) The electronic data message and electronic document shall be authenticated by proof that an appropriate security
procedure, when applicable was adopted and employed for the purpose of verifying the originator of an electronic data
message and/or electronic document, or in detecting error or alteration in the communication, content or storage of an
electronic document or electronic data message from a specific point, which, using algorithm or codes, identifying words
or numbers, encryptions, answers back or acknowledgment procedures, or similar security devices.
The Supreme Court may adopt such other authentication procedures, including the use of electronic notarization
systems as necessary and advisable, as well as the certificate of authentication on printed or hard copies of the
electronic document or electronic data messages by electronic notaries, service providers and other duly recognized or
appointed certification authorities.
The person seeking to introduce an electronic data message and electronic document in any legal proceeding has the
burden of proving its authenticity by evidence capable of supporting a finding that the electronic data message and
electronic document is what the person claims it to be.
In the absence of evidence to the contrary, the integrity of the information and communication system in which an electronic
data message or electronic document is recorded or stored may be established in any legal proceeding -
(a) By evidence that at all material times the information and communication system or other similar
device was operating in a manner that did not affect the integrity of the electronic data message
and/or electronic document, and there are no other reasonable grounds to doubt the integrity of
the information and communication system;
(b) By showing that the electronic data message and/or electronic document was recorded or stored
by a party to the proceedings who is adverse in interest to the party using it; or
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(c) By showing that the electronic data message and/or electronic document was recorded or stored
in the usual and ordinary course of business by a person who is not a party to the proceedings
and who did not act under the control of the party using the record.
1. A entered into a contract of sale with B where the former engages to sell a parcel of land for P500k. Is the contract
valid?
The contract is valid but unenforceable. See Art. 1403 (2) (e).
1.1 May the contracting parties compel each other to observe the form?
Yes. See Arts. 1357 and 1406.
2. A entered into a contract of sale with B where the former engages to sell a parcel of land for P500k. B already paid 500k
but A refused to deliver the land arguing that the contract they entered into is unenforceable.
A’s argument is untenable. The Statute of Frauds is applicable only to executory contracts.
3. A owns a parcel of land. B is an agent of A. B sold A’s land to C. What is the status of the contract?
The contract is void, absent any written document giving B the authority to sell A’s land. See Regina Dizon vs CA.
Regina Dizon vs CA Article 1874 of the Civil Code is explicit that: "When a sale of a
piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall
be void."
4. A owes B P500k. To defraud B, A sold his only property to C, who was in good faith. What are the remedies available to
B?
See Article 1177.
5. A entered into a contract of sale with B where the former engages to sell a parcel of land for P500k. There is no written
note or memorandum to prove the contract but the offer and acceptance were made through e-mail. Is the contract
valid and enforceable?
Yes. The Electronic Commerce Act (RA 8792) is applicable.
5.1. If the offer and acceptance were made through SMS, is the contract still valid and enforceable?
I think so.
6. A entered into a contract of sale with B where the former engages to sell a parcel of land for P500k. When the suit was
brought to the court to assail the enforceability of the contract, one party (A), failed to object to the presentation of
evidence aliunde made by B. Is the contract valid?
Yes. See Article 1405.
7. A entered into a contract of sale with B where the former engages to sell a parcel of land for $500k. B was mistaken to
believe that the price is P500k. Is there a perfected contract? If in the affirmative, is the sale valid? Can the contract be
reformed?
* LEGALITY OF SALE
Article 1409: the following contracts are inexistent and void from the beginning
(1) Whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy
(2) Those which are absolutely simulated or fictitious
(3) Those whose cause or object did not exist at the time of the transaction
(4) Those whose object is outside the commerce of men
(5) Those which contemplate an impossible service
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained
(7) Those whose expressly prohibited or declared void by the law
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
Article 1411: when the nullity proceeds from the illegality of the cause or object of the contract and the act constitutes a
criminal offense, both parties being in pari delicto, they shall have no action against each other and both shall be prosecuted.
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Moreover, the provisions of the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable to the
things or the price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim what he has given and
shall not be bound to comply with his promise.
IN PARI DELICTO RULE (for illegal cause or object)
1. BOTH are in pari delicto

 No action against each other
 BOTH will be prosecuted
 RPC provision relative to the disposal of effects/instruments of a crime shall apply
2. ONLY ONE is guilty
 INNOCENT PARTY may claim what he has given
 INNOCENT PARTY not bound to comply with his promise
Article 1416: When the agreement is not illegal per se but is merely prohibited, and the prohibition is designed for the protection
of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered.
Article XII, Section 2, 1987 Constitution: All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development,
and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake
such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as
may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and
reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish
farming, with priority to subsistence fishermen and fish- workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In
such agreements, the State shall promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its
execution.
Article XII, Section 3, 1987 Constitution: Lands of the public domain are classified into agricultural, forest or timber, mineral
lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which
they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or
associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the
Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase,
homestead, or grant.
Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian
reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or
leased and the conditions therefor.
Article XII, Section 7, 1987 Constitution : Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.
Article XII, Section 8, 1987 Constitution: Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.
* OBLIGATIONS OF A VENDOR
1. Deliver the thing and transfer its ownership to the vendee
2. Preservation of the thing (Article 1163)
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3. Deliver the fruits and accessories (Arts. 1164, 1166, 1495, 1537)
4. Make Warranties
5. Taking-out Insurance Coverage (Art. 1523)
*DELIVERY
- the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.
- See Arts. 1477, 1496, 1497
- The vendor must have the right to transfer the ownership of the thing at the time it is delivered (Art 1459)
Reason for this rule: NEMO DAT QUOD NON HABET (He who does not own the thing cannot dispose of the same)
Philippine Suburban The Court held that in the absence of an express stipulation to the
Development Corp. vs contrary, the payment of the purchase price of the goods is not a condition
Auditor General precedent to the transfer of title to the buyer, but title passes by the
delivery.
Balatbat vs CA Devoid of any stipulation that "ownership in the thing shall not pass to
the purchaser until he has fully paid the price", ownership in thing shall
pass from the vendor to the vendee upon actual or constructive delivery of
the thing sold even if the purchase price has not yet been fully paid. The
failure of the buyer has not yet been fully paid. The failure of the buyer to
make good the price does not, in law, cause the ownership to revest to the
seller unless the bilateral contract of sale is first rescinded or resolved
pursuant to Article 1191 of the New Civil Code. Non-payment only creates a
right to demand the fulfillment of the obligation or to rescind the contract.
* REQUISITES OF DELIVERY (3 I’s)

1. Identity
2. Integrity
Consing vs CA SC recognized the right of a buyer in a subdivision land to compel the seller to
complete the roads and other facilities of the subdivision, even when nothing to
that effect is stipulated in the contract of sale. A seller’s duty is to deliver the
thing sold in a condition suitable for its enjoyment by the buyer for the purposes
contemplated… and a proper access to a residence is essential to its enjoyment.
The seller cannot shift to the buyer the burden of providing for an access to and
from the subdivision, and when the seller has so defaulted in such obligation, the
buyer should be entitled to a proportionate reduction in her purchase price of the
two lots.
3. Intention
Abuan vs Garcia The critical factor in all different modes of effecting delivery, which gives legal
effect to the act, is the actual intention of the seller to deliver, and its
acceptance by the buyer. Without that intention, there is no tradition
Quijada vs CA In all forms of delivery, it is necessary that the act of delivery, whether
constructive or actual, should be coupled with the intention of delivering the
thing. The act, without the intention, is insufficient. The critical factor in the
different modes of effecting delivery which gives legal effect to the act, is the
actual intention of the vendor to deliver, and its acceptance by the vendee.
Without that intention, there is no tradition.
The Supreme Court recognized that the sale of a land previously donated by
the seller to a local government unit under a resolutory condition, was a valid
sale even though at the time of sale, ownership in the property was still with
the local government. However, when the resolutory condition did occur which
effectively reverted ownership back to the seller, under Article 1434 the seller’s
title passes by operation of law to the buyer. The Court expressly recognized
that the rule under Article 1434 of the Civil Code applies not only to sale of
goods, but also to other kinds of property, including real property.
1. A and B entered into a contract of sale whereby A engages to sell his watch at P1k to B. Because B was so excited
to have the watch, he stole the same from A. Three days later, he sold the same to C. Was there already a delivery
of the watch to B?
There was no delivery. Delivery must be intentional.
2. A and B are friends. They entered into an agreement whereby A would deliver and transfer the ownership of a gold
bar to B in exchange of P500k. Instead of delivering a gold bar, A delivered a silver bar. Rule the case.
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A’s obligation to B as to the delivery of the gold bar still subsists as there was no delivery of the subject matter yet.
In order to effect the delivery, the very object of the contract of sale (gold bar) must be delivered (this pertains to
the identity).
* SALE OF GOODS BY DESCRIPTION OR BY SAMPLE
By SAMPLE –sale where a small quantity of a commodity is exhibited by the seller as a fair specimen of the bulk, which
is not present and as to which there is no opportunity to inspect or examine; goods must correspond with sample shown
By DESCRIPTION – sale where a seller sells a thing as being of a certain kind, and the buyer merely relies on the seller’s
representations or representations; goods must correspond with description
Where the goods delivered do not correspond with the description or sample or, as in the case of sale by description and
sample, the goods do not correspond with either the description or sample – the remedy is RESCISSION.
* 2 KINDS OF DELIVERY
1. ACTUAL – when the thing sold is placed in the control and possession of the vendee
2. CONSTRUCTIVE
a. Execution of public instrument (Article 1497)
Exception:
i. when there is stipulation to contrary, execution does not produce effect of delivery
ii. when at the time of execution of instrument, subject matter was not subject to control of the seller.
ii.i subject matter should be within control of seller; he should have capacity to deliver at the time of
execution of public instrument when he wants to effect actual delivery
Addison vs Felix and Tioco The Code imposes upon the vendor the obligation to
deliver the thing sold. The thing is considered to be delivered
when it is placed “in the hands and possession of the
vendee.” (Civ. Code, art. 1462.) It is true that the same
article declares that the execution of a public instrument is
equivalent to the delivery of the thing which is the object of
the contract, but, in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the
vendor shall have had such control over the thing sold that,
at the moment of the sale, its material delivery could have
been made. It is not enough to confer upon the purchaser
the ownership and the right of possession. The thing sold
must be placed in his control. When there is no impediment
whatever to prevent the thing sold passing into the tenancy
of the purchaser by the sole will of the vendor, symbolic
delivery through the execution of a public instrument is
sufficient. But if, notwithstanding the execution of the
instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or
through another in his name, because such tenancy and
enjoyment are opposed by the interposition of another will,
then fiction yields to reality — the delivery has not been
effected.
ii.ii such capacity should subsist for a reasonable time after execution of instrument (reasonable time
depends on circumstances of persons, places & things)
Vda. De Sarmiento vs Lesaca Although it is postulated that the execution of a public

document is equivalent to delivery, this legal fiction only
holds true when there is no impediment that may prevent
the passing of the property from the hands of the vendor
into those of the vendee.
Since tradition is an obligation on the part of the seller,
then the burden must continue to lie with the seller to grant
the buyer reasonable period to take possession of the
subject matter.
Effect when these 2 requisites do not concur: no constructive delivery; no compliance on part of SELLER to
deliver
b. Traditio constitutum possessorium – at the time of perfection, the seller held possession of the subject
matter in the concept of owner, and pursuant to the contract, the seller continues to hold physical
possession thereof as lessee or other form of possession other than the concept of owner. (Art. 1500)
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c. Traditio brevi manu – opposite of constitutum possessorium; Before contract of sale, the would be buyer
was already in possession of the would be subject matter of sale (ex: as lessee) (Art. 1499)
d. Traditio longa manu –Delivery of thing by mere agreement; when SELLER points to the property without
need of actually delivering (Art. 1499)
e. Symbolic delivery – with regard to movable delivery, delivery may be effected by the delivery of the keys
of the place or depository where it is stored or kept. (Art. 1498)
f. Delivery through carrier (will be discussed later)
g. Delivery by negotiable document of title (will be discussed later)
h. Delivery of incorporeal property (will be discussed later)
1. A entered into a contract of pledge with B where A is about to give his car to B in exchange of P500k loan. The
document is duly notarized. Is the delivery of the car to B equivalent to transfer of ownership?
No. The transfer of ownership through delivery is applicable only to a contract of sale.
2. A and B entered into a contract whereby A engages to deliver his car to B, and B to pay a price therefor in the
amount of P50k. They executed a public instrument. Was there a delivery of the car?
Yes. The rule is applicable to both immovable and movable properties.
3. A sold B a parcel of land. They executed a public instrument. However, B lost his copy of the instrument. Was there
a delivery of the land?
Yes. Mere execution of the public instrument constitutes delivery.
4. A sold B a parcel of land at P500k. There is no written agreement, but B took possession of the land after their
agreement. When B died, his heir, C, took possession of the land. A contended that he is still the owner of the land
as there was no delivery of the land to B, and that the contract was unenforceable pursuant to the statute of frauds.
Rule the case.
A’s contention is untenable. Being the heir of B, C is now the owner of the land. The statute of frauds is not
applicable because this is not an executory contract. Likewise, there is no need to execute a public instrument to
effect delivery as there was already an actual delivery of the land when B took possession of the land.
Presumption of Good Faith

Tablante vs Aquino The placing of the titles of ownership in the possession of the vendee or the use
which he may make of his right with the consent of the vendor shall be considered
as a delivery.
Any person who is aware that there is in his title or in the manner of acquiring it
any flaw invalidating the same shall be considered a possessor in good faith. Good
faith is always presumed, and any person alleging bad faith on the part of the
possessor is obliged to prove it.
Possession of the Thing / Physical Presence in the Property bought

Gonzales vs Haberer The execution of the public instrument, without actual delivery of the thing,
transfers the ownership from the vendor to the vendee, who may thereafter exercise
the rights of an owner over the same. In the instant case, vendor Roque delivered
the owner's certificate of title to herein private respondent. It is not necessary that
vendee be physically present at every square inch of the land bought by him,
possession of the public instrument of the land is sufficient to accord him the rights
of ownership.
Execution Sale and Notice of Sale in Mortgage Foreclosure Sale

Flores vs Lim A purchaser of real property at an ordinary execution sale is not entitled to
possession at an ordinary execution rents and profits until after the period of
redemption has expired and the legal title to the land had become vested in him.
Gonzales vs
The effective conveyance of the land is accomplished by the deed which is issued
Calimbas
only after the period of redemption has expired.
- The certificate of sale issued to the purchaser at an auction sale is intended to
be a mere memorandum of the purchase. It does not transfer the property but
merely identifies the purchaser and the property, states the price and the date when
the right of redemption expires. The effective conveyance is made by the deed of
absolute sale executed after the expiration of the period of redemption.
Tambunting vs CA failure to advertise a mortgage foreclosure sale in compliance with statutory
requirements constitutes a jurisdictional defect invalidating the sale and that a
substantial error or omission in a notice of sale will render the notice insufficient and
vitiate the sale.
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Non-payment of Purchase Price

EDCA Publishing vs Non-payment of the purchase price by the impostor, although amounting to fraud,
Santos did not amount to unlawful deprivation under Article 559, but merely may be
considered vitiation of consent as to make the contract voidable; but that so long as
the contract has not been annulled, it remained valid, and the subsequent sale and
delivery by the impostor of the books to Santos effectively transferred ownership to
Santos.
Other cases
Bean vs Cadwaller Actual manual delivery of an article sold is not essential to the passing of the title
thereto (art 1450, Civil Code) unless made so by the terms of the contract or by an
understanding of the parties. The parties to the contract may agree when and on
what conditions the property in the subject of the contract was passed to the
prospective owner.
In the present case the parties agreed that the delivery of the logs should be
made alongside a vessel of the defendant. That was done by the plaintiff. The vessel
of the defendant was sent to the point of delivery and the said defendant attempted
to load on said vessel the logs delivered along its side by the plaintiff. It is a rule
well established that a mere contract for the sale of goods, where nothing remains
to be done by the seller before making delivery, transfers the right of property,
although the price has not been paid, nor the thing sold actually delivered to the
purchaser.
Sps. Pingol vs CA The distinction between a contract of sale and a contract to sell is important for in
a contract of sale, the title passes to the vendee upon the delivery of the thing sold,
whereas in a contract to sell, by agreement, ownership is reserved in the vendor and
is not to pass until the full payment of the price. In a contract of sale, the vendor
has lost and cannot recover ownership until and unless the contract is resolved or
rescinded, whereas in a contract to sell, title is retained by the vendor until the full
payment of the price, such payment being a positive suspensive condition, failure of
which is not a breach but an event that prevented the obligation of the vendor to
convey title from becoming
effective.
Bucton vs Gabar By the delivery of the possession of the land, the sale was consummated and title
was transferred to the appellee, that the action is actually not for specific
performance, since all it seeks is to quiet title, to remove the cloud cast upon
appellee's ownership as a result of appellant's refusal to recognize the sale made by
his predecessor, and that as plaintiff-appellee is in possession of the land, the action
is imprescriptible.
DELIVERY THROUGH CARRIER

* Is there an instance where the goods are delivered to a third person and yet delivery to the buyer is effected? YES, in
case of delivery to carrier.
General Rule: When the seller is authorized or required to send goods to the buyer (in pursuance of a contract), delivery
to carrier (whether named by the buyer or not) is delivery to buyer.
Exceptions:
1. FAS (Free Along Side)
-the seller pays all charges and is subject to risk until the goods are placed alongside the vessel.
2. FOB (Free on Board)
- the seller shall bear all expenses until the goods are delivered according as to whether the goods are to be
delivered “F.O.B.” at the point of shipment or at the point of destination determines the time when property passes.
3. CIF (Cost, Insurance, Freight)
- under an arrangement “C.I.F. Pacific Coast (destination), the vendor is to pay not only the coast of the goods, but
also the freight and insurance expenses, and, as it was judicially interpreted, this is taken to indicate that the
delivery is to be made at the port of destination.
4. Article 1503, first, second and third paragraphs (where the ownership is retained by the seller)
(a) Where goods are shipped and by the bill of lading the goods are deliverable to the seller or his agent, or to
the order of seller or agent
(b) Where goods are shipped and by the bill of lading the goods are deliverable to the order of the buyer or his
agent but the possession of the bill of lading is retained by the seller or his agent
(c) Where the seller of goods draws on the buyer for the price and transmits the bill of lading and bill of
exchange to the buyer to secure acceptance or payment of the bill of exchange, and the buyer does not
honor the bill of exchange [Here, the drawer is the seller and the drawee is the buyer. If the buyer does
not honor the bill of exchange, he shall return the bill of lading. If he retains the same, he acquires no
added right thereby.]
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* Without the bill of lading, or that the bill of lading is not deliverable to bearer or to the buyer or his order,
the buyer does not acquire the direct obligation of the bailee to hold the goods for him.
DELIVERY THROUGH NEGOTIABLE DOCUMENTS OF TITLE
Document of Title, defined

Document of title to goods includes any bill of lading, dock warrant, quedan or warehouse receipt or order for the
delivery of goods, or any other document used in the ordinary course of business in the sale or transfer of goods, as
proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the document
to transfer or receive, either by indorsement or by delivery, goods represented by such document. (Article 1636)
Negotiable Document of Title, defined

A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the order
of any person named in such document (Art. 1507)
Siy Cong Bieng Warehouse receipt represents the goods, but the intrusting of the receipt is more than
vs Hongkong & the mere delivery of the goods; it is a representation that the one to whom the
Shanghai bank possession of the receipt has been so entrusted has the title to the goods.
Bill of Lading – a document that serves as evidence of receipt of goods for shipment issued by a common carrier
Warehouse Receipt – a document of title which is issued by a warehouseman
Quedan – a warehouse receipt that covers sugar
Dock warrant – a warrant given by dock-owners to the owner of merchandise imported and warehoused on the dock
upon the faith of the bills of lading, as a recognition of his title to the goods
How Negotiated (Arts. 1508-1509)
Who can Negotiate (Art. 1512)
Effects of Negotiation (Art. 1513)
Unauthorized Negotiation (Art. 1518)

As between the owner of a negotiable document of title who indorsed it in blank and entrusted it to a friend, and the
holder of such negotiable document of title to whom it was negotiated in good faith and for value, the latter is preferred,
under the principle that as between two innocent persons, he who made the loss possible should bear the loss.
Non-Negotiable Documents of Title

How transferred or assigned (Art. 1514)
Effects of transfer (Art. 1514)
Negotiable Instrument vs Negotiable Document of Title

NEGOTIABLE INSTRUMENT NEGOTIABLE DOCUMENT OF TITLE
Operates as a substitute for money (to facilitate goods)
- operates as proof of the possession or control of
the goods, or
- authorizing or purporting to authorize the
possessor of the document to transfer or receive,
either by indorsement or by delivery, goods
represented by such document.
Governed by the Negotiable Instruments Law Governed by the Civil Code, and in some cases, by
the Warehouse Receipt Law and Code of Commerce
A bearer instrument is always a bearer instrument The special indorsement of a bearer instrument has
even if a special indorsement is made the effect of converting the bearer instrument into
an order instrument
If words “non-negotiable” or the like are placed on
the document which contains that it should be
delivered to the bearer, such document may
nevertheless be negotiated by the holder
1. A executed and gave B a negotiable document of title payable to the order of B. B negotiated the same through
indorsement and delivery to C. C, in turn, negotiated it to D, and D to E. Meanwhile, X, A’s creditor was able to
obtain a favorable judgment allowing for the attachment of the document of title in question. May X attach the
document of title to satisfy A’s indebtedness?
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2. A executed and gave B a negotiable document of title. B forged the document and indorsed the same to C. Who has
the title, A or C?
RESERVATION OF OWNERSHIP DESPITE DELIVERY

1. When there is an express reservation (Art. 1478)
2. Sale on Acceptance
- Ownership passes to the buyer only when:
(a) He signifies his approval or acceptance to the seller or does any act adopting the transaction; or
(b) he does not signify his approval or acceptance but retains the goods without giving notice of rejection, then if a
time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on
the expiration of a reasonable time.
[In “Sale or Return” ownership passes to the buyer on delivery but he may revest the ownership in the seller by
returning the goods within the time fixed in the contract, or if there is no time fixed, within a reasonable time]
3. Article 1503, first, second and third paragraphs
(a) Where goods are shipped and by the bill of lading the goods are deliverable to the seller or his agent, or to
the order of seller or agent
(b) Where goods are shipped and by the bill of lading the goods are deliverable to the order of the buyer or his
agent but the possession of the bill of lading is retained by the seller or his agent
(c) Where the seller of goods draws on the buyer for the price and transmits the bill of lading and bill of
exchange to the buyer to secure acceptance or payment of the bill of exchange, and the buyer does not
honor the bill of exchange [Here, the drawer is the seller and the drawee is the buyer. If the buyer does
not honor the bill of exchange, he shall return the bill of lading. If he retains the same, he acquires no
added right thereby.]
COMPLETENESS OF DELIVERY
* MOVABLES (Article 1522)

Where, in relation to what is contracted to sell, the quantity of goods delivered is –
 LESS
- Buyer has 2 options:
(a) Reject the goods
(b) Accept them
[When the acceptance is with knowledge that the seller is not going to perform the contract = buyer
shall pay at contract rate;
When knowledge is after the acceptance and consummation or disposal of the goods = buyer is not
liable for more than the fair value to him of the goods delivered]
 LARGER
(a) Accept per contract and reject the rest
(b) Accept the whole and pat at contract rate
(c) If indivisible, reject the whole
 MIXED WITH GOODS OF DIFFERENT DESCRIPTION

(a) Accept the goods which are in accordance with the contract and reject the rest
(b) If indivisible, reject the goods entirely
* IMMOVABLES (Article 1522)
 SOLD PER UNIT OR NUMBER (Art. 1539 - 1540)

- With statement of area at the rate of a certain price for a unit or measure or number
- If the vendee should demand, the vendor shall deliver ALL that may have been stated in the contract.
- If what is delivered is:
 LESS IN AREA / OF INFERIOR/DIFFERENT QUALITY =
(a) Rescission if lack in area is not less than 1/10 (or 1/10 +) of area agreed upon
(b) Proportional reduction of price
 GREATER IN AREA
(a) Accept per stipulation and reject the rest
(b) Accept the whole and pay at contract rate
[Articles 1539 and 1540 are not applicable to judicial sales (Art. 1541)
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 SOLD FOR LUMP SUM (Art. 1542)

- a cuerpo cierto / por precio alzado
- Where price per unit is not indicated
 GREATER / LESSER
-No adjustment of price
TIME AND PLACE OF DELIVERY (Art. 1521 in relation to Art. 1251)
TIME = at a reasonable hour (question of fact)
PLACE
1. Stipulation of the parties; or
2. Seller’s place of business if he has one; or
3. Seller’s residence; or
4. In case of sale of specific goods, in the place where the thing is.
[Q] Who bears the expenses of delivery?
SALE BY NON-OWNER OF GOODS (Art. 1505 in relation to Art. 559)

- As aforementioned, the seller need not have the title to the goods at the time of perfection of the contract. However,
he must have the title at the time of delivery.
- GENERAL RULE: In a sale by the non-owner, the buyer acquires no better title to the goods than the seller had (he
merely steps into the shoes of the seller)
EXCEPTIONS (in which case the true owner cannot recover the thing):
1. Estoppel or when the owner is precluded, by his own conduct, from denying the seller’s authority to sell (apply Art.
1438 by analogy)
2. PD 1529 (Recording Laws; Torrens Title
- even when the sale is void, the general rule that the direct result of a previous void contract cannot be valid is
inapplicable when it will directly contravene the Torrens system of registration. The Court cannot disregard such
rights and order the cancellation of the certificate, since the effect of such outright cancellation will be to impair
public confidence in the certificate of title.
3. Statutory power of sale or under the order of a court of competent jurisdiction
4. Sale in merchant’s store, or in fairs, or markets (Arts. 85 – 86, Code of Commerce)
- to allow recovery would retard commerce
Application of Article 559

Art. 559 provides for the right of recovery of the real owner of the movable property
- If the real/previous owner of a movable property has lost it or is unlawfully deprived of it, he may recover it from the
person who possesses the same without reimbursement, notwithstanding the good faith of the latter.
- If, however, the person who possesses the movable property has acquired the same in good faith at a public sale, the
owner has to reimburse him in order to recover the property.
Public Sale is defined as one where there has been a public notice of sale in which anyone is allowed to bid for the object
he desires to buy.
The exceptions to right to recover and exceptions to the rule that the buyer in a sale by non-owner does not acquire a
better title to the property than the seller had are just the same.
Art. 1505 in relation to rules on Co-ownership

a. co-owner sells whole property prior to partition – sale of property itself is void but
valid as to his spiritual share
b. co-owner sells definite portion to partition – sale is void as to other co-owner but
valid as to his spiritual share if the buyer would have still bought such spiritual share had he known that the definite
portion sold would not be acquired by him.
- Exceptions to (b):
i. Subject matter is indivisible
ii. Sale of definite portion is with consent of other co-owners
iii. co-owner sells 1 of 2 commonly-owned lands & does not turn over ½ of the proceeds, other co-owner, by
law & equity, has exclusive claim over remaining land.
SALE WITH A VOIDABLE TITLE
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As aforementioned, the seller need not have the title to the goods at the time of perfection of the contract. However, he
must have the title at the time of delivery.
If title has not been avoided, buyer acquires good title if he acquires them -
(a) in good faith;
(b) for value; and
(c) without notice of the seller’s defect of title
HYPOTHETICAL QUESTIONS (1505 and 1506):
1. A owns a Rolex watch. B stole A’s watch, and sold the same to C. C does not know that the watch was stolen and he
bought the same from B for value. May A recover the watch from C?
Yes. He may recovery it without the need of reimbursing C. See Art. 559.
2. A owns a Rolex watch. B stole A’s watch, and sold the same to C. C knows that the watch was stolen and he bought
the same from B for value. May A recover the watch from C?
Yes. The requirement that the possessor or the purchaser of the movable thing must be in good faith does not
pertain to the right of the owner to recover the property but to the doctrine of irrevindicability (that the possession
of movable property is equivalent to title). If A has the right to recover even if C is in good faith, it is but logical to
give A the right to recover the property from a possessor in bad faith. Likewise, it may be said that B may be held
criminally liable for violating the Anti-Fencing Law.
3. Given the same facts as Question #2 only that B sold the watch at a public sale, where C, the highest bidder, was
the one who was able to purchase the price. C, however, knows that the watch was stolen. If A has the right to
recover as stated in #2, should he reimburse C in recovering the watch?
No. Art. 559 implies that a possessor in bad faith (in this case, C) has no right to be reimbursed. But A may still
recover the property.
4. A owns a Rolex watch. B stole A’s watch, and pawned the same to Villarica Pawnshop. For failure to pay the loan,
VIllarica Pawnshop sold the watch at a public auction. C was the one who bought the watch. Rule the case.
A may recover the watch from C. He must, however, reimburse C as C obtained the watch from a public sale.
5. A owns a Rolex watch. B stole A’s watch, and sold the same to C, a merchant’s store. D, who does not know that
the watch was stolen, bought the same from C. May A recover the watch from D?
No. In this case, Article 1505 is applicable. To allow A to recover would retard commerce.
6. A owns a Rolex watch. B stole A’s watch, and sold the same to C, a merchant’s store. D, in bad faith, purchased the
watch from C. May A recover the watch from D?
No. Article 1505 does not require that the purchaser or buyer in a sale by non-owner must be in good faith.
7. A owns a Rolex watch. B stole A’s watch, and sold the same to C, a seller of “bagoong.” D saw the watch from the
bagoong-seller while he was buying a “bagoong.” Without knowing that the watch was stolen, he offered to buy the
same from C. C accepted the offer. Thereafter, D bought the watch from C for P5k. May A recover the watch from
D?
Yes. The sale is not made in a merchant’s store, or in fairs, or markets.
8. If D (referring to Question #6) purchased the same from a fish stall in a public market, may A still recover?
9. A owns a Rolex watch. B stole A’s watch, and sold the same to C. C sold the same at E-bay. D, in good faith, bought
the watch. May A recover the watch from D?
Yes. He must, however, reimburse D as a sale in E-bay may be considered a public sale.
10. A entered into a contract of sale with B where A engages to deliver 100 sacks of corn for P100k. Before delivery, A
became insane. A delivered the sacks of corn to B while A is insane. May the guardian of A recover the goods
delivered to B?
No. The delivery was void pursuant to Article 1239, which provides that “payment made by one who does not have
the free disposal of the thing due and capacity to alienate it shall not be valid.” However, Article 1427 provides that
in payment by incapacitated such as this one, there shall be no right to recover the goods from the oblige who has
spent them or consumed them in good faith.
* LOSS OF THE THING DUE

WHO BEARS RISK OF LOSS/DETERIORATION/FRUITS
Before perfection
• Res perit domino
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• Seller still owns the thing because there is no delivery or transfer of ownership yet; hence, seller bears the risk of
loss
At Perfection
• Contract is merely inefficacious because loss of the subject matter does not affect the validity of the sale
• Seller cannot anymore comply with obligation so buyer cannot anymore be compelled
After Perfection but before delivery

a. Loss – confused state
2 views:
Justices Paras & Vitug / Padilla (as well as Atty. Casino) : BUYER bears the risk of loss [Res perit creditori]
- Art. 1504, which embodies res perit domino, only covers goods.
- The obligation of the obligor (seller, in a contract of sale) is extinguished in applying Art. 1262.
- the obligation to pay on the part of the buyer is not extinguished (as he is not the obligor)
Tolentino / Jurado / Baviera / Villanueva : SELLER bears the risk of loss [Res perit domino]
- in reciprocal obligations, the extinguishment of the obligation due to loss of the thing affects both debtor and creditor;
the entire juridical relation is extinguished.
b. Deterioration & fruits - Buyer bears loss (Article 1189)
After delivery
• The buyer is the owner; hence, buyer bears risk of loss
Roman vs The facts clearly show that not contract of sale had been perfected between the
Grimalt parties, and therefore the loss of the vessel must be borne by its owner and not by a
party who only intended to purchase it.
Jose De Leon Except as to quality and quantity, the first of which is itself generic, the contract
vs Asuncion sets no bounds or limits to the palay to be paid, nor was there even any stipulation
Soriano that the cereal was to be the produce of any particular land. Any palay of the quality
stipulated regardless of origin on however acquired (lawfully) would be obligatory on
the part of the obligee to receive and would discharge the obligation. It seems
therefore plain that the alleged failure of crops through alleged fortuitous cause did
not excuse performance.
Union Motor The general rule is that after perfection but before delivery, the risk of loss is borne
Corp. vs CA by the seller under the rule of res perit domino.
Lawyer’s The ownership of the books purchased on installment were retained by the seller,
Cooperative although they have already been delivered to the buyer, under the condition that
Publishing ownership thereof will be transferred to the buyer upon his full payment of the
Company vs purchase price, it was held that despite the loss of the books in a fire, the risk of loss
Tabora would be borne by the buyer although he was not the owner yet, not only because
such was agreed merely to secure the performance by the buyer of his obligation, but
also because in the very contract itself, it was agreed that loss or damage to the
books after delivery to the buyer shall be borne by the buyer.
Yu Tek Co vs Gonzales (seller), who received payment, delivered no part of sugar promised.
Gonzales When a suit was brought against him for failure to deliver, he interposed the defense
of force majeure (there was a storm). SC held that he was still liable because no
specific lot of sugar was segregated and specifically designated to make the subject
matter of the contract determinate or specific; sugar being generic, there was no risk
of it being lost.
Bunge Corp. It appearing that the obligation of appellants is to deliver copra in a generic sense,
vs Camenforte this obligation cannot be deemed extinguished by the destruction or disappearance of
the copra they had already stored in Samar. Their obligation subsists as long as that
commodity is available. A generic obligation is not extinguished by the loss of a thing
belonging to a particular genus. Genus nunquam pereat.
* DOUBLE SALES
General Rule: FIRST IN TIME, PRIORITY IN RIGHT (PRIMUS TEMPORE, POTIOR JURE)
Application of the general rule: when not all requisites embodied in Art. 1544 concur
SPECIAL RULE: ART. 1544
* REQUISITES
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1. exactly same subject matter

2. exactly same immediate seller
3. buyers represent conflicting interest
4. both sales are valid
* RULES ACCORDING TO ART. 1544:
1. MOVABLE
• the owner is the one who is first to posses in good faith
2. IMMOVABLE
• First to register in good faith
• No inscription, first to possess in good faith
• No inscription & no possession in good faith – Person who presents oldest title in good faith
GOOD FAITH
- he who asserts the status of a purchaser if good faith and for value has the burden of proving such assertion. (legal
presumption of good faith cannot be invoked)
- one who buys property without notice that another person has a right or interest in such property
- one who has paid price before notice that another has claim or interest
• lis pendens – notice that subject matter is in litigation
• adverse claim – notice that somebody is claiming better right
POSSESSION
• Both actual or constructive
REGISTRATION
- any entry made in the books in the registry, including both registration in its ordinary and strict sense, and cancellation,
annotation, and even marginal notes. It is the entry made in the registry which records solemnly and permanently the right of
ownership and other real rights.
1. registered under Torrens system
• Art. 1544 applies
2. not registered under the Torrens system

• Art. 1544 does not apply
• Under Act No. 344, registration of documents affecting unregistered land is “without prejudice to a third party
with a better right.” The mere registration of a sale in one’s favor does not give him any right over the land if the vendor
was not anymore the owner of the land, having previously sold the same to somebody else, even if the earlier sale was
unrecorded.
3. if sale 1 occurs when land is not yet registered & sale 2 is done when land is already registered – apply FIRST IN TIME,
PRIORITY IN RIGHT
4. Registration by the first buyer under Act 3344 can have the effect of constructive notice to the second buyer that can defeat
his right as such buyer.
1. A, the owner of Lot 1, applied for registration of his title to the said lot. During the pendency of the application, he sold
Lot 1 to B. However, after the certificate of title was granted to him, he sold the lot to C, to whom a transfer certificate
of title was issued. Who owns the land, B or C?
C. To grant B the ownership over the said lot would directly contravene the Torrens system of registration. The Court
cannot order the cancellation of the certificate, since the effect of such outright cancellation will be to impair public
confidence in the certificate of title. Person dealing with registered land have the legal right to rely on the fact of the
Torrens certificate of title and to dispense with the need to inquire further except when the party concerned has actual
knowledge of facts and circumstances that would impel a reasonable cautious man to make such inquiry. (Naawan
Community Rural Bank vs CA)
2. A sold 100 sacks of corn to B through the execution of a public instrument. A day after, A sold the same goods to C, in
which case C was given the bill of lading to the goods. Who owns the sacks of corn?
It would seem that B is the owner because the execution of a public instrument operates as a transfer of the ownership
of the goods to him. However, C’s possession of the bill of lading gives him the right to the direct obligation of the bailee
to hold the goods in trust for him and give the goods to him upon his presentment of the bill of lading. (?)
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3. A sold a parcel of land to B through an oral contract of sale. When A died, his heir, X (who does not know of the sale
between A and B) sold the same land to C, who bought the land in good faith and for value. The sale of the land was
through the execution of public instrument. Who owns the land, B or C?
C. The requisite that there be one immediate seller has been complied with, notwithstanding that it is X who made the
second sale, because as A’s heir, X merely steps into the shoes of A. The decedent and his heir has only 1 personality,
as the heir’s ownership and possession of a property is merely a continuation of the ownership and possession of the
decedent. The public instrument executed by A and C gives C the oldest title to the property.
4. A, the owner of Lot 1, applied for registration of his title to the said lot. During the pendency of the application, he sold
Lot 1 to B, who immediately took possession of the land. However, after the certificate of title was granted to A, a levy
was made upon the land in favor of C. Who owns the land, B or C? (Compare with #1)
B. Section 35, Rule 39 of the Rules of Court (on execution sale) shall govern. The judgment creditor merely steps into
the shoes of the judgment debtor. Since the land was previously sold to the first buyer, the second buyer at the
execution sale actually bought nothing since the judgment debtor no longer had rights to the property previously sold.
(Dagupan Trading Co. vs Macam)
5. A, sold his unregistered land to B. Thereafter, he sold the same land to C where a public instrument was executed. The
sale was duly registered. Who owns the land?
B. Art. 1544 does not apply to sale of unregistered land. Under Act No. 3344 (now PD 1529), registration of documents
affecting unregistered land is “without prejudice to a third party with a better right.”
* WARRANTIES
Condition vs Warranty
CONDITION WARRANTY
Purports to existence of obligation Purports to performance of obligation
Condition must be stipulated to form part of the obligation Need not be stipulated; may form part of obligation by
provision of law
May attach itself to obligation of seller to deliver possession & Relates to the subject matter itself or to obligation of the seller
transfer ownership as to the subject matter of the sale
Warranty vs Promise (See Art. 2545)
Effect of Non-fulfillment of condition (Art. 1546)
Kinds of Warranty
1. Express Art. 1546
2. Implied Art. 1547
EXPRESS WARRANTY
- definition
- Requisites:
1. it must be an affirmation of fact or any promise by seller relating to the subject matter of sale
2. natural tendency of affirmation or promise is to induce buyer to purchase subject matter
3. buyer purchases the subject matter relying thereon
• when breached, seller is liable for damages
- Relate the following provisions:

Arts. 1340, 1341 and 1343(usual exaggerations in trade; mere expression of opinion; misrepresentation made in good
faith)
Arts. 1338 and 1344 (Causal and Incidental Fraud / Dolo Causante and Dolo Causante)
IMPLIED WARRANTIES
[There are 2 general classifications of implied warranty: (1) warranty against eviction; and (2) warranty against hidden
defects.]
* warranty that seller has a right to sell

• refers to consummation stage since in consummation stage, it is where ownership is transferred by tradition
• not applicable to sheriff, auctioneer, mortgagee, pledgee
* warranty against eviction

• implied, unless contrary provision appears in contract
• when ownership is transferred, buyer shall enjoy the legal and peaceful possession of the thing
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REQUISITES OF BREACH OF WARRANTY AGAINST EVICTION:

1. buyer is evicted in whole or in part from the subject matter of sale
2. there is a final judgement
3. basis of eviction is a right prior to sale or an act imputable to vendor
4. seller has been summoned in the suit for eviction at the instance of buyer; or made 3rd party defendant
through 3rd party complaint brought by buyer
• no appeal needed nor a need for buyer to resist eviction for right to accrue; it is enough that the
aforementioned requisites are complied with
• warranty cannot be enforced until aforementioned requisites concur
• applies to judicial sale; judgment debtor responsible for eviction unless otherwise decreed in judgment
• vendor not liable for eviction if adverse possession had been commenced before sale but prescriptive period is
completed after transfer
LIABILITY OF SELLER: (eviction w/c caused buyer to lose whole subject matter)
1. value of thing at time of eviction ( be it greater/lesser than price of sale )
2. value of income of fruits
3. costs of suit which caused the eviction
4. expenses of contract if buyer paid for them
5. damages & interests and ornamental expenses if sale was made in bad faith
RIGHTS OF BUYER WHEN DEPRIVED OF ONLY PART OF THE SUBJECT MATTER BUT WOULD NOT HAVE BOUGHT SUCH PART IF NOT IN RELATION FOR THE
WHOLE:
1. rescission
2. mutual restitution
1. A found a ring which he sold to B, honestly believing and representing to B that it was a diamond ring. In truth, the
ring was ordinary glass. Is there a breach of warranty?
No breach of warranty. A merely expressed an opinion. (Arts. 1341 on mere expression of opinion; and Art. 1343 on
misrepresentation made in good faith)
2. Advertisement: “the cigarette that will give you utmost smoking pleasure.” Is this a warranty?
No. Consequently, breach of the same is not breach of warranty. (Arts. 1340 on usual exaggerations on trade)
3. A sold to B a parcel of land which is claimed by C, who has been in possession of the property in the concept of
owner publicly and continuously for 30 years. Rule the case.
C is deemed to have acquired ownership over the land by prescription without need of title or good faith (apply Art.
1137). Hence, A shall be liable to be in case of eviction. (Art. 1550)
4. Same facts as #3, only that C was in adverse possession of the land for only 25 years at the time of sale, and the
prescriptive period is completed after the sale.
S shall not be liable to B in case of eviction as B could have brought action against C during the remaining 5 year
period to recover the property. (Art. 1550)
5. B purchased land from A after having been informed of prior right of another to purchase the same based on prior
occupancy. Is B entitled to the vendor’s warranty against eviction and damages under Art. 1555?
No. He had knowledge of facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor. (J.M Tuazon vs CA)
* WARRANTY AGAINST NON-APPARENT BURDEN OR SERVITUDES (ART. 1560)

-REQUISITES:
a. immovable sold is encumbered with non–apparent burden or servitude not mentioned in the agreement
b. nature of non–apparent servitude or burden is such that it must be presumed that the buyer would not have
acquired it had he been aware thereof
• When breach of warranty exist, buyer may ask for:

(a) rescission; or
(b) indemnity
• warranty not applicable when: [ARAK]
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(a) servitude is apparent

(b) non – apparent burden or servitude is recorded in the Registry of Property (EXCEPT when there is express warranty
that the thing is free from all burdens & encumbrances)
(c) the servitude is mentioned in the agreement
(d) vendee had knowledge of servitude
* PRESCRIPTION (Rescission): 1 year.

- after 1 year, only action for damages may be brought.
* WARRANTY AGAINST HIDDEN DEFECTS: (Art. 1561)

- When liability attaches, REQUISITES: [Art. 1561] – [HIS-NRW]
(a) the defect is hidden
HIDDEN – not known or could not have been known to the vendee;
- hidden to the eyes and cannot be discovered by ordinary careful inspection.
(b) the defect is serious or important such that –
(b.1) the hidden defect should render the subject matter UNFIT for the use for which it is intended; or
(b.2) the hidden defect should DIMINISH the thing’s FITNESS such that the BUYER WOULD NOT HAVE ACQUIRED IT
OR WOULD HAVE GIVEN A LOWER PRICE FOR IT HAD HE BEEN AWARE OF IT.
(c) the defect must exist at the time of sale
(d) vendee must give notice of the defect to the vendor within a reasonable time
(e) the action must be brought within a reasonable period
(f) there must be no waiver of warranty
- Vendor is not liable for:

(a) patent defects; or
(b) those that are not visible but should have been known by an expert by reason of his profession.
- KNOWLEDGE OF VENDOR, NOT IMPORTANT (CAVEAT VENDITOR or SELLER BEWARE): [1566, NCC]
GENERAL RULE: Seller or vendor is liable even though he is not aware of the hidden defect.
EXCEPTION: there is a stipulation to the contrary and the seller is not aware of it.
Rationale behind Caveat Venditor: a sound price warrants a sound article
- OBLIGATION of seller for breach of warranty:

* IF THERE WAS NO WAIVER OF WARRANTY: [Art. 1568]
- the thing is lost in consequence of hidden defects.
- When vendor is AWARE of the hidden defects:
(a) Bear the loss
(b) Return the price
(c) Refund the expenses of the contract
(d) Pay damages
- When vendor is NOT AWARE of the hidden defects:
(a) Bear the loss
(b) Return the price and interest
(c) Reimburse expenses of the contract
* IF THERE WAS A WAIVER OF THE WARRANTY: [Art. 1566, par. 2]
- When vendor is AWARE of the hidden defects:
- waiver is in bad faith; as a corollary, seller is still liable
- When vendor is NOT AWARE of the hidden defects:
- not liable
* IF THE DEFECTIVE THING IS LOST BY FORTUITOUS EVENT OR FAULT OF VENDEE: [Art. 1569, 2nd par.]
-the thing must be defective at the time of sale
- BUYER may DEMAND for:
Price paid minus value of the thing at the time it was lost
-the aforesaid formula represents the damage suffered and the benefits incurred by the buyer
- REMEDY OF BUYER in case of breach of warranty against hidden defect: [Art. 1567]
- buyer may choose any of the following:
(a) ACCION REDHIBITORIA (Redhibitory Action)
- withdrawing from the contract
- avoidance of the sale due to vice in the thing sold
(b) ACCION QUANTI MINORIS
- proportionate reduction of price
- APPLICABILITY TO JUDICIAL SALES (Art. 1570) – however, judgment debtor is not liable for damages for the reason
that he is merely compelled to sell his property.
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- PRESCRIPTIVE PERIOD: [Art. 1571]

- SIX MONTHS from delivery
COMPARATIVE TABLE OF PRESCRIPTIVE PERIODS RELATING TO WARRANTIES

and OTHER ACTIONS in case of breach
CONTRACT OF SALE with CONTRACT OF SALE with OTHER CONTRACT WARRANTY under RA
EXPRESS WARRANTY IMPLIED WARRANTY (in case of breach of 7394
contract itself)
(a) Follow (a) In case of
stipulation in the Warranty against (a) In case of (a) with
contract non-apparent RESCISSION, IMPLIED
(b) If there is no burden: 1 year apply Art. 1389 WARRANTY
stipulation, apply (Action for (general rule on AND EXPRESS
other provisions of Rescission) (Art. rescission): 4 WARRANTY:
the Civil Code, i.e. 1560) years of equal
(b) In case of (b) In case of any duration
In case of Warranty against other action
RESCISSION of hidden defect: 6 concerning the (b) with
contract, apply Art. months from written contract IMPLIED
1389 (general rule delivery (Both of sale, apply WARRANTY
on rescission): 4 Accion Redhibitoria Art. 1144 (general only (no
years and Accion Quanti rule on warranty card,
Minoris) (Art. 1571) prescription): 10 etc.): not less
In case of any years than 60 days
other action
(c) In case of
Warranty against nor more than
concerning the 1 year
written contract redhibitory defect
on animals: 40 following the
of sale, apply Art. sale of new
1144 (general rule days from delivery
(Art.1577) consumer
on prescription): products
10 years (d) In case the
disease which
caused the death
of the animal
existed at the time
of contract: 3 days
after purchase (Art.
1578)
* WARRANTY AGAINST REDHIBITORY DEFECTS ON ANIMALS:

- When considered redhibitory defect; REQUISITE (Arts. 1576 and 1578) [EVA]
(a) expert knowledge is not sufficient to discover it [1576, 1st par., NCC]; or
(b) The veterinarian failed to discover or disclose it through ignorance or bad faith [1576, 2nd par., NCC]; or
(c) the animal dies within three days: [Art. 1578]
- Instance where THERE IS NO WARRANTY: [Art. 1574]

- here, caveat emptor governs.
-sale of animals at public auction or fairs or of livestock as condemned (animals are not bought because of their quality
or capacity for work)
- Sale of 2 OR MORE ANIMALS: [Art. 1572]

GENERAL RULE: the defect of one will only give rise to its redhibition
EXCEPTION: when the buyer would not buy them if one is defective (or would not buy one without the other)
*The exception is PRESUMED when what is bought is a TEAM, YOKE, PAIR or SET (even if separate price has been fixed
for each one of the animals composing the same).
- REMEDY in case of sale of animals with redhibitory defects: [Arts. 1580 and 1577]
(a) Accion Redhibitoria
(b) Accion Quanti Minoris
- When SALE OF ANIMALS IS CONSIDERED VOID: [Art. 1575]

(a) sale of animals with CONTAGIOUS DISEASES
(b) Sale of UNFIT animals, i.e. the use or service for which the animals are acquired has been stated and they are found
to be unfit therefor.
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- LIABILITY OF BUYER IN CASE SALE OF ANIMAL IS RESCINDED

- animal shall be returned in the condition in which it was sold and delivered, the vendee being answerable for any
injury due to his negligence, and not arising from the redhibitory fault or defect.
* IMPLIED WARRANTIES ON SALE OF GOODS / IMPLIED WARRANTY OF QUALITY:
QUALITY – state or condition (as to promote high standard in business)
- When implied warranty exists; REQUISITES: [Art. 1562, NCC]

(a) Buyer makes known to the seller the particular purpose (expressly or by implication) for which goods are acquired
and the buyer relied on seller’s skills or judgment. (There is here WARRANTY FOR FITNESS FOR A PARTICULAR
PURPOSE)
(b) Sale by Description. (There is here WARRANTY THAT THE THING IS OF MERCHANTABLE QUALITY)
- warranty that goods are reasonably fit for general purpose
- MERCHANTABLE QUALITY – requires identity with what is described or what is tendered (synonyms: saleable,
average quality)
* Art. 1481 provides for rescission in case where the bulk of the goods delivered do not correspond with the sample or
description.
QUESTION / INQUIRY: If the vendee does not inform seller of the purpose, is there still warranty?
ANSWER: Yes, in the following cases:
- Long and continuous contract
- Numerous contract involving same parties and same subject matter entered into on a regular basis
- Annexed by usage of trade (Art. 1564)
- SALE OF SPECIFIED ARTICLE UNDER PATENT OR TRADE NAME (Art. 1563)

- there is NO WARRANTY AS TO FITNESS FOR PARTICULAR PURPOSE
(the buyer relied on his own judgment)
- SALE OF GOODS BY SAMPLE: [Art. 1565, NCC].

- There is a WARRANTY THAT THE THING IS OF MERCHANTABLE QUALITY (the same with sale by description)
- Buyer’s REMEDIES in Case of Breach of Warranties in Sale of Goods: [1599, NCC]

(a) accept or keep the goods and set up breach of warranty by way of recoupment in diminution or extinction of price
(b) accept or keep and set up action for damages
(c) refuse to accept and set up action for damages
(d) rescind the contract
* IMPLIED WARRANTIES FOR CONSUMER GOODS: (RA 7394)

CONSUMER PRODUCTS – primarily for personal, family, household or agricultural purposes (e.g. food, drugs, cosmetics and
devices)
- Retailer is subsidiarily liable
- DURATION of WARRANTY:
- with IMPLIED WARRANTY AND EXPRESS WARRANTY:
- of equal duration
- with IMPLIED WARRANTY only (no warranty card, etc.):
- not less than 60 days nor more than 1 year following the sale of new consumer products
- REMEDY in case of breach:

- in case of EXPRESS WARRANTY:
(a) repair of goods (prescription: 30 days, but may be extended)
(b) refund of purchase price
- in case of IMPLIED WARRANTY:
(a) retain the goods and recover damages
(b) reject the goods, cancel the contract, and recover damages.
Albert Bryan vs Thomas The evidence shows that where this kind of lumber is used and is thoroughly
Handkins and J. seasoned, with proper care and treatment, the life of a boat will be from ten to
Biaglowski twelve years, but where palosapis lumber used is green and is painted and
covered with coal tar, its life is very short, and it is very apparent that the
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lumber used here was green and that even at the time of the sale the vessel
had but little actual value. The defendants knew or should have known of the
quality of the lumber used in the construction of the vessel. The plaintiff did
not, and its actual condition could not be determined without a physical
inspection. In other words, the defects in the lumber and material used in the
construction of the vessel were hidden and concealed and unknown to the
plaintiff until the official inspection.
Gochanco vs Dean It was not proven that the declaration made by the defendant in the contract of
exchange was made fraudulently. It does not appear in the record that the
defendant deliberately violated the truth in stating his belief that there were
such a number of coconut trees on said lands. Furthermore, it was shown that
the plaintiff viewed the lands and himself estimated that there were there
more than six thousand coconut trees.
Mccullough vs Aenle There is no evidence to show that any representations as to the quality of the
tobacco were made to the plaintiff by the defendant prior to the contract of
August 27, nor that there was any agreement prior to that time as to an
exhibition of samples nor that the plaintiff prior to that time made any
examination or inquiry as to the quality of the tobacco. The fact is that the
plaintiff in order to get the building had to buy the factory and everything that
went with it. He saw himself obliged to take all the tobacco which the
defendant had, no matter what its quality was. The plaintiff bound himself by
the contract of August 27 to take all the tobacco which the defendant then had
and pay therefor the prices that the company had paid. He could relieve
himself from this obligation only by showing either that the tobacco in the
inventory was not owned by the defendant on August 27 or that the prices
stated therein were not the prices which the defendant paid for it. He
undertook to do neither of these things, and his action must fail. The fact that
an article is of one grade or quality instead of another does not constitute a
hidden defect within the meaning of that article.
Note that the sole purpose of the inventory was to ascertain what the total
purchase price was. If it correctly gave the number of bales and the price paid
therefor by the appellant, according to the invoices, it was a sufficient
compliance with the contract. The fact that the tobacco was described as of
one class instead of another would be unimportant. The appellee did not
purchase by class or quality, but by quantity.
Chang Yong Tek vs In the case at bar, The ONLY defense presented by the defendant was that the
Santos tobacco delivered by the plaintiff was not of good quality. The defendant
admits that she had sold the tobacco in question. The record does not disclose
when the defendant sold the tobacco in question.
In the absence of an express warranty, a vendor or merchandise only warrants:
First. The legal and peaceable possession of the thing sold; and
Second. That there are no hidden faults or defects therein. (Art. 1474, Old Civil
Code.)
It not being proven that the plaintiff made any warranty or any
misrepresentations with reference to the quality of the tobacco in question,
and it having been proven that the defendant had an opportunity to and did
examine the tobacco in question at the time of purchase and not having made
any objection whatever until after a lapse of more than three years and not
then until after an action had been brought, and making no objection whatever
as to the price agreed upon, nor as to the quantity of the tobacco delivered, in
our opinion she should be held liable for the payment of the amount agreed
upon. (defendant is therefore liable for the balance of the purchase price).
Martinez vs CA There is no weight in the appellants' argument that, being a purchaser for value
and in good faith of Lot No. 2, the nullification of its registration would be
contrary to the law and to the applicable decisions of the Supreme Court as it
would destroy the stability of the title which is the core of the system of
registration. Appellants cannot be deemed purchasers for value and in good
faith by virtue of the deed of absolute conveyance which they executed.
Before purchasing a parcel of land, it cannot be contended that the appellants

who were the vendees did not know exactly the condition of the land that they
were buying and the obstacles or restrictions thereon that may be put up by
the government in connection with their project of converting Lot No. 2 in
question into a fishpond. Nevertheless, they willfully and voluntarily assumed
the risks attendant to the sale of said lot. One who buys something with
knowledge of defect or lack of title in his vendor cannot claim that he acquired
it in good faith (Leung Lee v. Strong Machinery Co., et al., 37 Phil. 664).
The ruling that a purchaser of a registered property cannot go beyond the record
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to make inquiries as to the legality of the title of the registered owner, but
may rely on the registry to determine if there is no lien or encumbrances over
the same, cannot be availed of as against the law and the accepted principle
that rivers are parts of the public domain for public use and not capable of
private appropriation or acquisition by prescription.
Jerry Moles vs IAC When an article is sold as a secondhand item, a question arises as to
whether there is an implied warranty of its quality or fitness. It is
generally held that in the sale of a designated and specific article sold as
secondhand, there is no implied warranty as to its quality or fitness for the
purpose intended, at least where it is subject to inspection at the time of the
sale. On the other hand, there is also authority to the effect that in a sale
of a secondhand articles there may be, under some circumstances, an
implied warranty of fitness for the ordinary purpose of the article sold
or for the particular purpose of the buyer.
Article 1562 of our Civil Code: Art. 1562. In a sale of goods, there is an implied
warranty or condition as to the quality or fitness of the goods, as follows: (1)
Where the buyer, expressly or by implication, makes known to the seller the
particular purpose for which the goods are acquired, and it appears that the
buyer relies on the seller's skill or judgment (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be
reasonably fit for such purpose;
In the case at bar, a certification to the effect that the linotype machine
bought by petitioner was in A-1 condition was issued by private
respondent in favor of the former. This cannot but be considered as an
express warranty.
It must be remembered that the certification was a condition sine qua non
for the release of petitioner's loan which was to be used as payment
for the purchase price of the machine. Private respondent failed to refute
this material fact. Neither does he explain why he made that express warranty
on the condition of the machine if he had not intended to be bound by it. In
fact, the respondent court, in declaring that petitioner should have availed of
the remedy of requiring repairs as provided for in said certification, thereby
considered the same as part and parcel of the verbal contract between the
parties.
We disagree with respondent court that private respondents express
warranty as to the A-1 condition of the machine was merely dealer's
talk. Private respondent was not a dealer of printing or linotype machines to
whom could be ascribed the supposed resort to the usual exaggerations of
trade in said items. His certification as to the condition of the machine
was not made to induce petitioner to purchase it but to confirm in
writing for purposes of the financing aspect of the transaction his
representations thereon. Ordinarily, what does not appear on the face of
the written instrument should be regarded as dealer's or trader's talk; 25
conversely, what is specifically represented as true in said document, as in the
instant case, cannot be considered as mere dealer's talk.
Engineering & The contract in question is one for a piece of work. It is not petitioner's line of
Machinery Corp vs business to manufacture air-conditioning systems to be sold "off-the-shelf." Its
CA and Almeda business and particular field of expertise is the fabrication and installation of
such systems as ordered by customers and in accordance with the particular
plans and specifications provided by the customers. Naturally, the price or
compensation for the system manufactured and installed will depend greatly
on the particular plans and specifications agreed upon with the customers.
a close scrutiny of the complaint filed in the trial court reveals that the original
action is not really for enforcement of the warranties against hidden defects,
but one for breach of the contract itself. It alleged17 that the petitioner, "in the
installation of the air conditioning system did not comply with the
specifications provided" in the written agreement between the parties.
Having concluded that the original complaint is one for damages arising from
breach of a written contract - and not a suit to enforce warranties against
hidden defects - we here - with declare that the governing law is Article 1715.
However, inasmuch as this provision does not contain a specific prescriptive
period, the general law on prescription, which is Article 1144 of the Civil Code,
will apply. Said provision states, inter alia, that actions "upon a written
contract" prescribe in ten (10) years. Since the governing contract was
executed on September 10, 1962 and the complaint was filed on May 8, 1971,
it is clear that the action has not prescribed.
Carlos De Guzman vs Since no warranty card or agreement was attached to the complaint, the
Toyota Cubao contract of sale of the subject pick-up carried an implied warranty that it was
free from any hidden faults or defects, or any charge or encumbrance not
declared or known to the buyer. The prescriptive period thereof is six (6)
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months under the Civil Code (Art. 1571).

Under RA No. 7394, the provisions of the Civil Code on conditions and warranties
shall govern all contracts of sale with condition and warranties (Art. 67). The
duration of the implied warranty (not accompanied by an express warranty)
shall endure not less than sixty days nor more than one (1) year following the
sale of new consumer products (Art. 68, par. [e]). The two (2) year
prescriptive period under Art. 169 cannot prevail over Art. 68 because the
latter is the specific provision on the matter.
Since petitioner filed the complaint on April 20, 1999, or more than nineteen
months counted from November 29, 1997 (the date of the delivery of the
motor vehicle), his cause of action had become time-barred. Consequently,
even if the complaint is made to fall under the Republic Act No. 7394, the
same should still be dismissed since the prescriptive period for implied
warranty thereunder, which is one year, had likewise lapsed.
(Relative to plaintiff’s argument that the claim for moral and exemplary damages
and attorney’s fees is based on quasi-delict or breach of contract, such are
merely ancillary to the main cause of action which is based on warranty
against hidden defects. Without the latter, the former cannot stand alone.)
Jaime Ang vs CA and Soledad gave an implied warranty of title in declaring that he owned and had
Soledad clean title to the vehicle. In pledging that he "will defend the same from all
claims or any claim whatsoever [and] will save the vendee from any suit by
the government of the Republic of the Philippines," Soledad gave a warranty
against eviction.
Since what Soledad, as seller, gave was an implied warranty, the prescriptive
period to file a breach thereof is six months after the delivery of the vehicle,
following Art. 1571. But even if the date of filing of the action is reckoned from
the date petitioner instituted his first complaint for damages on November 9,
1993, and not on July 15, 1996 when he filed the complaint subject of the
present petition, the action just the same had prescribed, it having been filed
16 months after July 28, 1992, the date of delivery of the vehicle.
Coca-Cola Bottlers, The vendee's remedies against a vendor with respect to the warranties against
Inc. vs CA hidden defects of or encumbrances upon the thing sold are not limited to those
prescribed in Article 1567 of the Civil Code. The vendor could likewise be liable
for quasi-delict under Article 2176 of the Civil Code, and an action based
thereon may be brought by the vendee. While it may be true that the pre-
existing contract between the parties may, as a general rule, bar the
applicability of the law on quasi-delict, the liability may itself be deemed to
arise from quasi-delict, i.e., the acts which breaks the contract may also be a
quasi-delict. Otherwise put, liability for quasi-delict may still exist despite the
presence of contractual relations.
Natividad Villostas vs As regards the contention that the action for rescission is barred by prescription
CA, et al. under Art. 1571 of the Civil Code, the same is bereft of merit. It must be
pointed out that at the time the Electrolux Aqua Guard water purifier was
delivered and installed at petitioner Villostas' residence a Warranty Certificate
was issued by private respondent Electrolux.
The foregoing is clearly an express warranty regarding the efficiency of the water
purifier. On this regard the court said that while it is true that Article 1571 of
the Civil Code provides for a prescriptive period of six months for a redhibitory
action, a cursory reading of the ten preceding articles to which it refers will
reveal that said rule may be applied only in case of implied warranties. The
present case involves one with an express warranty. Consequently, the
general rule on rescission of contract, which is four years (Article 1389, Civil
Code) shall apply. Inasmuch as the instant case involves an express warranty,
the filing of petitioner's amended answer on September 30, 1988 is well within
the four-year prescriptive period for rescission of contract from September 13,
1986, which was the delivery date of the unit.
1. A mortgaged his unregistered parcel of land to X. Thereafter A sold the land to B, without informing the latter that the
land was mortgaged. The mortgage was foreclosed. X was the one who was able to buy the land in question. By virtue
of the same, B was evicted from the land. Is A liable for warranty against hidden defect?
No. A is liable for warranty against eviction, i.e. warranty against non-apparent burden or servitude.
2. A sold Brand X pork and beans to B. When B opened the can, he found out that the pork and beans does not have pork.
Is there a violation of any warranty?
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3. On 11 June 2009, A and B entered into a contract of sale whereby A engages to deliver a particular car on or before 8
July 2009. The car incurred a hidden defect after the perfection of the contract but before delivery. When must the
defect exist, 11 June 2009 or 8 July 2009?
The defect must exist “at the time of sale”
4. A sold a car with hidden defect to B, who does not have a knowledge of the defect. B sold the car to C. Does A have an
implied warranty in favor of C?
Yes. See Moles vs IAC.
* OBLIGATIONS OF THE VENDEE
(Art. 1582) The vendee must:

(a) Accept delivery
(b) Pay the price
- RULES ON ACCEPTANCE AND PAYMENT:

(a) Both must be performed at the time and place stipulated
(b) When there is no stipulation as to time and place of payment, payment must be made at the time and place of
delivery.
(c) Apply Article 1524 (in relation to Article 1169, last paragraph), where payment and delivery are simultaneous
- apply Arts. 1251 and 1521 (Time and Place of Delivery)
TIME = at a reasonable hour (question of fact)
PLACE
5. Stipulation of the parties; or
6. Seller’s place of business if he has one; or
7. Seller’s residence; or
8. In case of sale of definite or specific goods, in the place where the thing is.
1. A and B entered into a contract of sale where it is stipulated that B, the buyer, is bound to pay 15 days after the
perfection of the contract. May B demand the delivery of the thing from A even before the arrival of the day he is bound
to pay?
Yes. A’s obligation, not being dependent on a condition or a period, is pure. His obligation is thus demandable at once,
even at the time the contract is perfected (Art. 1179)
2. A and B entered into a contract of sale of a parcel of land. A delivered the parcel of land to B upon perfection. B, on the
other hand, is bound to pay on October 9. A became incapacitated on October 8. On October 9, B went to A to pay. Is
payment of B to A valid?
As a rule, payment to the incapacitated is void. However, if the incapacitated has kept the thing delivered or if payment
has been beneficial to him, the payment is valid (Article 1241).
3. (?) A sold sacks of corn to B for P500k. They agreed that A will deliver on 1 June 2009, and B will pay on 31 July 2009.
A lives in Davao, while B lives in Manila. On 1 June 2009, A delivered the sacks of corn. B, on the other hand, did not
pay the price on 31 July 2009. A went to Manila and spent P6k for airfare and P5k for hotel accommodation in order to
get the payment of the purchase price from B. B tendered P500k, but A refused to accept. A contends that B should also
pay P11k which the former spent for airfare and hotel accommodation. Is A’s contention correct?
Yes. It is the duty of the debtor to correct payment. Applying Art. 1582 in relation to Art. 1521, B is bound to pay at the
place of delivery, in the absence of stipulation as to the place of payment. The place of delivery, when there is no
stipulation as to where the same is to be made, is the seller’s place of business or residence. Hence, B is bound to go to
Davao to pay A.
4. Hypo on place of payment
5. Place of delivery
- COMPANY BOUGHT-OUT
- if involves not considerable amount – mere continuance of business
- if involves considerable amount such that the company is bought out to stop its operations – there is no assumption of
obligations
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(Art. 1583): VENDOR IS NOT BOUND TO ACCEPT PARTIAL DELIVERY

- relate Article 1233: There is no payment until the thing is completely delivered
- relate Article 12348: One cannot be compelled to receive partial payment; one has no right to make partial payment
* SEPARATE PRICE FOR EACH INSTALLMENT

- BREACH AFFECTS THE WHOLE CONTRACT (Injured party may sue for breach of entire contract)
- when seller makes defective or incomplete deliveries; or
- buyer wrongfully neglects or refuses to accept delivery; or
- buyer fails to pay any installment
- BREACH IS SEVERABLE
- only claim for compensation for particular breach may be allowed
(Art. 1584): BUYER’S RIGHT TO EXAMINE GOODS

ACCEPTANCE – assent to become owner of the specific goods when delivery of them is offered to the buyer
EXAMINATION – is a condition precedent to transfer ownership
* Art. 1584 refers to ACTUAL DELIVERY
* RULES:
(a) Examination before delivery should be made by request. Vendor is not bound to offer the thing for
examination before delivery without the request of the vendee.
(b) When the thing is delivered, the thing is not considered accepted if the vendee has not examined it or has
no reasonable opportunity to examine it…
(c) In case of COD (collect on delivery) – buyer is not entitled to examine until payment is made, EXCEPT
when there is an agreement or that the usage of trade permits the same
* In COD, goods are not to be delivered by the carrier to the buyer unless the latter pays.
(Art. 1585): MODES OF MANIFESTING ACCEPTANCE

1. EXPRESS ACCEPTANCE – the buyer intimates to the seller that he accepts the thing
2. IMPLIED ACCEPTANCE – may be either of the following:
a. Buyer does an act inconsistent with the seller’s ownership; or
b. Buyer’s retention of goods without intimating rejection after the lapse of reasonable time.
*NOTE: Delivery and Acceptance are separate acts.
(Art. 1586): ACCEPTANCE IS NOT A BAR TO ACTION FOR DAMAGES. However, notice must be given to the seller within a
reasonable time.
(Art. 1587): WHERE BUYER’S REFUSAL TO ACCEPT IS JUSTIFIED

- Buyer is not bound to return the goods; but he must notify seller (It is the seller who is required to recover the
goods from the buyer)
- The risk of loss is still with the seller
- Buyer is not liable as DEPOSITARY unless he voluntarily constitutes himself as such
QUESTION / INQUIRY: Is the buyer bound to take care of the goods? (whether Art. 1163 is applicable in this case)
(Art. 1588): REFUSAL OF THE BUYER WITHOUT JUST CAUSE

- Title passes to the buyer the moment it is placed at his disposal
(Art. 1589): INTEREST (for the period between delivery and payment):
- Contemplates a situation where DELIVERY AND PAYMENT ARE NOT SIMULTANEOUS
- Vendee is bound to pay interest in any of the following instances: [IFV (Inday’s Funniest Videos)]
(a) Interest is stipulated
- may be oral
- interest which must be in writing refers only to loan (Art. 1956)
(b) Fruits or income are received by vendee from the thing sold
-even if a term has been fixed for the payment of price
(c) Vendee is guilty of Default (see Art. 1169)
[Under Art. 1169, the debtor incurs in delay from the time of judicial or extra-judicial demand. However,
demand is not necessary to constitute delay in the following cases: [LTD]
1. The law or obligation expressly so provides;
2. Time is of the essence; or
3. Demand would be useless as when the obligor has rendered it beyond his power to perform.]
(Art. 1590): RIGHT OF VENDEE TO SUSPEND PAYMENT

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- Contemplates a situation where the CONTRACT IS NOT YET CONSUMMATED

- GENERAL RULE: Applicable in 2 cases:
(a) Where the vendee is disturbed in possession or ownership of the thing bought; or
(b) Vendee has reasonable ground to fear that his possession or ownership would be disturbed (by a
vindicatory action or a foreclosure mortgage)
* In both instances, the vendee may retain only the price that has not been paid to the vendor. He is not
entitled to recover what has already been paid.
- EXCEPTIONS TO SUSPENSION OF PAYMENT (where vendee has no right to suspend payment): [SSCTP]
(a) S: vendor gives security for the return of the price
(b) S: stipulation that vendee must make payment notwithstanding such contingency
(c) C: cessation of disturbance or danger
(d) T: disturbance is a mere act of trespass
(e) P: vendee has paid the price in full
- When the disturbance is caused by non-apparent servitude, the remedy is rescission not suspension of
payment.
1. A sold a parcel of land to B. Thereafter, C filed a suit against A and B for quieting of title. During pendency,
may B suspend payment?
Yes. B has reasonable fear ground to fear that his possession or ownership would be disturbed by a
vindicatory action.
2. (?) Same facts as #1 but C only claims for a part of the land. May there e suspension of payment?
Yes, B may still suspend payment for the entire amount.
(Art. 1591): RIGHT OF VENDOR TO RESCIND SALE OF IMMOVABLE PROPERTY / ANTICIPATORY BREACH
- REQUISITES:
(a) There is delivery of immovable property
(b) Vendee has not paid the price
(c) Vendor has reasonable ground to fear the:
a. LOSS of PROPERTY; AND
b. LOSS of PRICE
- When there is no such reasonable ground, Art. 1191 shall be observed (when the vendee does not comply with
what is incumbent upon him).
(Art. 1592): WHERE AUTOMATIC RESCISSION OF SALE OF IMMOVABLE PROPERTY IS STIPULATED

- According to Villanueva and Pineda, the phrase “even though” means that this provision is also applicable in a
case where there is no stipulation in the contract as to automatic rescission.
Atty. Casiňo does not agree with them (this time, he agrees with De Leon)
- Vendor is given am option to rescind UPON JUDICIAL OR NOTARIAL DEMAND
- However, when there is no judicial or notarial demand, vendee may still pay. Offer to pay is sufficient to defeat
vendor’s prerogative.
- Vendor’s right to rescind is not absolute.
o Art. 1191, par. 3 provides that the court may grant vendee a new term
o However, if there is already a demand, the court may no longer fix a term.
- Breach must be substantial as would defeat the very object of parties.
- NOT APPLICABLE TO:
o Sale on installment of real estate (Caridad Estates vs Santero)
o Mere promise to sell real estate / Conditional sale
o Cases under RA 6552 (RA 6552 recognizes the vendor’s right to cancel unqualifiedly in case of
industrial lots, commercial buildings, etc. with a refund of certain percentages of payments made on
account of cancelled contract.
*In other words, the vendee in such cases may no longer pay the price after the expiration of the time
agreed upon although no demand has yet been made upon him by suit or notarial act.
(Art. 1593): WHERE AUTOMATIC RESCISSION OF SALE OF MOVABLE PROPERTY IS STIPULATED

- Vendor can rescind the contract as a matter of right if the vendee does not:
(a) Accept; or
(b) Pay unless credit period for payment is stipulated
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- Reason for the rule: Personal property are not capable of maintaining stable price in the market. Hence, any
delay is prejudicial to the vendor.
*REMEDIES OF PARTIES IN CASE OF BREACH OF CONTRACT OF SALE
A. Sale of Personal Property
1. Sale of personal property on installments:
Requisites (Art. 1484)

(a) contract of sale
(b) personal property
(c) payable in installments
(d) in case of 2nd and 3rd remedies, there has been a failure to pay two or more installments
Alternative remedies of the vendor: [Art. 1484, NCC]

(a) exact fulfillment of the obligation should the vendee fail to pay
(b) cancel the sale should the vendee’s failure to pay cover two or more installments
(c) foreclose the chattel mortgage on the thing sold (if one has been constituted), should the vendee’s failure to pay cover two or
more installments.
[In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to
the contrary shall be void.]
Delta Motors Sales Corp. v. The remedies under Art. 1484 have been recognized as alternative, not
Niu Kim Duan, 213 SCRA259 cumulative, in that the exercise of one would bar the exercise of the others.
Elisco Tool Manufacturing The Court has long been aware of the practice of vendors of personal property
Corp. v. CA, 307 SCRA 731 of denominating a contract of sale on installment as one of lease to prevent
the ownership of the object of the sale from passing to the vendee until and
unless the price is fully paid.
What constitutes sale on installment:

Levy Hermanos, Inc. v. When there is only one payment to be paid in the future, there is no basis to
Gervacio, 69 Phil. 52 apply the Recto law, since under the language of then Article 1454-A, the
buyer needs to have defaulted in the payment of two or more installments to
allow the seller to rescind or foreclose on the chattel mortgage.
Specific Performance:
GENERAL RULE: when the seller has chosen specific performance, he can no longer seek for rescission nor foreclosure of the
chattel mortgage constituted on the thing sold.
EXCEPTION [Art. 1191]: Even if the seller had chosen specific performance, if the same has become impossible, the seller may
still choose rescission
see Chieng v. Sps. Santos, G.R. No. 169647, Aug. 31, 2007
Rescission
*When rescission is deemed chosen:

When the seller has clearly indicated to end the contract such as when –
(a) he sends a notice of rescission, or
(b) he takes possession of the subject matter of the sale, or
(c) he files an action for rescission.
*Forfeiture of installment or rentals paid:

GENERAL RULES [Art. 1385]: Rescission creates the obligation to return the things which were the object of the contract,
together with the fruits, and the price with interests. It can be carried out only when he who demands rescission can return
whatever he may be obliged to restore.
EXCEPTION [Art. 1486]: A stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be
valid insofar as the same may not be unconscionable under the circumstances.
* Effect of rescission:
Nonato v. IAC When the seller’s assignee, a financing company, is able to take back
possession of the motor vehicle with a condition that the vehicle could be
redeemed by the buyers within 15 days, then such taking of possession is
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clearly with the intent to cancel the contract.

Delta Motor Sales Corp. v. Niu A stipulation in a contract that the installments paid shall not be returned to
Kim Duan, the vendee is valid insofar as the same may not be unconscionable under the
circumstances. The Court took pains to show that the treatment of the
forfeited installments as rental is more than justified by the retention and use
of the air-conditioning units by the buyer for 22 months.
Foreclosure of chattel mortgage
When remedy is deemed chosen:

At the time of actual sale of the subject property at public auction pursuant to the foreclosure proceedings commenced.
Rule:
Manila Motor Co. vs Fernandez The remedies under Article 1484 are alternative, not cumulative, in that the
exercise of one would bar the exercise of the others.
Vda de Quiambao vs Manila Motor Only the taking back of the property coupled with an unequivocal desire on its
Inc part to rescind its contract or for the purpose of appropriating the same,
would suffice to bar the seller form proceeding with specific performance. In
this case, it was not the seller who demanded a return of the subject motor
vehicle, but rather it was the buyer who voluntarily returned the same to
postpone the satisfaction of the enforcement of the judgment debt obtained
by the seller on the unpaid balance of the purchase price.
Northern Motors vs Sapinoso If prior to the actual sale of the subject property at public auction, the seller
had received further payments from the buyer, the seller is not obliged to
refund said payments after foreclosure to the buyer.
Universal Motors vs Dy Hian Tat The filing by the seller of an action for the issuance of a writ of replevin, and
the actual recovery of possession of the subject property, would not amount
to foreclosure, even with the attachment of the mortgage contract itself, since
no actual foreclosure pursuant to the relevant provisions of the Rules of Court
have been pursued.
The mere fact that the seller has secured possession of the truck in question
does not necessarily mean that it will foreclose its mortgage. Indeed, there is
no showing at all that the seller is causing the sale thereof at public auction or
is even preparing to do so. It is quite possible that the seller wanted merely to
be sure that the truck is not lost or rendered valueless, preparatory to having
it levied upon under a writ of attachment.
Effect of foreclosure of the chattel mortgage:

No further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary is void. [Art.
1484(3)] [Note: unpaid balance here pertains to purchase price]
EXCEPTION:
Filipinas Investment & Finance When a defaulting buyer-mortgagor refuses to surrender the chattel to the
Corp, v. Ridad seller to allow the latter to be able to proceed with foreclosure, then the
seller, even after foreclosure, should be allowed to recover expenses and
attorney’s fees incurred in trying to obtain possession of the chattel.
Barring Effect of Other Securities Given for Payment of Price

Cruz v. Filipinas Investment & - The “further action” being barred under Art. 1484 is not limited to judicial
Finance Corp proceedings, but should include extrajudicial proceedings by virtue of which
the seller may be enabled to exact recovery of the supposed unsatisfied
balance of the purchase price from the purchaser or his privy.
- A seller is precluded from having a recourse against the additional security
put up by a third party insofar as the burden would ultimately fall on the
buyer himself is concerned (e.g. the guarantor will later on proceed against
the buyer). To rule otherwise would be a circumvention of Art. 1484.
Assignor-Assignee; Financing Transaction

When the seller assigns his credit to another person, the latter is likewise bound by the same law. (Borbon II vs Servicewide
Specialists)
Assignment with recourse basis

Filipinas Investment & Art. 1484 (3) does not bar one to whom the vendor has assigned on with a recourse
Finance Corp. vs Vitug basis his credit against the vendee from recovering from the vendor the assigned
credit in full although the vendor may have no right of recovery against the vendee
for the deficiency.
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QUESTION/INQUIRY: What if it is the buyer who assigned or alienated the property to another person (whether the other person
is bound by the same law)?
Applicability of Recto Law: [Art. 1485]: Art. 1484 applies also to contracts purporting to be leases of personal property with
option to buy (when the lessor has deprived the lessee of the possession or enjoyment of the thing)
PCI Leasing and Finance, Inc. v. Giraffe-X Creative Imaging, Inc., G.R. No. 142618, July 12, 2007;
BA Finance Corp. v. CA, 228 SCRA 530; Vda. de Jose v. Barrueco, 67 Phil. 191]
1. A lease of personalty with option to buy was entered into by A and B. For failure to pay rentals, the lessor (A) took possession
of the thing sold. May A still collect the unpaid rentals?
No. Lessor is estopped from further action to recover the unpaid rentals which are deemed waived. The remedies are alternative.
The exercise of one would bar the exercise of the other.
2. The vendor elected to foreclose the chattel mortgage on the car sold. He filed an action for replevin. Before the vendee filed
his answer, he paid two installments amounting to P1,250. May the vendor retain the amount paid to him?
Yes. The said amount could be retained by the vendor since it was paid before the actual foreclosure of the chattel mortgage. See
Northern Motors, Inc vs Sapinoso.
3. A and B entered into a contract of sale where A bound himself to deliver upon perfection a particular car. B, on the other hand,
bound to pay half of the price at the time of perfection and the other half 15 days thereafter. There was no payment made by B.
(a) Is Art. 1484 applicable?
No. This is a sale on straight term. See Levy Hermanos, Inc. v. Gervacio.
(b) May A foreclose the chattel mortgage if one has been constituted?
Yes, under the Chattel Mortgage Law.
(c) May A cancel the contract?
Yes, under Art. 1191.
(d) May A recover the balance after foreclosing the chattel mortgage?
Yes. There is no barring effect because Art. 1484 is not applicable.
bound to pay P100k on ten equal monthly installments. B failed to pay the 4th, 5th and 6th installments (on 4th, 5th, and 6th
months). On the 7th month, B went to A and paid P10k. A accepted the payment and issued a receipt. May A avail of the
remedies stated in Art. 1484?
No. The receipt of a later installment of a debt without reservation as to prior installments shall raise the presumption that such
installments have been paid. (Art. 1176, par. 2)
bound to pay P100k on ten equal monthly installments. B failed to pay the 4th, 5th and 6th installments (on 4th, 5th, and 6th
months). May A rescind the contract?
No. There is no demand. In order for Art. 1484 to apply, the vendee must be in default. Applying Art. 1169, vendee is not in
default when there is no judicial or extra-judicial demand.
bound to pay P100k on ten equal monthly installments. B failed to pay 1 installment. May A rescind the contract?
No. The non-payment must pertain to two or more installments.
7. [(?) ESCALATION CLAUSE] A and B entered into a contract of sale where A bound himself to deliver upon perfection a
particular car. B, on the other hand, bound to pay P100k on ten equal monthly installments. There is a stipulation in the contract
that failure to pay one of the installments, shall automatically make all of the installments due and demandable. B failed to pay 1
installment. Assuming that there is a demand to pay on the part of A as to the unpaid installment, may A rescind the contract?
8. [(?) FACTS UNCLEAR] A and B entered into a contract of sale where A bound himself to deliver upon perfection a particular
car. B, on the other hand, bound to pay P100k on ten equal monthly installments. A chattel mortgage was constituted to secure
B’s payment of the price. Meanwhile, a real estate mortgage is also constituted on the property in favor of C. B failed to pay the
4th, 5th and 6th installments (on 4th, 5th, and 6th months). If A would choose foreclosure of the chattel mortgage, may he proceed a
gainst C as to the payment of the balance?
bound to pay P100k on ten equal monthly installments. C guaranteed B’s payment of the price. B failed to pay the 4th, 5th and 6th
installments (on 4th, 5th, and 6th months). May A proceed against B, the guarantor, for the payment of the unpaid balance?
No. Check Ridad case. A seller is precluded from having a recourse against the additional security put up by a third party insofar
as the burden would ultimately fall on the buyer himself is concerned (e.g. the guarantor will later on proceed against the buyer).
To rule otherwise would be a circumvention of Art. 1484 (Cruz v. Filipinas Investment & Finance Corp). Furthermore, a guarantor
is only subsidiarily liable, unlike a surety who is primarily and solidarily liable with the principal.
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10. Same facts as #9 only that A did not choose foreclosure. C, the guarantor, paid the price of the car in behalf of B. Rule the
case.
There is here a legal subrogation where even without the knowledge of B, the debtor, C, a person interested in the fulfillment of
the obligation, pays (Art. 1302)
11. A and B entered into a contract of sale where A bound himself to deliver upon perfection a particular car. B, on the other
hand, bound himself to pay P100k on ten equal monthly installments. B paid the 1st installment but before the 2nd installment
was due, B became insolvent. May A avail of the remedies stated in Art. 1484 even without a demand?
Yes. B lost his right to a period, he having become insolvent who gave no guaranty or security for the payment of the price (Art.
1198).
B. Sale of Immovable Property
(1) Remedies of Vendor/Seller:
1. Anticipatory Breach:
(Art. 1591): RIGHT OF VENDOR TO RESCIND SALE OF IMMOVABLE PROPERTY / ANTICIPATORY BREACH
- REQUISITES:
(a) There is delivery of immovable property
(b) Vendee has not paid the price
(c) Vendor has reasonable ground to fear the:
a. LOSS of PROPERTY; AND
b. LOSS of PRICE
When there is no such reasonable ground, Art. 1191 shall be observed (when the vendee does not comply with what is
incumbent upon him).
2. AUTOMATIC RESCISSION: [1592, NCC; Laforteza vs. Machuca, 333 SCRA 643]
(Art. 1592): WHERE AUTOMATIC RESCISSION OF SALE OF IMMOVABLE PROPERTY IS STIPULATED
- According to Villanueva and Pineda, the phrase “even though” means that this provision is also applicable in a
case where there is no stipulation in the contract as to automatic rescission.
Atty. Casiňo does not agree with them (this time, he agrees with De Leon)
- Vendor is given an option to rescind UPON JUDICIAL OR NOTARIAL DEMAND
- However, when there is no judicial or notarial demand, vendee may still pay. Offer to pay is sufficient to defeat
vendor’s prerogative.
o Art. 1191, par. 3 provides that the court may grant vendee a new term
o However, if there is already a demand, the court may no longer fix a term.
- Breach must be substantial as would defeat the very object of parties.
- NOT APPLICABLE TO:
o Sale on installment of real estate (Caridad Estates vs Santero)
o Mere promise to sell real estate / Conditional sale
o Cases under RA 6552 (RA 6552 recognizes the vendor’s right to cancel unqualifiedly in case of
industrial lots, commercial buildings, etc. with a refund of certain percentages of payments made on
account of cancelled contract.
*In other words, the vendee in such cases may no longer pay the price after the expiration of the time agreed upon although no
demand has yet been made upon him by suit or notarial act.
*Article 1592, not applicable to Contract to Sell:

[Pangilinan vs. CA, 279 SCRA 590 (1997); Alfonso vs. CA, 186 SCRA 400 (1990);
Valarao vs. CA, 304 SCRA 155 (1999);
People’s Industrial and Commercial Corp. vs. CA, 281 SCRA 206 (1997)].
(2) Remedies of Buyer
1. Right to Suspend Payment:
(Art. 1590): RIGHT OF VENDEE TO SUSPEND PAYMENT

- Contemplates a situation where the CONTRACT IS NOT YET CONSUMMATED
- GENERAL RULE: Applicable in 2 cases:
(c) Where the vendee is disturbed in possession or ownership of the thing bought; or
(d) Vendee has reasonable fear ground to fear that his possession or ownership would be disturbed (by a
vindicatory action or a foreclosure mortgage)
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* In both instances, the vendee may retain only the price that has not been paid to the vendor. He is not
entitled to recover what has already been paid.
- EXCEPTIONS TO SUSPENSION OF PAYMENT (where vendee has no right to suspend payment): [SSCTP]
(f) S: vendor gives security for the return of the price
(g) S: stipulation that vendee must make payment notwithstanding such contingency
(h) C: cessation of disturbance or danger
(i) T: disturbance is a mere act of trespass
(j) P: vendee has paid the price in full
- When the disturbance is caused by non-apparent servitude, the remedy is rescission not suspension of
payment.
*Rule applicable in cases not involving subdivision or condominium projects
*Rule applicable in cases involving sale of subdivision lots or condominium units
Ground for suspension of payment:

No installment payments made by the buyer in a subdivision or condominium project for the lot or unit he contracts to buy shall
be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer desists from further
payment due to the failure of the owner or developer to the develop the subdivision or condominium project according to the
approved plans and within the time limit for complying with the same. [Sec. 23, PD 957]
[1.2.2] Alternative remedies of the buyer: [Sec. 23, PD 957]

Relucio v. Brillante-Garfin, 187 SCRA 405;
Casa Filipina Realty Corp. v. Office of the Pres., 241 SCRA 165].
2. Right to Grace Period:
Bricktown Development When a grace period is provided for in the contract of sale, it should be construed as a
Corp. v. Amor Tierra right, not an obligation of the debtor, and when unconditionally conferred, the grace
Development Corp. period is effective without further need of demand either calling for the payment of
the obligation or for honoring the right.
C. The Maceda Law (RA 6552)
Purpose of law : Protect buyers in installments against oppressive conditions
1. Applicability:
Transactions Covered:
Transaction or contracts involving the sale of financing of real estate on installment payments, including residential condominium
apartments.
- Covers:
1. contract of sale
2. contract to sell
3. financing transactions
Excluded:
1. industrial
2. commercial
3. sale to tenants under agrarian laws
[Sec. 3, RA 6552].
Applicability:
[Sec. 2, RA 6552].
Applies even to contract to sell:

[Villanueva, Sales, 432; Rillo v. CA, 274 SCRA 461; Leano v. CA, 369 SCRA 674].
2. Rights Granted to Buyer Under Maceda Law:
If the buyer has paid at least two years of installments:
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(a) The buyer must pay, without additional interest, the unpaid installments due within the total grace period earned by
him. There shall be 1 month grace period for every 1 year of installment payments made. [NOTE: This is to be exercised
only once in every 5 years or the life of the contract and its extensions.
(b) Actual cancellation can only take place after 30 days from receipt by the buyer of the notice of cancellation or demand
for rescission by a notarial act and upon full payment of the cash surrender value to buyer. [NOTE: The seller shall
refund to the buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments
made, After 5 years of the installments, there shall be an additional 5% every year but not to exceed 90% of the total
payments made.
(c) The buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by
updating the account during the grace period and before actual cancellation of the contract.
(d) The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any
time without interest and to have such full payment of the purchase price annotated in the certificate of title covering
the property.
If the buyer has paid less than two years installments:

(a) the seller shall give the buyer a grace period of not less than 60 days from the date the installment became due. If the
buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30
days from receipt by the buyer of the notice of cancellation or the demand for rescission of contract by notarial act.
(b) c and d above
[NOTE: downpayments, deposits or options on the contract shall be included in the computation of the total number of
installment payments made.]
3. Requisites for valid cancellation of contract covered by Maceda Law:
Requisites:
Actual cancellation can only take place after 30 days from receipt by the buyer of the notice of cancellation or demand for
rescission by a notarial act and upon full payment of the cash surrender value to buyer. [NOTE: The seller shall refund to the
buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments made, After 5 years of
the installments, there shall be an additional 5% every year but not to exceed 90% of the total payments made.
[Sec. 3, RA 6552; Siska Development Corp. vs. Office of the President of the Philippines, 231 SCRA 674 and Marina Properties
Corp. vs. CA, 294 SCRA 272 (1998)]
Effect of failure to comply:

[Active Realty & Development Corp. vs. Daroya, 382 SCRA 152; Olympia Housing v. Panasiatic Travel Corp., G.R. No. 140468,
Jan. 16, 2003; Layug vs. Court of Appeals, 369 SCRA 36]
Effect of contrary stipulation

[Sec. 7, RA 6552].
1. (?) A and B entered into a contract of sale whereby A bound himself to deliver a parcel of land through a public
document on 1 July 2010, and B bound himself to pay on 31 December 2010. On 31 July 2010, however, B became
insolvent. Can A sue for rescission?
Yes. B loses his right to a period because of his insolvency pursuant to Article 1198.
2. (?) A and B entered into a contract of sale whereby A bound himself to deliver a parcel of land through a public
document on 1 July 2010, and B bound himself to pay on 31 December 2010. On 31 July 2010, however, B absconded.
Can A sue for rescission?
Yes. B loses his right to a period pursuant to Article 1198
3. A and B entered into a contract of sale whereby A bound himself to deliver a parcel of land through a public document
on 1 July 2010, and B bound himself to pay on 31 December 2010. B did not pay A on 31 December 2010. What is/are
the remedy/ies of A?
A may choose between fulfillment and rescission of the obligation with payment of damages in either case on the ground
that B does not comply with what is incumbent upon him (Article 1191). Should there be a reasonable ground to fear
the loss of property sold and its price, A may immediately sue for rescission of the sale (Article 1591)
4. (?) (Soria/Suria?) A and B entered into a contract of sale whereby A bound himself to deliver a parcel of land through a
public document on 1 July 2010, and B bound himself to pay on 31 December 2010. A real estate mortgage was
constituted on the property, having A as the mortgagee. B did not pay A on 31 December 2010. May A maintain rescind
the sale?
No. Upon the constitution of Real estate mortgage, the contract has been changed into one of payment of a loan.
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D. Sale of Goods
Remedies of Unpaid Seller:
[Art. 1526] – Notwithstanding that the ownership in the goods may have passed to the buyer:
(a) Possessory lien
(b) Stoppage in transitu
(c) Right of resale (can only be exercised when the two prior remedies have been exercised)
(d) Rescission (can only be exercised when the two prior remedies have been exercised)
Who is considered an unpaid seller?

[Art. 1525]
(a) when the whole of the price has not been paid or tendered to the seller; or
(b) when a bill of exchange or other negotiable instrument has been received (as conditional payment), and the condition on
which the instrument was received was broken by reason of the dishonor of the instrument, insolvency of buyer, or
otherwise.
* Lien on goods or right of retention:
When right of lien exists: [Art.1527] [WEI]

(a) goods have been sold without any stipulation as to credit
(b) goods have been sold on credit, but the term of credit has expired
(c) buyer becomes insolvent (as he had already lost his right to a period pursuant to Art. 1198)
When unpaid seller loses his lien: [Art.1529] [CLW]

(a) he delivers to a carrier or other bailee
-for the purpose of transmission to the buyer
- without reserving the ownership in the goods or the right of possession thereof
(b) buyer or his agent lawfully obtains possession of the goods
(c) waiver
Part delivery of goods had been made [Art. 1528]

– lien on the remainder
Effect of sale of goods by buyer: [Art.1535]

Seller’s right of lien or stoppage in transitu is not affected.
EXCEPTION:
(a) Seller assented thereto
When a negotiable document of title has been issued for goods (reiteration of Art. 1532 and in consonance with Art. 1518)
* Stoppage In Transitu:
When can it be invoked: [Arts. 1526, 1530 and 1532]

- seller has parted with the possession of the goods
- REQUISITES:
(a) unpaid seller
(b) insolvent buyer
(c) goods are in transit
(d) The exercise of stoppage in transitu is either by:
(i) obtaining actual possession of the goods
(ii) giving notice of his claim to the carrier or other bailee in whose possession of the goods are.
- (1532) Notice may be given either to the person in actual possession of the goods or to his principal.
- When notice is given to the carrier or other bailee in possession of the goods, he must redeliver the goods
according to the directions of the seller [NOTE: Expenses must be borne by the seller]
EXCEPTION: a negotiable document of title representing the goods has been issued (in which case the carrier or
bailee is not obliged to redeliver the goods unless the seller surrendered the document for cancellation)
When are the goods considered “in transit” (Art. 1531)

1. After delivery to a carrier or other bailee and before the buyer or his agent takes delivery of them; and
2. Goods are rejected by the buyer and the carrier or other bailee continues in possession of them (even if the seller
refused to receive them back)
When are the goods considered no longer in transit (Art. 1531)

1. After delivery to buyer or his agent
2. Buyer or his agent obtains delivery of the goods (before their arrival at the appointed destination)
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3. After the arrival at the appointed destination, the carrier or bailee acknowledge to the buyer or his agent that he is
holding the goods in his behalf and continues in possession of them as bailee for buyer or his agent
4. Carrier or bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf
Effect of sale of goods by buyer: [Art.1535]

Seller’s right of lien or stoppage in transitu is not affected.
EXCEPTION:
(b) Seller assented thereto
(c) When a negotiable document of title has been issued for goods (reiteration of Art. 1532 and in consonance with Art.
1518)
* Resale of the Goods
REQUISITES: [Art. 1533]

(1) first two remedies have been exercised
- unpaid seller has right of lien or has stopped goods in transitu
(2) under any of the following conditions:
(a) goods are perishable
(b) seller expressly reserves the right of resale in case buyer defaulted
(c) buyer has been in default in payment for an unreasonable time
Seller is not liable to original buyer for profit made by virtue of resale
Seller may recover from buyer damages for loss due to breach of contract of sale
Buyer acquires good title as against original buyer
* Rescission of sale:
[A] Special right to rescind [Art.1534]

- seller has parted with possession of the goods
- seller may recover from the buyer damages for any loss due to breach of contract
- there must be NOTICE or some other OVERT ACT of intention to rescind [Overt act need not be communicated BUT the giving
of notice is relevant in case of default for an unreasonable time.
REQUISITES:
(1) first two remedies have been exercised
- unpaid seller has right of lien or has stopped goods in transitu
(2) under any of the following conditions:
(a) seller expressly reserves the right of resale in case buyer defaulted
(b) buyer has been in default in payment for an unreasonable time
[B] Technical Rescission [Art. 1597]

- There is no delivery of goods yet
- seller may totally rescind by giving notice of his election to do so to the buyer
(1) Buyer has repudiated the contract of sale;
(2) Buyer has manifested his inability to perform obligations; or
(3) Buyer committed a breach
1. A entered into a contract of sale with B whereby B bound himself to pay P500k for the 100 sack of corn, which is to
be delivered by A. A gave B a bill of lading, deliverable to B or order. Subsequently, B became insolvent. May A
exercise to right of stoppage in transitu?
Yes.
2. A and B entered into a contract of sale of 100 sacks of corn. A is bound to send the goods to B through his ship,
which is being operated by C. Assuming that A became an unpaid seller, may he exercise the right of stoppage in
transitu while the goods are in the possession of C?
No. A is still in the possession of the goods. C’s possession is merely that of a holder, as he was acting as A’s
employee. Because A has not yet parted with the possession of the goods, his remedy is to exercise his lien of the
goods.
3. a
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Actions in case of breach of contract of sale of goods
[A] REMEDIES OF SELLER

1. Action for the price / Specific performance (Art. 1595)
(a) when the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods
according to the terms of the contract
(b) when price is payable on certain day, irrespective of delivery or transfer of title, and the buyer wrongfully neglects or
refuses to pay [BUT: it is a defense to such action that seller has manifested an inability or lack of interest to perform
his obligation before judgment]
(c) if goods cannot readily be resold for a reasonable price, although transfer of ownership has not passed – seller may
offer to deliver the goods to the buyer; if buyer refuses to receive, seller may notify the buyer that he holds the goods
as bailee for the buyer. Thereafter, the seller may treat the goods as buyer’s and may maintain an action for the price.
2. Action for Damages (Art. 1596)
- When buyer wrongfully neglects or refuses to ACCEPT and PAY for the goods
- MEASURE OF DAMAGES = estimated loss directly and naturally resulting in the ordinary course of events from
the buyer’s breach
- MEASURE OF DAMAGES (WHEN THERE IS AVAILABLE MARKET) = difference between the contract price and the
market or current price at the time the goods ought to have been accepted, or at the time of refusal to accept
when there is no time fixed
3. Rescission (Art. 1597)
- There is no delivery of goods yet
- seller may totally rescind by giving notice of his election to do so to the buyer
(1) Buyer has repudiated the contract of sale;
(2) Buyer has manifested his inability to perform obligations; or
(3) Buyer committed a breach
[B] REMEDIES OF BUYER
1. Specific performance, without giving the seller the option of retaining the goods on payment of damages. [Judgment
may be unconditional, or upon such terms and conditions as to damages, payment of the price and otherwise, as the
court may deem just] (Art. 1598)
2. In case of seller’s breach of warranty (Art. 1599)
(a) Recoupment – accept the goods and set up the seller’s breach to reduce or extinguish the price
(b) Accept the goods and maintain an action for damages for breach of warranty
(c) Refuse to accept and maintain an action for damages for breach of warranty
(d) Rescission – rescind the contract; refuse to receive the goods; or if goods have already been received, return them
and recover what was paid or any part of it concurrently with return or immediately after it.
- These remedies are alternative, without prejudice to paragraph 2 of Art. 1191 (that a party may still seek
rescission after choosing specific performance if the latter is impossible)
- Buyer cannot rescind if he knew of the breach and accepted the goods without protest, or fails within
reasonable time to notify the seller of his election to rescind, or fails to return or offer to return the goods in
substantially as good condition as it was
- If seller refuses to accept an offer to return the goods and the buyer elected rescission, buyer shall be deemed
to hold the goods as bailee for the seller subject to lien to secure payment of any portion of the price which has been
paid.
- LOSS (in case of breach of warranty of quality) = difference between value of the goods at the time of delivery
and value they would have had if they had answered to the warranty
Provisions on Rescission
1191 (Judicial Rescisison based on substantial breach) – at the instance of aggrieved party
1381 (rescission based on lesion) - at the instance of aggrieved party
1591 (for Anticipatory breach) - at the instance of vendor
1592 (Automatic rescission when there is stipulation - immovable) - at the instance of vendor
1593 (Automatic rescission when there is stipulation – movable) - at the instance of vendor
1534 (Special right to rescind) - at the instance of vendor
1597 (Technical Rescission) - at the instance of vendor
1599(4) (where there is breach of warranty on the part of seller) – at the instance of vendee
Rescission in case of breach of a party or lesion

RESCISSION (RESOLUTION) 1191 RESCISSION – 1381
legal basis is substantial breach legal basis is lesion (rescissible contract)
principal remedy, retaliatory vs. unjust party subsidiary remedy – cannot be instituted except when
other remedies exhausted
mutual restitution mutual restitution
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Rescission at the instance of vendor - immovable

1591 1592
Rescission based on Anticipatory breach Rescission based on stipulation regarding automatic
rescission
(b) There is delivery of immovable property - Vendor is given an option to rescind UPON
(c) Vendee has not paid the price JUDICIAL OR NOTARIAL DEMAND
(d) Vendor has reasonable ground to fear the: - However, when there is no judicial or notarial
a. LOSS of PROPERTY; AND demand, vendee may still pay. Offer to pay is
b. LOSS of PRICE sufficient to defeat vendor’s prerogative.
o Art. 1191, par. 3 provides that the court may
grant vendee a new term
However, if there is already a demand, the court may
no longer fix a term.
Principal/subsidiary (?)
Rescission at the instance of vendor – movable / goods

1534 1597
Special right to rescind Technical Rescission
Seller has already parted with possession of the goods… There is no delivery of goods yet…
(1) Seller expressly reserved the right to do so in (1) Buyer has repudiated the contract of sale;
case the buyer should make default; or (2) Buyer has manifested his inability to perform
(2) The buyer has been in default in the payment obligations; or
of the price for an unreasonable time. (3) Buyer committed a breach
Rescission at the instance of vendor - movable

1593 1534 / 1597
Movable Property Movable Property / goods
Automatic rescission of sale of movable is stipulated (See requisites)
Comparative Table of Remedies in case of breach
REMEDIES
VENDOR/SELLER VENDEE/BUYER
1191 1191
1170 1170
(IMMOVABLE) (IMMOVABLE)
1. Rescission under 1591 1. Suspension of payment under 1591
2. Rescission under 1592 2. Right to grace period under Maceda Law
3. Re provisions on Maceda Law
(MOVABLE / GOODS)
(MOVABLE / GOODS) 1. (1598)
1) Action for the price / Specific performance 2. In case of breach of warranty of seller (1599)
(1595) 3. Remedies of Unpaid Seller (1526)
2) Action for Damages
3) Rescission under 1597
4) Rescission under 1593 (there is stipulation)
<UNDER CONSTRUCTION>
* EXTINGUISHMENT OF SALE
Sales are extinguished by the same causes as all other obligations (Art. 1600), such as:
1. Payment or performance of obligation
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger of rights
5. Compensation
6. Novation
7. Rescission
8. Annulment
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Sales are also extinguished by CONVENTIONAL OR LEGAL REDEMPTION.
*Conventional Redemption
* A right of repurchase is an alienable right and within the commerce of man. It may be sold, attached and levied upon.
1. A land was sold in 1971 for P50k. Later, the vendor claims sale to be an equitable mortgage because of unusual
inadequacy of the price. Is he correct?
No. Price is not inadequate because of circumstance and time the thing was sold. In 1971, P50k is already a big amount.
Inadequacy of price is determined at the time of sale.
2. (?) A third person acquires right of repurchase of vendor, which was attached and sold at a public auction where the
former became the highest bidder. May vendor still exercise right of repurchase?
3. (?)(?)(?) A owes B P100k. B filed an action to collect and judgment is rendered in his favor. The subject parcel of land
was awarded to B. May A be compelled to immediately deliver the land?
No, there is one year right of repurchase.
4. A and B entered into a contract of sale with right of repurchase. They agreed that the right of repurchase is fixed at
P600k. Is the stipulation valid?
Yes. Conventional redemption is subject to such “other stipulations which may have agreed upon.” (Art. 1601) (Solid
Homes vs CA)
5. A and B entered into a pacto de retro sale. B, the vendee a retro, sold the subject property to C through an absolute
sale. May A exercise the right of repurchase as against C?
Yes. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the
second contract, there is no mention as to the right to repurchase (Art. 1608)
6. A and B entered into a pacto de retro sale. B, the vendee a retro, leased the subject property to C. May A evict C?
No. A is bound to respect the lease (Art. 1618)
7. B entered into a pacto de retro sale with C. A is a creditor of B. May A proceed directly against C (or levy upon the
subject property which is in the possession of C) for the satisfaction of B’s debt?
No. The creditors of the vendor cannot make use of the right of redemption against the vendee until after they have
exhausted the property of the vendor. (Art. 1610 in connection with Art. 1177) [Noted: exceptions to this rule are: (a) a
mortgage which is recorded prior to sale and (b) mortgage that was foreclosed]
8. A, B, and C are co-owners of an undivided immovable. A sold his share to D, which made D a new co-owner. Partition of
the property took place. Subsequently, B and C sold their part of the property to D. Rule the case.
A must redeem the whole property if he wishes to redeem (Art. 1611)
9. A, B, and C are co-owners of an undivided immovable. They jointly entered into a contract of pacto de retro sale of the
immovable property to D. Rule the case.
None may exercise right to repurchase more than his share. (Art. 1612)
10. X owns a parcel of land. When he died, he left the said land to A, B and C. A, B, and C jointly entered into a contract of
pacto de retro sale of the immovable property to D. Rule the case.
None may exercise right to repurchase more than his share. (Art. 1612)
11. In #s 8, 9 and 10, May the vendee demand from vendors to agree to purchase the whole?
Yes. If the vendors cannot agree, the vendee cannot be compelled to consent to partial redemption. (Art. 1613)
12. A, B, and C are co-owners of an undivided immovable. They entered into separate contracts of pacto de retro sale of
their shares in favor of one vendee, D. Rule the case. May D compel either of A, B and C to redeem the whole?
No, they cannot be compelled, but each of them may independently exercise the right of repurchase as regards his
share. (Art. 1614)
13. A entered into a pacto de retro sale of an undivided immovable with B. B, the vendee, died leaving C, D, and E as his
heirs. May A compel one of the heirs to redeem the whole prop? If the property has already been partitioned, would the
answer be the same?
Whether the property is undivided or partitioned, the heirs cannot be compelled to redeem the whole property, except
when after partition, the whole property has been awarded to one of the heirs, in which case, he may be compelled to
redeem the whole.
14. Suria case (Art. 1616)
15. A entered into a pacto de retro sale of a parcel of land with B. The property is to be redeemed within 3 years from sale.
The land was sold to B at P500k. B further paid P50k for the growing and visible fruits on the land. On the 3rd year after
sale, A sought to redeem the property –
(a) If A will exercise redemption, he must pay P550k as price for sale.
(b) If B did not pay, he is not entitled to reimbursement for crops existing at the time of redemption.
(c) If no crops at the time of sale and some exist at redemption, B is entitled to crops during the last year, i.e. 2nd year.
(d) If there were crops at the time of sale and B paid them, B must receive reimbursement or is entitled to fruits for the
last year because having paid them, the effect is the same as if there were no crops on the land when it was sold.
(Art. 1617)
16. A entered into a pacto de retro sale with B. B, the vendee a retro, mortgaged the property to C. Should B redeem the
mortgage prior to A’s exercise of his right of repurchase?
Yes. The vendor who recovers the thing sold shall receive it free from all charges or mortgages constituted by the
vendee. (Art. 1618)
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* Legal Redemption
• Legal redemption is not applicable to: (enumeration is not exclusive)

(a) barter,
(b) donation
(c) transmission of things by hereditary title,
(d) mortgage,
(e) lease
• Article 1492 provides that the prohibitions as laid down in Arts. 1490 and 1491 are also applicable to legal redemption.
HYPOTHETICAL QUESTIONS
1. A, B and C are co-owners of a parcel of land. A donated his share to X. May B or C exercise legal redemption as against
X?
No. The transmission of ownership is not by onerous title See Article 1619.
2. A, B and C are co-owners of a parcel of land. A, through a will, awarded his share to X. May B or C exercise legal
redemption as against X?
No. The transmission of ownership is not by onerous title See Article 1619.
3. A owns a land adjoining B’s, C’s, and D’s lands, all of which are of 10,000 sq. m. (1 hectare). Supposing B, C, and D
separately sold their lands to X who owns a rural land, may A redeem all of the lands sold to X?
Yes. All the requisites are satisfied.
4. A owns a rural land adjoining B’s, C’s, and D’s rural lands, all of which are of 10,000 sq. m. (1 hectare). Supposing B, C,
and D, in a single contract, sold their lands to X who owns a rural land, may A redeem all of the lands sold to X?
Yes. All the requisites are satisfied. It is not necessary that the sales are made in separate contracts. There are still 4
parcels of land, each not exceeding 1 hectare.
5. A owns a rural land adjoining B’s, C’s, and D’s rural lands, all of which are of 10,000 sq. m. (1 hectare). Supposing B
sold his land to C, whose land is adjoining B’s and A’s land, may A exercise the right of redemption?
No. Look into the purpose of the law.
6. A owns a rural land adjoining B’s, C’s, and D’s rural lands. B sold his land to X for P500k but the property is only valued
at P300k –
(a) May A exercise the right of repurchase? Yes
(b) How much should A pay? P500k. Art. 1620 (on grossly excessive price) applies only to co-owners
(c) If A, B, C and D are co-owners, how much should A pay? P300k, for Art. 1620 would be the applicable provision.
(d) What if B and X freely agreed that subject is to be sold for P500k, may A compel X to resell the land to him for
P300k only? Yes.
7. A, B, and C are brothers and co-owners of a parcel of land. C died, leaving X as his sole heir. B sold his share to X. May
A redeem the share sold by B to X?
NO. X is not a stranger to a contract. He is a co-owner.
8. Same facts as # 7, only that X is C’s wife. May A redeem the share sold by B to X?
NO. X is not a stranger to a contract. He is a co-owner.
9. S
10.
11.
* Assignment of Credit
LEASE
(OUTLINE – borrowed from Atty. Rabuya of Arellano Law)
1. Nature of contract of lease:[Chua Tee Dee v. Court of Appeals, G.R. No. 135721, 27 May 2004, 429 SCRA 418, 434, citing Lim
Si v. Lim, 98 Phil. 868, 870 (1956); Bugatti v. Court of Appeals, 397 Phil. 376, 395 (2000), citing Vitug, Compendium of Civil Law
and Jurisprudence, 1993 edition, 653-654].
[1.1] Consent is necessary:
[1.1.1] General rule: [Pagurayan v. Reyes, G.R. No. 154577, July 23, 2008].
[1.3.2] Exception: [Art. 448, NCC].
[1.4] Requirement of Formality: [Art. 1403(2)(e), NCC; Fernandez v. CA (166 SCRA 577]
[1.5] Lessor need not be the owner: [Ballesteros v. Abion, 482 SCRA 23
2. Kinds of lease: [1642, NCC]
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by Diory Rabajante
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3. Term of lease in lease of things: [1643; 1403(2)(e), NCC].

[3.1] What can be the object of lease? [1645, NCC]
4. Lease of lands (be it rural or urban):

[4.1] Who are prohibited from becoming party: [1646 and 1647, NCC];
5. Rights and obligations of the lessee:

[5.1] Assignment of lease contract: [1649, NCC]
[5.2] Authority to sublease: [1650-1652, NCC]
6. Obligations of the lessor to lessee:
[6.1] 3 Principal obligations of lessor to lessee: [1654, NCC]
[6.1.1] Effect of breach: [1658 and1659, NCC]

[6.1.2] What kind of trespass is contemplated? [G.Q. Garments, Inc, v. Miranda, 495 SCRA 741]
[6.1.3.3] Remedy of lessee in case of trespass in fact: [G.Q. Garments, Inc. v. Miranda, supra.].
7. Obligation of the lesse: [1657, NCC; Collage Assurance Plan v. Belfranlt Development, Inc., 538 SCRA 27].
8. Termination of lease:
[8.1] If for determinate period: [1669, NCC; Josefa v. San Buenaventura, 484 SCRA 49].
[8.2] Implied new lease (tacita reconduccion): [1670, NCC]
[8.3] If period of leased is not fixed: [1687, NCC; Tisa v. CA, G.R. No. 148562, Nov. 25, 2004]
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SALES AND LEASE REVIEWER

(by Diory Rabajante)

* CONTRACT OF SALE, defined (Art. 1458, CC)

* SOURCES OF RIGHTS / OBLIGATIONS (Art. 1156)

* CHARACTERISTICS OF A CONTRACT OF SALE

1. Nominate - law gave it a name, i.e . “SALE”

2. Principal - can stand on its own, unlike an accessory contract

3. Bilateral - imposes obligation on both parties

4. Onerous – imposes valuable consideration

5. Commutative – a thing of value is exchanged for equal value

6. Consensual – a contract of sale is perfected by mere consent.

* CONTRACT OF ABSOLUTE SALE VS. CONTRACT OF CONDITIONAL SALE

* CONTRACT OF SALE VS. CONTRACT TO SELL

CONDITIONAL CONTRACT OF SALE CONTRACT TO SELL

* CONTRACT OF SALE VS. CONTRACT FOR A PIECE OF WORK

* CONTRACT OF SALE VS. CONTRACT OF AGENCY TO SELL

SALE CONTRACT OF AGENCY TO SELL

* CONTRACT OF SALE VS. DACION EN PAGO

SALE DACION EN PAGO

* CONTRACT OF SALE VS. BARTER

 value of thing < amount of money or its equivalent

“Manifest intention” – judged by the parties contemporaneous and subsequent acts

* CONTRACT OF SALE VS. LEASE

1. Exact fulfillment of obligation in case of failure to pay (specific performance)

* PARTIES TO A CONTRACT OF SALE

Article 44: The following are juridical persons:

(1) The State and its political subdivision

Article 1327: The following cannot give consent to a contract:

(1) Unemancipated minors

(1) One of the parties is incapable of giving consent (want of capacity)

Article 1489: (refer above)

1. When separation of property was agreed upon in marriage settlements

REASON FOR THE RULE

• Prevent commission of fraud or prejudice to third persons

In case of disagreement, the court shall decided, WON:

* ELEMENTS OF A CONTRACT OF SALE

-See Perfection Stage

A contract of sale is perfected by mere consent. (Art. 1475)

ELEMENTS OF SUBJECT MATTER

Examples of void sale due to being illicit:

DETERMINATE OR AT LEAST DETERMINABLE

Why should the price be certain?

What is the meaning of “or its equivalent”?

Simulated price vs Simulated contract?

* STAGES IN THE LIFE OF A CONTRACT OF SALE

* NEGOTIATION STAGE (OPTION CONTRACT, RIGHT OF FIRST REFUSAL)

What is an option contract?

Option Contract vs Earnest Money?

Southwestern Sugar and When an option is not supported by a separate consideration, it is

petitioners to buy (or to re-sell them) the foreclosed property (not

* PERFECTION STAGE (OFFER AND ACCEPTANCE)

A contract of sale is perfected by mere consent. (Art. 1475)

* Can there be a reformation of an oral contract of sale?

* Electronic Commerce Act

IN PARI DELICTO RULE (for illegal cause or object)

1. BOTH are in pari delicto

* REQUISITES OF DELIVERY (3 I’s)

* SALE OF GOODS BY DESCRIPTION OR BY SAMPLE

Vda. De Sarmiento vs Lesaca Although it is postulated that the execution of a public