SALES – JUDGE EDGARDO BELLOSILLO

September 07, 2021 A: On the part of the vendor, the obligation to transfer ownership
and to deliver, while on the part of the vendee is the obligation to
pay.
Sale – a contract whereby 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
Q: Is it possible that a vendor can sell a particular thing or
equivalent (Art. 1458).
object even though he is not yet the owner?
Vendor – obligation to transfer the ownership and
A: YES. Art. 1459 provides that the vendor must have a right to
obligation to deliver a determinate thing.
transfer the ownership of the thing at the time it is delivered. He
Vendee – obligation to pay a price certain in money or its may not be the owner upon the perfection of the sale, but what is
equivalent. required is that he is the owner at the time of delivery.

Q: Is a contract of sale a mode of acquiring ownership? Nemo dat quad non habet – nobody can dispose of that thing
which does not belong to him.
A: NO. The only modes of acquiring ownership are:
1. Law
Essential elements of a contract of sale
2. Contract
Absence of any of the three elements renders the sale void.
3. Testate or intestate succession
1. Consent/meeting of the minds
4. Tradition
2. Determinate/specific object – there must be an agreement
5. Prescription
between the parties as to what the object of the sale is.
Only title is acquired from a contract of sale.
3. Price certain in money or its equivalent

Q: What arises after the parties entered into a contract of

Characteristics of a contract of sale:
sale?
1. Consensual – perfected by mere consent.

| Page 1
 SALES – JUDGE EDGARDO BELLOSILLO

2. Bilateral – both parties are bound by obligations 2. Warranty against hidden defects
dependent upon each other.
3. Warranty as to the merchantability
3. Onerous – to acquire rights, valuable consideration must
be given.
Kinds of sales:
4. Commutative – the values exchanged are equivalent to
each other. A. As to the subject matter:
5. Principal – it can stand alone without the need of another 1. Sale of real/immovable property
contract.
2. Sale of personal/movable property
6. Nominate – the Code refers to it by a special designation
or name. B. As to the value of things exchanged:
1. Commutative

Accidental elements 2. Aleatory – price is less than the value of the object (e.g.,
lotto ticket).
Those which may be present or absent in the contract; does not
affect the validity of sale. C. As to whether the object is tangible or intangible:

1. Time 1. Sale of property

2. Place 2. Sale of a right – assignment of a right or credit,

copyright, trademark, goodwill.
3. Presence of conditions – must be lawful
(a) Chose in possession – tangible object
4. Interest
(b) Chose in action – intangible object; right (e.g., right
5. Penalty to claim money arising from an accident caused by
another’s negligence).

D. As to the validity or defect of the transaction:

Natural elements
1. Valid sale
Those which are inherent in the contract of sale.
2. Rescissible sale
1. Warranty against eviction

| Page 2
 SALES – JUDGE EDGARDO BELLOSILLO

3. Voidable sale happening of which results in which gives rise to the

the loss of rights acquired). acquisition of obligations).
4. Unenforceable sale Ownership is retained by the
Title over the property
5. Void sale seller, regardless of delivery
generally passes to the buyer
and is not to pass until full
upon delivery.
E. As to the legality of the object: payment of the price.
Since the seller retains
1. Licit object After delivery has been made, ownership, despite delivery,
2. Illicit object the seller has lost ownership he is enforcing and not
and cannot recover it unless rescinding the contract if he
a. Per se (of its nature) – e.g., decayed food the contract is rescinded. seeks to oust the buyer for
failure to pay.
b. Per accidens (by law) – e.g., drugs

Kinds of delivery:
Q: When is the thing considered determinate? 1. Actual – turning over the possession of the property to the
A: When it is particularly designated or physically segregated buyer.
from all others of the same class (Art. 1460). 2. Constructive
a. Execution of public instrument (SLDC v. CA)
Requisites of object: b. Symbolic delivery (handing over the key to the
1. Determinate property)

2. Licit or lawful c. Traditio longa manu (long hand)

3. Must not be impossible/not outside the commerce of man d. Traditio brevi manu (short hand)
– e.g., the sun, the moon e. Traditio constitutum possessorium
f. Quasi-traditio
Contract of sale Contract to sell
The payment in full of the
The non-payment of price is a Q: When will ownership of the property revert to the seller in
price is a positive suspensive
resolutory condition (the
condition (the happening of case of a contract of sale?

| Page 3
 SALES – JUDGE EDGARDO BELLOSILLO

A: When seller rescinds or resolves the contract of sale. Conditional sale Contract to sell
In conditional sale, the first
element of consent is present
Q: In the case of a contract to sell, is there a need on the part but it is subject to a condition If the buyer fully paid the
of the seller to demand from the buyer to transfer the or contingent event which price, the ownership will not
may or may not happen. automatically transfer to the
ownership?
If the contingent event will not buyer even though there is a
A: NO, because the seller retains ownership of the object. happen, the contract of sale delivery.
will be abated so there will be
no contract of sale to speak of.
If the condition will be
Q: Is a contract to sell considered a conditional sale?
fulfilled, there is a perfected
A: NO. In a contract to sell, the seller retains ownership while in a contract of sale. There is still a need on the part
conditional sale, there is a condition that must be complied by the If the condition is fulfilled and of the prospective seller to
parties. the object is delivered to the execute a deed of absolute
buyer, the ownership, by sale.
operation of law automatically
transfers to the buyer.
Q: In a conditional sale, is it possible for the seller to retain
ownership until the buyer fully pays the price?
Pactum reservati domini Contract to sell
A: It could be possible. That condition is called suspensive Preparatory to a contract of
condition, in which the happening of the event will give rise to It is a form of conditional sale.
sale.
obligations. The parties can agree that the seller will retain the There is no delivery of the
ownership until the full payment of the price. There is a delivery of the
object.
object.
Payment through installment

Q: Resolutory condition v. suspensive condition?

Contract of sale
A: The happening of the suspensive condition will give rise to There is no pre-existing debt.
obligations while resolutory condition will extinguish the Gives rise to obligations.
obligation. The cause or consideration is
the price (seller) or obtaining
the object (buyer).
Dacion en pago
There is a pre-existing debt.
Extinguishes obligations.
The cause or consideration is
the extinguishment of debt
(debtor) or the acquisition of

| Page 4
 SALES – JUDGE EDGARDO BELLOSILLO

the object offered in lieu of the

original debt.
Greater freedom in the Less freedom in determining
determination of the price. the price.
Giving of object
Payment of price extinguishes
extinguish completely or
obligation.
partially the obligation.
Contract of sale Cession
Ownership is not transferred.
There must at least be 2
creditors.
Transfer of ownership upon
Creditors acquire the right to
delivery.
sell.
The proceeds of the sale is
acquired by the creditors.
Emptio rei speratae Emptio spei
Sale of hope; it does not matter
If the thing does not if the expected thing
materialize, the sale is not materializes or not because
effective. what matters is that the hope
itself validly existed.
Object is expected thing; Object of the contract is the
future thing. hope; present thing.
Q: What about if it is a vain hope?
A: The contract is void if it is a vain hope.
may
Contract of sale Contract of loan
An agreement between
parties wherein one party
lends the other money and
An agreement between two
that the money will be paid
parties with regards to a
back.
specific object and payment.
The amount is substantially
smaller than the value of the
security given.
Lease
The lessor or landlord transfers merely the temporary possession
and use of the property for a definite or indefinite period subject
to the payment of rentals every month, or depending on the
agreement of the parties.
Q: What goods may be the object of the contract of sale?

Q: Does emptio spei assure the existence of the quantity and
quality of the thing, of the hope?
A: NO. There is not guarantee. There is just the hope. Unlike in
emptio rei speratae, which is based on the existing thing, but the
quality or quantity is not assured also.
A: Existing goods and future goods (Art. 1462). Existing goods are
goods owned or possessed by the seller. Future goods are goods
to be manufactured, raised, or acquired by the seller.
Q: Can future goods be the subject of a contract of sale?

| Page 5
 SALES – JUDGE EDGARDO BELLOSILLO
A: YES (Art. 1462).
Q: Can future inheritance be the subject of a contract of sale?
A: NO.
Q: Is the sole owner of the thing may sell the undivided
interest therein?
A: YES (Art. 1463). Once a portion of that undivided interest is
sold to another person, that person becomes a co-owner.
Q: Mr. A owned a sports car. Can he sell ½ of that sports car to
Mr. B?
A: YES. They become co-owners and may agree when and how to
use the sports car.
Q: You own 1,000 square meters of a parcel of land. You sell
500 square-meters to another without mentioning what
specific portion of the property. Is that possible?
A: YES. The buyer becomes a co-owner of the property, owning
50% of that 1,000 square meters because there is no agreement
as to which portion of the property was sold.
Q: May fungible goods be the object of a contract of sale?
A: YES (Art. 1464). Fungible goods may be replaced by another of
the same kind or quality.
Q: Mr. A thought that he had 1,500 sacks of rice inside his
warehouse. He sold 1,000 sacks of rice to his friend. What
will happen?
A: The buyer will only have a right to the 1,000 sacks of rice in the
warehouse.
Q: Supposing there are only 800 sacks of rice. It was found out
that there were only 800 sacks of rice in the warehouse?
What is the obligation of the vendor?
A: Vendor has to pay the deficiency or deliver the deficit of 200
sacks of rice.
Q: Can objects subject to a resolutory conditions be the
subject of a contract of sale?
A: YES (Art. 1465). Resolutory conditions mean the happening of
a certain event will extinguish the obligation.
Example: Mr. A sold his car to Mr. B for 500,000 with a right
to repurchase within two years. Mr. B, one year after buying
the car, he sold it to Mr. C. What will happen if Mr. A will
redeem the car within 2 years? What will happen to the sale
of the car by Mr. B to Mr. C?
| Page 6
 SALES – JUDGE EDGARDO BELLOSILLO

A: The transaction between Mr. B and Mr. C will fail. Mr. A can still The agent delivers the price
demand for the delivery of the car subject to the payment of the The buyer pays the price. which in turn he got from his
price of 500,000 plus interest, if there is one. buyer.
The agent who is supposed to
sell does not become the
The buyer, after delivery,
owner, even if the property
Example: A was not able to pay his obligation and there was a becomes the owner.
has already been delivered to
collateral. That collateral was subjected to an auction sale him.
with a right to redeem the property (redemption right; The agent who sells assumes
within 1 year from registration with the Register of Deeds). A no personal liability as long as
redeemed the property during the auction. The owner has a The seller warrants. he acts within his authority
preferential right over the property. But if there is no and in the name of the
redemption by the owner, the sale to the auction buyer is principal.
valid.

Q: What should be considered in construing whether a

Contract of sale v. contract for piece of work (Art. 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.
General public
Contract of sale
Contract for piece of work
The goods are to be
manufactured specially for the
customer and upon his special
order, and not for the general
market.
Specific buyer
Agency to sell
contract is a contract of sale or an agency to sell?
A: The essential clauses of the whole instrument shall be
considered (Art. 1466).
Example: Contract of lease with option to buy. How do you
interpret that?
A: In construing a contract containing provisions characteristic of
both the contract of sale and of the contract of agency to sell, the
essential clauses of the whole instrument shall be considered (Art.
1466). You must go over the entire document to identify the
agreement of the parties.
A contract of lease with the option to buy is a kind of
conditional sale.

| Page 7
 SALES – JUDGE EDGARDO BELLOSILLO

Rules in determining if contract is one of sale or barter (Art.

1468):

• If value of the object is more than the price = BARTER

• If the price is more than the value of the object = SALE

• If 50-50 = SALE

Q: Mr. A bought the car of Mr. B for 500,000. Mr. A gave

200,000 pesos to Mr. B and he gave his Rolex watch he valued
at 300,000. Is the contract one of sale or barter?
A: BARTER because the price is 500,000 and the money paid is
200,000. The value of the car is more than the money provided.

| Page 8
SALES (JUDGE EDGARDO BELLOSILLO)
September 14, 2021
Q: When is the price considered certain?
A:
(1) If it is with reference to another thing certain;
or
(2) The determination of the price be left to the
judgment of third persons (Art. 1469).
Q: Is it possible for the contracting parties to
designate a third party fix the price for them?
A: YES (Art. 1469).
Q: What is the effect if the third person designated
is unable or unwilling to fix the price? What
happens to the contract of the parties? Is there a
perfected contract of sale?
A: There is no perfected contract. The sale is
inefficacious. The price certain is an essential element
of a contract of sale. Absence of a price, there is no
contract of sale.
Q: Is there still a possibility that the parties will
come up with an agreement if there is no price?
Can it be cured?
A: YES. The parties may subsequently agree upon the
price after the refusal of the third person designated
to fix the price (Art. 1469, par. 2)
Q: When may the Court fix the price?
A: If the third person/s acted in bad faith or mistake
(Art. 1469, par. 3)
GR: The price fixed by the third person is binding on
the contracting parties.
XPNs:
1. Third persons acted in mistake or bad faith.
2. Third persons disregards instructions or
specifications given by the contracting parties.
Q: What is the effect of error of judgment by the
third person in fixing the price?
A: It is binding on both parties.
Q: What is the effect if the price is not fixed by the
third persons designated?
A: If the third persons refuse to fix the price without
the fault of the buyer or the seller, there is no contract
because there is no price.
Q: Suppose there is fault on the part of the seller to
fix the price and the third person is unable to fix
the price, what is the remedy of the buyer?
A: Rescission or demand the fulfillment.
Q: In a demand for the fulfillment, who will fix the
price?
A: The Court shall fix the price.
Statute of Frauds
→ Require certain contracts to be in writing to be
enforceable.
→ Purpose: To prevent fraud or forgery in the
enforcement of the obligations.
→ Transactions under Art. 1403:
(a) An agreement that by its terms is not to be
performed within a year from the making
thereof;
(b) A special promise to answer for the debt,
default, or miscarriage of another;
(c) An agreement made in consideration of
marriage, other than a mutual promise to
marry;
UST 2G | 2021 | Page 1
SALES (JUDGE EDGARDO BELLOSILLO)
(d) Sale of personal property of 500 pesos or
more;
(e) Agreement for the leasing for a longer
period than 1 year or sale of real property
or of an interest therein;
(f) Representation as to the credit of a third
person.
Q: Supposing that a couple agreed to marry in June
next year. In preparation for the wedding, the
bride spent a lot of money but one month before
the wedding, the groom backed out from the
promise. Can the bride compel the boyfriend to
marry her?
A: NO. She can only file an action for damage for the
expenses. A promise to marry cannot be a subject of a
contract.
Basic fundamental principles on the Statute of
Frauds:
1. The SOF applies to executory contracts: contracts
about to be executed. If there is a performance or
delivery on the part of the party, the provisions of
the SOF will not apply.
Q: There is an agreement between A and B for the
sale of real property. A sold the property to B. A
delivered the property to B. They agreed that B
will pay 1 month after. One month after, B
tendered the payment but A refused to accept
because according to him, there is no written
contract, so the agreement is unenforceable. Is the
argument of A tenable?
A: NO, because the contract has been executed as there
is already delivery of the property. Pursuant to the
SOF, when there is partial or complete execution, the
SOF is inapplicable. Thus, the contract is enforceable.
2. The SOF can be waived by one of the parties even
though there is a need for a written contract.
3. It is personal. Only the contracting parties to the
transaction can invoke the SOF.
Q: What is a right of first refusal?
A: The right of first refusal or the preferential right is
a right which gives a party a right to have the first
opportunity to either purchase or lease a property, or
to enjoy a right. The right of first refusal is provided by
contract or by law.
Q: Do all contracts of sale/lease automatically
have the provision of right of first refusal?
A: NO. It must be agreed or stipulated by the
contracting parties.
Q: Is there a need of a consideration for the lessee
to have the right of first refusal?
A: NO. There is nothing required to have the right of
first refusal in the contract. Unlike in option money or
earnest money which requires a separate amount of
money.
Q: Is the gross inadequacy of the price invalidate
the sale?
A: NO (Art. 1470). As a general rule, the gross
inadequacy of the price will not invalidate the sale.
Q: Under what situation will that affect the sale?
A:
1. If it may indicate a defect in the consent; or
2. The parties really intended a donation or some
other act or contract.
Jurisprudence: A property worth ₱60,000 was sold
for only ₱867. Can the Court invalidate the sale?
UST 2G | 2021 | Page 2
SALES (JUDGE EDGARDO BELLOSILLO)
YES, if the price is so inadequate as to shock the
conscience of the court.
Q: What is the effect if the price is simulated?
A: The contract of sale is void (Art. 1471), but the act
may be shown to have been in reality a donation, or
some other act or contract.
Q: What is meant by “simulated”?
A: There is no intention on the part of the parties to
pay the price. Kunwari there was a sale.
Q: Can parents sell property to their children?
A: YES.
Q: Can the price of securities, grains, or liquids be
based on another thing?
A: YES (Art. 1472). The parties can agree to base the
price on the ongoing rate on stock exchanges on a
particular day.
Q: May the determination of the price be left to the
discretion of one of the contracting parties?
A: NO (Art. 1473). However, if the price fixed by one of
the parties is accepted by the other, the sale is
perfected.
Q: What is the rationale?
A: Consent is an essential element. If the fixing of the
price is left to the discretion of one of the contracting
parties, then the element of consent is lacking.
Q: What is the effect if the price cannot be
determined?
A: The contract is inefficacious (Art. 1474). The
contract of sale is void.
Q: Supposing there was a delivery of the object to
the buyer, however, there was no agreement with
respect to the price. Can the seller demand
payment from the buyer?
A: YES (Art. 1474, second sentence). The payment
must be a reasonable price.
Q: What is a reasonable price?
A: It is a question of fact. It is dependent on the
circumstances of each particular case.
Q: When is the contract of sale perfected?
A: When there is a meeting of the mind upon the thing
which is the object of the contract and upon the price
(Art. 1475).
Q: Supposing the parties just orally agreed with
respect to the object sold by the seller to the buyer.
And the buyer agreed to pay but their agreement
was just oral. Was the sale perfected?
A: YES.
Q: Is it required that for the sale to be in writing to
be valid and enforceable?
A: YES. If the transaction falls under the Statute of
Frauds, then it must be in writing to be enforceable.
But the general rule, even though it is oral, the
transaction is valid and enforceable.
Q: Must it be reduced in a public instrument to be
binding?
A: NO. But to affect third persons, it must be in a public
instrument.
UST 2G | 2021 | Page 3
SALES (JUDGE EDGARDO BELLOSILLO)
Q: Is a private instrument binding to a third party?
A: NO. It will only be binding to a third party if it is
notarized then becomes a public instrument.
Q: The seller and buyer are far away from each
other and through a telegram, the buyer
consented to the sale of a property. However,
while the telegram was still out for delivery and
not yet received by the seller, the seller changes
his mind. Is there a perfected contract of sale?
A: Seller can still take back his offer before acceptance.
He can sell the property to another person.
Q: A sold his watch to B and the value of the watch
is 400 pesos. They agreed that B will pay the watch
two years after. Two years later, B demands the
delivery of the watch but A refused. According to
him the agreement was not reduced in writing.
Can B compel A to accept payment?
A: NO, because under the SOF, if the transaction will
happen after the year, it must be in writing in order to
be enforceable.
Q: What formalities are required in the contract of
sale?
A:
1. Writing or oral.
2. It may also be partly oral and partly written.
3. It can be inferred from the actions of the
parties.
These are subject to the SOF or any applicable laws.
Q: When is sale by auction perfected?
A: The sale is perfected when the auctioneer
announces its perfection by the fall of the hammer or
in other customary manner.
Q: May a bidder in that auction sale retract his bid
before the fall of the hammer?
A: YES.
Q: Can the auction seller participate in the auction
sale?
A: YES, provided that:
1. The right to bid is reserved;
2. Notice was given; and
3. It must not be prohibited by any law or
stipulation.
Q: Can the auctioneer (the one conducting the
auction) participate in the bidding process?
A: As a general rule, he cannot personally participate.
But he can employ someone to participate or bid for
him.
Q: How do you define “puffing”?
A: It is a secret bidding on behalf of the seller. The
seller will employ a third person to participate in the
bidding process.
Q: How is actual delivery done by the vendor?
A: When control and possession of the property is
turned over to the buyer.
Q: What about constructive delivery?
A: Other means of delivering the property without
actually transferring the property to the buyer.
Q: What are the kinds of constructive delivery?
A:
UST 2G | 2021 | Page 4
SALES (JUDGE EDGARDO BELLOSILLO)
1. Symbolic delivery – delivery of the key of the
place where the property is sold.
2. Traditio longa manu – by mere consent or
agreement.
3. Traditio brevi manu – if the buyer had
already the possession of the object even
before the purchase. Such as when the lessee
buys the apartment from the lessor.
4. Traditio constitutum possessorium –
opposite of brevi manu; possession as owner
changed. For example, the lessor becomes the
lessee.
Q: What is quasi-tradition?
A: Delivery of rights, credits, or incorporeal property,
made by:
1. Placing titles of ownership in the hands of a
lawyer; or
2. Allowing the buyer to make use of the rights.
Mutual promise – a promise to buy and sell a
determinate thing for a price certain is reciprocally
demandable. There is a mutual obligation on the part
of both parties to comply (Art. 1479, par. 1)
Unilateral promise to buy and sell (Art. 1479, par.
2) – if the promise is accompanied by a consideration
distinct from the price and it is binding upon the
parties.
Q: What is a policitation?
A: This is a unilateral promise to buy or to sell which
is not accepted. This produces no juridical effect, and
creates no legal bond. This is a mere offer, and has not
yet been conversed into a contract.
Q: Supposing A owns a parcel of land and he
offered to sell it to B for 1 million. A gave B one
month to decide and accept the offer. Later, A told
B that he changed his mind and that he will sell it
instead to B for 1.2 million. Supposing B, after 1
month, came to A and brought 1 million as
payment for the land. Can B compel A to accept the
payment of 1 million initially offered?
A: NO. When he was given 1 month to ponder the sale,
there was no consideration given that is distinct from
the price.
Q: In the same example, B informed A that he is
accepting his offer (there was no counter-offer
yet). Can B compel A to accept the payment?
A: YES. Since the offer is accepted, there is already a
perfected contract of sale. There is a unilateral
acceptance to buy and sell.
Q: In the same example, B gave 1,000 pesos option
money to protect his rights. Before the end of 1
month, A changed his mind and that he will be
selling his land for 1 million. Can B compel A to
accept the payment?
A: YES, because there was a separate consideration.
He has a right under the law whether he will accept
the offer or not. A must respect that. B has the
discretion whether he will buy or not.
Q: Who bears the risk of loss?
A:
a) If the object has been lost before perfection,
the seller bears the loss.
b) If the object was lost after delivery to the
buyer, clearly the buyer bears the loss. (Res
perit domino — the owner bears the loss.)
c) If the object is lost after perfection but before
delivery, the buyer bears the loss.
XPNs to the XPN:
1. If the seller would be guilty of fraud or
negligence.
2. If the object is a generic thing because a
generic thing does not perish.
UST 2G | 2021 | Page 5
SALES (JUDGE EDGARDO BELLOSILLO)

3. If the object sold consists of fungibles sold for A: Sale by description. It is not sale by sample because
a price fixed according to weight, number, or the seller does not see the actual sample of the
measure. product.

September 28, 2021 Case: Vda. De Jomoc v. Court of Appeals

→ Double sale
Sale by description

→ Where the seller sells things as being of a

certain kind, the buyer merely relying on the Earnest money Option money
Also known as “arras” is
seller’s representations or descriptions.
something of value to
→ Generally, the buyer has not previously seen Money given as a
show that the buyer
the goods, or even if he has seen them, he distinct consideration
was really in earnest,
believes (sometimes erroneously) that the for an option contract.
and given to the seller
description tallies with the goods he has seen. to bind the bargain.
Part of the purchase Not part of the purchase
Sale by sample
price. price.
→ Where the seller warrants that the bulk of the Proof that the contract
goods shall correspond with the sample in of sale is perfected.
kind, quality, and character.
→ Only the sample is exhibited; the bulk is not Q: What will happen if the contract does not push
present, and so there is no opportunity to through? Will the option money be forfeited?
examine or inspect it.
A: Vendor can forfeit the option money.
Sale by description and sample

→ Must satisfy the requirements in both, and not

in only one. Q: Is it possible that the option money may become
earnest money?
A: YES, but there must be an agreement between both
Q: What will happen if the bulk of the goods parties that the option money given will become
delivered does not correspond with the earnest money.
description or sample made by the seller?
A: Buyer can rescind contract of sale.
Q: What are the formalities required in a contract
of sale?
Q: Can the buyer accept the goods delivered even A: No specified formalities required. It may be:
though they do not correspond with the
description or sample? 1) Written
2) Verbal
A: YES. 3) Partly written and partly verbal
4) Implied from the acts of the parties

Q: How would you consider online selling: is it a

sale by description, by sample, or both? Q: Is the contract of sale enforceable if it is purely
oral?

UST 2G | 2021 | Page 6

SALES (JUDGE EDGARDO BELLOSILLO)
A: It depends if the sale falls under the Statute of
Frauds. If it falls under the SOF, it must be in writing in
order to be enforceable.
Note: Art. 1403(2)
Q: Should the contract of sale be reduced in a
public instrument in order to be enforceable?
A:
Q: What if the sale of a property is made through
an agent?
A: The authority of the agent must be in writing in
order to be VALID. Otherwise, the sale is void.
Q: Suppose that the document executed by both
parties (sale of real property) is a private
document, is it a valid sale?
A: Between the contracting parties, it is valid and
binding, but not binding against third persons. The
law does not require that the contract of sale be in a
private instrument in order to be valid or binding.
Q: Can one of the parties demand that it must be
reduced in a public instrument?
A: YES.
Q: When will the private instrument become a
public instrument?
A: If it is notarized by a notary public.
Q: What is the reason that the instrument should
be reduced in a public instrument?
A: For convenience, for registration, and to be binding
against third persons.
Q: What will happen if the notary public has no
authority to notarize the document? Is the
document still valid?
A: YES, the document is still valid between the parties.
However, the document becomes questionable.
Q: What is your recourse?
A: Go after the notary public. File an administrative or
criminal case against him.
Case: Macion v. Guiani
→ Demand of the execution of the contract of sale
Recto Law (Art. 1484)
→ Sale of personal property on installment
Requisites for the application of Art. 1484:
1. There must be a contract of absolute sale
2. What is sold is personal property
3. Payment must be on an installment (not on
cash or straight terms)
Straight terms – after an initial payment, the balance
is paid in its totality at the time specified, also known
as a cash sale.
Alternative remedies of vendor under Art. 1484:
1. Exact fulfillment
2. Cancel the sale
3. Foreclose the mortgage
Q: Can the vendor exercise these 3 rights
cumulatively?
UST 2G | 2021 | Page 7
SALES (JUDGE EDGARDO BELLOSILLO)
A: NO. If one is exercised, the other cannot be made
use of. These remedies cannot be exercised
cumulatively or successively.
Q: What is required in the cancellation of the
contract of sale?
A: If there is failure to pay two or more installments.
Q: What if there is only one default on the payment
of installment? Can the vendor exercise
cancellation of the contract?
A: NO, there must be failure to pay two or more
installments (Art. 1484, par. 2).
Q: What about in foreclosure?
A: There must be two or more unpaid installments.
Q: In exact fulfillment?
A: There must be only one default on the part of the
buyer.
Q: In foreclosure of mortgage, supposing that the
vendor and the vendee agreed that the vendor
would foreclose the chattel mortgage. If the
vendor exercises the right to foreclose the chattel
mortgage, in case there is a deficiency—meaning,
there is still a balance. Supposing the balance is
50,000 and the vendor, after selling thru public
auction, the motorcycle for 40,000, and there is
still deficiency of 10,000, can the vendor run after
the vendee for the deficiency?
A: NO.
Q: Supposing there is an agreement between the
parties that the vendor can still run after the
vendee in case of a deficiency, is that agreement
valid?
A: NO. Any agreement to the contrary shall be void
(Art. 1484, last par.)
Q: Is that provision on non-recovery of deficiency
unconstitutional because it will unduly impair the
obligation of contract?
A: NO. The proviso on non-recovery of the deficiency
(also known as Recto Law) is constitutional in view of
the public policy involved. Moreover, it does not
unduly impair the obligation of contracts inasmuch as
it is not retroactive.
Case: Optimum Development Bank
→ There was a valid revocation or rescission of
contract of sale
Maceda Law
→ Provides protection to buyers of real property
in installment against oppressive and onerous
conditions imposed by the vendor.
Remedy of the vendee if he was able to pay 2-years
installment:
→ Continue payment with a grace period of 1
month for every 1 year of installment
payments made without additional interest.
↳ This right can only be exercised once
in every 5 years.
Obligation of vendor if contract is cancelled
→ The seller must refund to the buyer 50% of the
total payments made.
→ If vendee paid for more than 5 years: an
additional 5% every year but not to exceed
90% of the total payments made.
UST 2G | 2021 | Page 8
SALES (JUDGE EDGARDO BELLOSILLO)

Q: Can the buyer assign all his rights over the

property or reinstate his contract, supposing the
Recto Law – Foreclosure of Mortgage
buyer was not able to pay on the installment due?
Q: Supposing the vendor resorted to foreclosure of
A: YES. The buyer shall have the right to sell his rights
mortgage and then eventually, he changed his
or assign the same to another person or to reinstate
mind. Instead of foreclosure, he resorted to
the contract by updating the account during the grace
execution. Is it still prohibited for the vendor to
period and before actual cancellation of the contract
abandon the foreclosure and resort to execution?
(Sec. 5, Maceda Law).
A: NO, but there must be full exercise of the remedy to
Beyond the grace period and if there is no
be barred.
cancellation yet, the buyer can still exercise this right.

Q: Supposing the vendor now abandoned the

Q: Can the buyer advance the payment?
foreclosure, and it resorted to execution. In the
A: YES. The buyer shall have the right to pay in event that there is a deficiency, can the vendor
advance any installment or the full unpaid balance of demand for the deficiency of the vendee.
the purchase price any time without interest and to
A: YES, because the one resorted to was not
have such full payment of the purchase price
foreclosure. If the one resorted was foreclosure, then
annotated in the certificate of title covering the
recovery of deficiency is prohibited.
property (Sec. 6).

Q: Mr. A sold to Mr. B by installment the

Q: What are the lots excluded under Maceda Law?
motorcycle. Mr. C, a third party, guaranteed that in
A: case there is a foreclosure and there is a
deficiency, Mr. C will pay for the deficiency. Can
1) Industrial lots
Mr. A demand from Mr. C later on for the deficiency
2) Commercial lots
if after foreclosure there is still a deficiency?
3) Those covered under Land Reform
4) Those covered under Mortgage Sales A: NO. The stipulation is contrary to Recto Law, thus,
void.

Q: Supposing X bought a lot from Palmera Homes

for the price of 1 million. The buyer was able to Q: What is the rationale as to why Mr. C cannot pay
secure a loan from the bank to pay the balance. He for the deficiency?
was able to give a down payment of 250,000 and
A: Mr. C is not a third party. Circumvention of Art.
then the buyer secured a loan from the bank for
1484.
150,000 then he was able to pay 750,000 and then
the buyer is supposed to be paying an installment
to the bank. But the bank only paid Palmera.
Supposing the buyer was not able to pay the Q: If Mr. C will be required to pay for the deficiency,
installment. Is this transaction still covered by can Mr. C eventually demand from Mr. B the
Maceda Law? payment of that deficiency?

A: NO, because the installment was fully paid and the A: There is a circumvention of the provision under Art.
obligation of the buyer is already with the bank, which 1484.
is another transaction.

UST 2G | 2021 | Page 9

SALES (JUDGE EDGARDO BELLOSILLO)

Q: Mr. A sold to Mr. B a motorcycle payable in

installment and they agreed that Mr. B will use
Contents of complaint for expropriation:
another motorcycle as his collateral. In case there
is a non-payment on the part of the vendee, can Mr. 1. Purpose of expropriation
A foreclose the other motorcycle which was used 2. Description of the property to be expropriated
as collateral? 3. Names of the persons owning or claiming or
occupying or having interest in the property
A: NO. The vendor can foreclose only the object which
is the subject of the sale. He cannot foreclose the other
property.
October 05, 2021

Condition imposed on Condition imposed on Who can enter into a contract of sale?
the perfection of the the performance of an
contract obligation Any persons, natural or juridical, who have the
If the condition is not capacity to enter into a contract of sale.
complied:
If the condition is not 1) Refuse to
complied, there will be proceed or Who are natural persons?
no contract. rescission; or
2) Waive the At least 18 years of age.
condition.

Case: Romero v. Court of Appeals Who are juridical persons?

Partnerships, corporations, associations, or
cooperatives. They have the personality separate and
Eminent domain distinct from the incorporators and stockholders.
→ Right of the State

Can minors, demented persons, insane, and deaf-

mutes enter into a contract of sale?
Expropriation
No, they are disqualified because they are
→ Is the process
incapacitated to enter into a contract of sale.
→ Requisites:
(1) Taking by competent authority But the contracts entered into by a minor,
(2) Due process of law insane, or demented persons are not void. They are
(3) Taking for public use only voidable, subject to annulment or ratification.
(4) Payment of just compensation

Can the capacitated persons move for the

Just compensation
→ Market value of the property + consequential
damage – consequential benefits
→ Either at the time of the taking or at the time
of the filing of complaint for expropriation,
whichever came first.
annulment of the contract because the other
person is incapacitated?
No, they cannot. If you are capacitated, and then you
have no right to move for the annulment of the
contract just because the other party is incapacitated.
You are disqualified to raise that.

UST 2G | 2021 | Page 10

SALES (JUDGE EDGARDO BELLOSILLO)
There are two kinds of incapacity:
(a) Absolute incapacity – those persons who
cannot bind themselves (like minors, deaf-
mute, insane) but the contracts entered into by
them is voidable.
(b) Relative incapacity – those provided under
Arts. 1490 and 1491.
Art. 1490
GR: Husband and wife cannot sell to each other. It is
contrary to law and public policy.
XPNs:
1) If there is a marriage settlement.
2) There is a judicial decree.
Why the husband and wife cannot to each other?
1) To prevent them to defraud the creditors.
2) To prevent the dominant spouse to take
advantage over the weaker spouse.
3) To avoid indirect violation of the provision
against donations between spouses.
Who can question the same?
1) The heirs of either spouses
2) The prior creditors. If they become creditors
after the transaction between the husband and
the wife, they cannot question the same.
3) The government for non-payment of taxes
What are necessaries?
Everything needed for sustenance, clothing, dwelling,
education, medical attendance. These are sold to
minors for sustenance.
What are the two elements for the sale of
necessaries to be completed?
1) There must be a perfected sale
2) There is a delivery of the necessaries
If that is the case, the minor can be held liable for the
delivery of the necessaries and the contract is valid,
not voidable. The minor has to pay reasonable price.
Art. 1491
Who are those prohibited to buy or purchase?
1) Guardians are prohibited from buying the
property of the persons who is under their
guardianship.
2) Agents are prohibited from buying the
property of the principal.
3) Executors and administrators where the
estate is under state proceedings and they are
appointed as executors and administrators.
4) Public officers or employees.
5) Justices, judges, prosecutors, and those clerks
of the higher and lower courts, and lawyers
are prohibited from purchasing the property
which are under litigation.
↳ If the lawyer will buy the property
under litigation, that purchase is void.
6) Any others specially disqualified by law like
foreigners.
↳ Foreigners cannot buy land or real
estate, but they can buy condominium
units.
❖ The first three—guardians, agents, executors, and
administrators—the transaction can be cured by
the judiciary. The sale is voidable because it
involves private interest and it can be cured by
ratification of the seller.
❖ When it comes to the last three, the sale is void
because it involves public interest.
If the object is partially lost, what are the options
of the buyer?
The buyer can cancel the contract or demand the
delivery of the remaining part and pay the
proportionate price.
UST 2G | 2021 | Page 11
SALES (JUDGE EDGARDO BELLOSILLO)

↳ This obligation arises when the

obligation to deliver the thing arises
What if the object is totally lost or completely lost?
There is no contract because the seller cannot deliver
anymore. Two kinds of delivery:
1) Actual
↳ By handing the object to the buyer
What is the consequence after the perfection of the
2) Constructive
contract but before the delivery, who will bear the
↳ Execution of the public document
loss?
↳ Symbolic delivery
GR: Under the principle of res perit domino, the buyer ↳ Longa manu
should bear the loss. ↳ Brevi manu
↳ Constitutum possessorium
XPNs:
1) If the object is lost before the perfection of the
contract, the seller will bear the loss. ❖ The thing is considered delivered when it is put
2) If the object is lost after the delivery, the buyer under the control and possession of the buyer.
will bear the loss.
XPNs to the XPNs:
Distinguish “on sale or return” and “for
1) If the object delivered is fungible and is sold approval/trial/satisfaction”
according to weight, number, or measure, the
“On sale or return” is subject to a resolutory condition,
seller will be held liable, unless the buyer is
meaning the happening of the event will extinguish
guilty of delay in accepting the goods.
the obligation. In the case of “on
2) If the seller is guilty of negligence, fraud, or
trial/satisfaction/approval” is subject to a suspensive
default or violations of contractual terms, the
condition, the happening of the event will give rise to
seller will bear the loss.
an obligation.
3) If the object is a genus—meaning, it can be
replaced by another one. The first one depends entirely on the will of
the buyer. The second one depends on the quality of
the goods.
What are the obligations of the vendor?
In the case of the first one, ownership is
After the contract is perfected, the vendor is obliged: transferred to the buyer upon delivery. When it comes
to “for approval/satisfaction/trial,” the ownership is
1) To transfer the ownership still with the seller until the buyer will signify his
2) To deliver the thing which is the object of the approval for acceptance.
contract
3) To warrant against eviction or hidden defects
4) To take care of the thing pending the delivery
❖ In “sale or return,” the buyer must inform the
with proper diligence
seller of his intention to accept the goods within
5) To pay the expenses if it was agreed upon that
the time fixed by the parties or within a reasonable
the seller will be the one to shoulder for the
time.
expenses for the execution of the deed of sale
❖ In “sale or return,” the buyer can return the object
6) To deliver the fruits and accessories to the
even though there is nothing wrong with the
buyer
object. It is the right of the buyer.

UST 2G | 2021 | Page 12

SALES (JUDGE EDGARDO BELLOSILLO)
XPNs:
1) Where the buyer has materially abused the
condition of the thing
2) With respect to the period, the buyer has to
inform the seller within the period agreed
upon whether he will accept or approve the
goods delivered; or if there is no period agreed
upon, within reasonable time.
When the buyer signifies his acceptance, when
does it commence to run? What is the period for
the buyer to signify his acceptance, supposing that
the seller has to deliver the object on installment?
The buyer has to signify his acceptance after the
completion of the delivery. If it is just a partial
delivery, the period for the buyer to make a decision
will commence to run from the time that the delivery
of all the objects are completed.
Is it also possible that a third person will be the
one to signify the approval or acceptance?
Yes, that is allowed. The parties can stipulate that third
persons will be designated, provided that the third
person must be in good faith.
Art. 1505
What is the consequence if the one who sold the
goods is not the owner? For example, Mr. A owned
a jewelry and then Mr. B stole that jewelry from
Mr. A. Mr. A found out in a birthday party that his
jewelry is now in possession of Mr. C. It turned out
the Mr. B, after he stole that jewelry, he sold it to
Mr. C. Can Mr. A recover that jewelry from Mr. C?
Yes, he can recover that.
Is Mr. A required to reimburse Mr. C?
No, he is not required.
Supposing that the buyer was able to buy that
jewelry from the market or stores, can the owner
still recover that?
Yes, but he has to reimburse the buyer. If the object is
bought from private persons, he can recover that. But
if the object was bought in a market or in a store, then
the owner can still recover but he has to reimburse the
buyer for that.
❖ In the case where the minor sold his car to A. A
believed that the one selling the car has the
capacity and A sold the car to B. B is not aware of
that transaction but later on, the father of the
minor questioned the sale. Before the sale was
questioned by the father, supposing A bought the
car from the minor sold a part to B without
knowing that the one who sold the car is a minor,
the sale is valid, provided that the buyer must be
in good faith and he has no knowledge of the defect
of the transaction.
❖ Conditions:
1) Before the transaction was avoided
2) Buyer in good faith
3) No knowledge of the defect in the title of the
previous owner
Masiclat
→ Principle of equitable estoppel – between
the two persons, the one who allowed the
third person to do wrong shall bear the loss.
→ Doctrine of ostensible ownership – it is
presumed that one selling goods in the market
is presumed to be the real owner. If the real
owner will not question that, that sale is
considered valid.
Sun Brothers v. Perez
→ Was the agreement of the parties—wherein
the buyer will be responsible for the air-
conditioner once it is delivered but the
appliances store retained ownership—valid?
→ Yes, because it is not contrary to law.
UST 2G | 2021 | Page 13
SALES (JUDGE EDGARDO BELLOSILLO)

Canullas v. Fortun

→ Provisions under Art. 1490 will apply to

common law relationships.
→ Common law spouses cannot sell properties to
each other.

Phil. Trust Company

→ Anomalous sale of a minor’s property by the

step-mother to her brother-in-law
→ Administrators and executors are prohibited
to purchase the lot which is the subject of state
proceedings.
→ The purpose is fiduciary relationship. They are
supposed to take care of the lots of the ward.
→ Step-mother circumvented the law when she
sold the lot to her brother-in-law and a week
later it was sold back to her.
→ Violation of Art. 1491.

UST 2G | 2021 | Page 14

SALES (JUDGE EDGARDO BELLOSILLO)
October 12, 2021

Art. 1507 – Document of Title Quedan

What is a document of title? Type of warehouse receipt. The subject or the goods
kept by the warehouseman is usually sugar. Issued by
It is a negotiable document. It is any document used as
the warehouseman who stores the goods.
proof of possession or authority to transfer the goods
represented by the document.
Warehouse receipt
Where is it normally used? Receipt issued by warehouse men as
acknowledgement that the goods were delivered to
Transporting goods.
them and are stored in the warehouse.
It is also a contract or receipt of the goods deposited
Common forms of document of title: with the warehouseman. The warehouseman
undertakes to keep the goods and to deliver them to
1. Bill of lading the specified persons or to order to bearer.
2. Dock warrant
3. Quedan
4. Warehouse receipt
2 classes of documents of title:
5. Any other document used as proof of
possession or authority to transfer the goods 1. Negotiable – negotiated by:
represented by the document. (a) Delivery; OR
(b) Indorsement completed by delivery
2. Non-negotiable
Bill of lading
Contract for the transfer of goods and their delivery to
Who can negotiate a document of title?
the persons named therein (the consignee) or to the
bearer or to the order. 1) Owner of the document of title
2) Persons to whom the possession or custody of
the document is entrusted by the owner
Parties in a bill of lading:
1. Shipper – sends goods
Who will bear the loss in case of an unauthorized
2. Consignee – receives goods
negotiation?
3. Carrier – transports good by land, air, or water
Apply the ruling in the case of Masiclat v. Centeno.
Maxim of equitable estoppel and doctrine of
Can the shipper and consignee be one and the ostensible ownership.
same person?
Between two innocent persons, the one who allowed
Yes. the third person to commit the wrong will bear the
loss (equitable estoppel).
The one selling the goods in a market is presumed to
Dock warrant be the owner of the goods and is authorized to sell
Proof that goods are stored in a warehouse. It is issued them.
by the dock owner to the importer of the goods.

UST 2G | Page 1
SALES (JUDGE EDGARDO BELLOSILLO)
October 12, 2021

Art. 1505
If the one selling the goods is not the owner, the buyer
will acquire only whatever the title of the seller has.
(see previous discussion; Oct. 05, 2021)
(3) If there is no usage, the buyer must get them at
the seller’s place of business or residence.
XPN: In the place where the specific goods
are found.

Time of delivery
Warranties in document of title: (Art. 1516)
(1) Agreement of the parties
1. That the document is genuine
(2) In the absence of agreement, within a
2. That the indorser or assignor has a legal right
reasonable time
to negotiate or transfer it;
3. That he has knowledge of no fact which would
impair the validity or worth of the document;
What is reasonable time?
and
4. That he has a right to transfer the title to the It is a question of fact, depending upon circumstances.
goods and that the goods are merchantable or
fit for a particular purpose.
Rules when the quantity is less than that agreed
upon:
What happens if there is a typographical or
grammatical error in the negotiable document? 1) Buyer may reject
2) Buyer may accept what have been delivered at
It will not destroy the negotiability of the document the contract rate
for what is considered is the intent of the parties.

In case the object delivered is less than that agreed

Can a non-negotiable document of title be upon by the parties and then the buyer was able to
negotiated? dispose the partial delivered goods without
knowing that seller will not deliver anymore the
NO, but a non-negotiable document can be transferred
remaining goods. How much will the buyer pay?
by delivery.
The buyer shall pay the fair value of the goods
received.
What makes a document non-negotiable?
If it is to be delivered to a specified person. It cannot
What if the buyer is aware that the seller will no
be negotiated because it is intended only for that one
longer deliver but the buyer still disposes the
particular person, unlike in a negotiable document, it
goods partially delivered? How much will he pay?
can be negotiated to order or to bearer.
He must pay for the original contract rate.

Place of delivery
Rules when the quantity is more than the
(1) Specified on the agreement (express or
agreement:
implied)
(2) If there is no agreement, the usage of trade 1) Buyer may reject all

UST 2G | Page 2
SALES (JUDGE EDGARDO BELLOSILLO)
October 12, 2021
2) Buyer may accept the goods agreed upon and
reject the rest
3) If he gets all, he must pay for them at the
contract rate
What if the objects delivered are different?
1) The buyer may accept the goods which are in
accordance with the contract; and
2) Reject the rest
3) If the sale is indivisible, the buyer may reject
the whole of the goods
Kinds of delivery to carrier
1) CIF (cost, insurance, freight) – the cost,
insurance, and freight, if part of the selling
price, the seller shall borne the expenses.
2) FOB (free on board)
a) FOB at the place of shipment – the buyer
shall shoulder the expenses
b) FOB alongside the vessel – from the
moment that the goods are brought
alongside the vessel, the buyer must pay
c) FOB at the place of destination – the seller
will pay for the expenses
When is the seller deemed an unpaid seller?
1) If only part of the price has been paid or
tendered.
2) If a negotiable instrument was delivered for
conditional payment and dishonored (e.g.,
check)
Chrysler v. Court of Appeals
• There was non-delivery not misdelivery
• Application of res perit domino
Uraca v. Court of Appeal
• Double sale of immovable property
• Prior registration does not confer ownership or
better right over the property since Art. 1544
requires that it must be coupled with acquisition
in good faith.
• Primus tempore, potior jure – first in time, stronger
in right
• Prior knowledge tainted registration with bad
faith
• No extinctive novation
Art. 1544 – Rules on double sale; preference of
ownership
A) Movable property – first possessor in good faith
B) Immovable property:
(1) First registered in good faith
(2) In the absence of the first, the first possessor
in good faith
(3) In the absence of both registration and
possession, the one who can present the oldest
title in good faith
Fudot v. Cattleya Land
• No consent of the wife, sale of property is void
under the Family Code
• Before the effectivity of the FC, in case of sale of the
spouse without the consent of the other, the sale
of the conjugal is not considered void, only
voidable. Spouse can question the sale within 10
days.
• Under the FC: Sale can be questioned within 5
years.
• Sale of conjugal property without the consent of
the other spouse is considered as a continuing
offer.
• There is no double sale here. Double sale will
apply if the sales are valid. There is only one seller
and two or more buyers. If there are two or more
sellers, there is no double sale.
Radiowealth v. Palileo
UST 2G | Page 3
SALES (JUDGE EDGARDO BELLOSILLO)
October 12, 2021

• If the property involved is unregistered, Art. 1544

cannot be applied.
• Radiowealth should have a better right applying
Art. 1544. However, the property here is
unregistered land, so do not apply the rule under
Art. 1544.

Cheng v. Genato

• If one of the contracts is a contract to sell, Art.

1544 will not apply.

Coronel v. Court of Appeals

• Second buyer was aware of the first sale. He was

not a buyer in good faith.

UST 2G | Page 4