LAW ON SALES

CARABALLO, JESSA MAE

OROSCO, LUCY
ABIT, ARAH
MALOTA, MADJORY
CONSUMER ACTS OF THE PHILIPPINES

CHAPTER I:
CONSUMER RIGHTS UNDER R.A 7394
REPUBLIC ACT
7394

CONSUMER
RIGHTS
REPUBLIC ACT 7394:
 Known as the Consumer Act of the Philippines
 Declares the policy of the state to protect the
interests of the consumer
 Promotes general welfare and to establish
standards of conduct for business and industry to
implement measures to achieve, among others,
the protection against deceptive, unfair and
unconscionable sales acts and practices.
 What are the basic
rights of a consumer?

As a consumer, you have the right to expect the

marketplace
marketplace to
to be
be fair.
fair. You
You also
also have
have the
the
responsibility to be fair and deal with problems
quickly.
 8 CONSUMER RIGHTS

• Right to basic needs Ex. Food,shelter,education

• Right to safety -this protects consumer against marketing of
hazardous goods and services

• Right to information -this protects consumer against dishonest or

misleading advertisement.

• Right to choose -consumers right to from various products at

competitive prices with an assurance of high
quality products.

• Right to representation -provides the consumer with the right to input

consumer interest or concern in governmental
policies.

• Right to redress -right to compensate for misrepresentation of

poor quality goods

• Right to consumer education -right to obtain the necessary knowledge and

skills to be an informed customer.

• Right to a healthy environment -right to live and work in an environment that is

neither dangerous nor threatening to promote
well-being.
 DEFINITION OF SALE:

• Contract whereby on of the contracting parties

(SELLER) obligates himself to transfer the
ownership , and to deliver the possession. Of a
determine thing; and the other party (BUYER)
obligates himself to pay therefor a price certain in
money or its equivalent.
 Republic Act. No. 386
The Civil Code of the Philippines

AN ACT TO ORDAIN AND INSTITUTE THE CIVIL CODE OF THE

PHILIPPINES
Title VI.

SALES
CHAPTER 1
NATURE AND FORM OF THE CONTRACT

• Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership and to deliver a determinate thing, and the
other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.

• Art. 1459. The thing must be licit and the vendor must have a right to transfer
the ownership thereof at the time it is delivered.

• Art. 1460. A thing is determinate when it is particularly designated or physical

segregated from all other of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is
entered into, the thing is capable of being made determinate without the necessity
of a new or further agreement between the parties.
 CHAPTER 2

CAPACITY TO BUY OR SELL

• Art. 1489. All persons who are authorized in this Code to obligate themselves, may enter
into a contract of sale, saving the modifications contained in the following articles.
Where necessaries are those 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 Article
290.

• Art. 1490. The husband and the wife cannot sell property to each other, except:

(1) When a separation of property was agreed upon in the marriage settlements; or

(2) When there has been a judicial separation or property under Article 191.

• Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:

(1) The guardian, the property of the person or persons who may be under his
guardianship;

(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;

(3) Executors and administrators, the property of the estate under administration;

(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;
(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.

(6) Any others specially disqualified by law.

•Art. 1492. The prohibitions in the two preceding articles are applicable to sales
in legal redemption, compromises and renunciations.
 CHAPTER 3
EFFECTS OF THE CONTRACTWHEN THE THINGSOLD HAS BEEN
LOST
• Art. 1493. If at the time the contract of sale is perfected, the thing which is the
object of the contract has been entirely lost, the contract shall be without any
effect.

But if the thing should have been lost in part only, the vendee may choose between
withdrawing from the contract and demanding the remaining part, paying its price
in proportion to the total sum agreed upon.

• Art. 1494. Where the parties purport a sale of specific goods, and the goods
without the knowledge of the seller have perished in part or have wholly or in a
material part so deteriorated in quality as to be substantially changed in
character, the buyer may at his option treat the sale:

(1) As avoided; or

(2) As valid in all of the existing goods or in so much thereof as have not
deteriorated, and as binding the buyer to pay the agreed price for the goods in
which the ownership will pass, if the sale was divisible.
OBLIGATIONS OF THE VENDOR
SECTION 1. – GENERAL PROVISIONS

• Art. 1495. The vendor is bound to transfer the ownership of and deliver, as
well as warrant the thing which is the object of the sale.

• Art. 1496. The ownership of the thing sold is acquired by the vendee from
the moment it is delivered to him in any of the ways specified in Articles
1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee. 
SECTION 2. – DELIVERY OF THE THING SOLD
• Art. 1497. The thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee.

• Art. 1498. When the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if
from the deed the contrary does not appear or cannot clearly be inferred.
With regard to movable property, its delivery may also be made by the delivery of
the keys of the place or depository where it is stored or kept.

• Art. 1499. The delivery of movable property may likewise be made by the mere
consent or agreement of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time of the sale, or if the latter
already had it in his possession for any other reason.

• Art. 1500. There may also be tradition constitutum possessorium.

• Art. 1502. When goods are delivered to the buyer “on sale or return” to give
the buyer an option to return the goods instead of paying the price, the
ownership passes to the buyer of delivery, but he may revest the ownership
in the seller by returning or tendering the goods within the time fixed in the
contract, or, if no time has been fixed, within a reasonable time.

• Art. 1503. When there is a contract of sale of specific goods, the seller may,
by the terms of the contract, reserve the right of possession or ownership in
the goods until certain conditions have been fulfilled. The right of possession
or ownership may be thus reserved notwithstanding the delivery of the goods
to the buyer or to a carrier or other bailee for the purpose of transmission to
the buyer.
• Art. 1504. Unless otherwise agreed, the goods remain at the seller’s risk until the
ownership therein is transferred to the buyer, but when the ownership therein is
transferred to the buyer the goods are at the buyer’s risk whether actual delivery
has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a Bailee for the
buyer, in pursuance of the contract and the ownership in the goods has been
retained by the seller merely to secure performance by the buyer of his
obligations under the contract, the goods are at the buyer’s risk from the time of
such delivery;

(2) Where actual delivery has been delayed through the fault of either the buyer or
seller the goods are at the risk of the party in fault. 
What are the remedies of the seller for breach of contract of sale
according to the law?

BREACH OF A CONTRACT OF SALE

1. ACTION FOR PAYMENT OF THE PRICE:

• Art. 1595. 
Where, under a contract of sale, 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 of sale, the seller may maintain an
action against him for the price of the goods.
2. ACTION FOR DAMAGES FOR NON-ACCEPTANCE OF THE
GOODS:

• Art. 1596. 
Where the buyer wrongfully neglects or refuses to accept and pay for the
goods, the seller may maintain an action against him for damages for non-
acceptance.
3. ACTION FOR RESCISSION
• Art. 1597. 
Where the goods have not been delivered to the buyer, and the buyer has
repudiated the contract of sale, or has manifested his inability to perform
his obligations thereunder, or has committed a breach thereof, the seller
may totally rescind the contract of sale by giving notice of his election so to
do to the buyer.
• Art. 1582. The vendee is bound to accept delivery and to pay the price of the thing
sold at the time and place stipulated in the contract.

• Art. 1584. Where goods are delivered to the buyer, which he has not previously
examined, he is not deemed to have accepted them unless and until he has had a
reasonable opportunity of examining them for the purpose of ascertaining whether
they are in conformity with the contract if there is no stipulation to the contrary.
Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he
is bound, on request, to afford the buyer a reasonable opportunity of examining the goods
for the purpose of ascertaining whether they are in conformity with the contract.
Where goods are delivered to a carrier by the seller, in accordance with an order
from or agreement with the buyer, upon the terms that the goods shall not be delivered by
the carrier to the buyer until he has paid the price, whether such terms are indicated by
marking the goods with the words “collect on delivery,” or otherwise, the buyer is not
entitled to examine the goods before the payment of the price, in the absence of agreement
or usage of trade permitting such examination. 
OBLIGATIONS OF THE
VENDEE
• Art. 1585. The buyer is deemed to have accepted the goods when he intimates to the seller
that he has accepted them, or when the goods have been delivered to him, and he does any
act in relation to them which is inconsistent with the ownership of the seller, or when, after
the lapse of a reasonable time, he retains the goods without intimating to the seller that he
has rejected them.

• Art. 1586. In the absence of express or implied agreement of the parties, acceptance of the
goods by the buyer shall not discharge the seller from liability in damages or other legal
remedy for breach of any promise or warranty in the contract of sale. But, if, after
acceptance of the goods, the buyer fails to give notice to the seller of the breach in any
promise of warranty within a reasonable time after the buyer knows, or ought to know of
such breach, the seller shall not be liable therefor.

• Art. 1587. Unless otherwise agreed, where goods are delivered to the buyer, and he refuses
to accept them, having the right so to do, he is not bound to return them to the seller, but it is
sufficient if he notifies the seller that he refuses to accept them. If he voluntarily constitutes
himself a depositary thereof, he shall be liable as such.
• Art. 1589. The vendee shall owe interest for the period between the
delivery of the thing and the payment of the price, in the following
three cases:

(1) Should it have been so stipulated;

(2) Should the thing sold and delivered produce fruits or income;

(3) Should he be in default, from the time of judicial or extrajudicial

demand for the payment of the price.
What are the remedies of the buyer for breach of contract of sale
according to the law?

BREACH OF A CONTRACT OF SALE

1. Action for specific performance:

• Art. 1598. Where the seller has broken a contract to deliver specific or ascertained
goods, a court may, on the application of the buyer, direct that the contract shall be
performed specifically, without giving the seller the option of retaining the goods on
payment of damages. The judgment or decree may be unconditional, or upon such terms
and conditions as to damages, payment of the price and otherwise, as the court may
deem just.
. 
2. Action for rescission or damages for breach of warranty:

• Art. 1599. Where there is a breach of warranty by the seller, the buyer may, at
his election:
(1) Accept or keep the goods and set up against the seller, the breach of warranty
by way of recoupment in diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller for
damages for the breach of warranty;
(3) Refuse to accept the goods, and maintain an action against the seller for
damages for the breach of warranty;
(4) Rescind the contract of sale and refuse to receive the goods or if the goods
have already been received, return them or offer to return them to the seller and
recover the price or any part thereof which has been paid.
(5) In the case of breach of warranty of quality, such loss, in the absence of
special circumstances showing proximate damage of a greater amount, is the
difference between the value of the goods at the time of delivery to the buyer and
the value they would have had if they had answered to the warranty. 
HIGHLIGHTS:
• If price provisions are not agreed by the parties, does local law impose
requirements in relation to price (for example, the time, method and place of
payment)?
 The price must be certain for a sale of goods contract to be enforceable. To be
considered certain, the price can be determined by reference to a certain method, or its
determination can be left to the judgement of a specific person or persons (Civil
Code). The contract will not be enforceable if such person or persons are unable or
unwilling to fix the price, unless the parties subsequently agree on it. The courts can
fix the price if the third party acted in bad faith or made a mistake. The fixing of the
price cannot be left to the discretion of one of the contracting parties. However, the
sale will be perfected if the price fixed by one of the parties is accepted by the other.
An offer can be withdrawn at any time before acceptance by giving notice of
withdrawal, except when the offer or the option to purchase is based on consideration.
Philippine law does not impose any requirements as to the time, method, and place
of payment. The parties can agree on these issues in the contract of sale. The Civil Code
does not include any rules that determine the time, method, and place of payment if the
parties do not agree on these issues.
•  If delivery provisions are not agreed by the parties, does local law impose
requirements in relation to delivery (for example, the time, method and place of
delivery)?
 The Civil Code does not contain requirements in relation to the time, method, and place
of delivery of goods under a contract of sale. However, the Civil Code provides that
ownership of goods sold must be transferred to the buyer on actual or constructive
delivery of the goods. The Civil Code provides for the following rules on delivery:
The goods sold are deemed delivered when they are placed in the control and possession
of the buyer.
When the sale is made through a public instrument (deed), execution of the deed is
equivalent to delivery of the goods, unless otherwise provided for in, or inferred from, the
deed.
Delivery of movable property can be made by:
delivery of the keys of the place where the goods are stored or kept; or
mere consent or agreement of the parties, if the goods cannot be transferred to the buyer at
the time of sale, or if the buyer was already in possession of the goods at the time of sale.
Delivery occurs when legal title to the goods is transferred to the buyer, even if the seller
retains physical possession of the goods.
The execution of a deed of sale of incorporeal property is deemed delivery. Delivery of
incorporeal property otherwise occurs on placing the title of ownership in the possession
of the buyer or on use of its rights by the buyer with the seller's consent.
• The Consumer Act IRR further provides that:
Artistic or aesthetic considerations in the packaging of consumer products is allowed,
provided that steps are taken to avoid possible misconception by consumers as to the
product's contents, size, quantity, measurement or fill.
The packaging of consumer products that are under sales promotion can vary from that of
products for regular distribution, provided that the contents, size, quantity, and
measurement of the products are not affected to the prejudice of the buyer.
Consumer products that have non-functional slack fill packaging must clearly and
conspicuously indicate on their labelling the correct quantity of their contents, size,
measurement or fill. A package filled to less than its capacity due to the inherent
characteristics of its contents is not considered a non-functional slack-fill packaging,
provided that its label indicates the correct quantity, size, and measurement of the
product.
Basic necessities must not use non-functional slack-fill packaging.
For consumer products packaged in such a way that the contents cannot be seen or
inspected on purchase, samples or labelling describing the product inside the package
through words, pictorial or graphical representation or similar means must be provided to
the buyer. The sample or description must accurately represent the product in the
package.
• If not agreed by the parties, when does title to the goods pass to the buyer?
 Under the Civil Code, title to the goods passes to the buyer on delivery or in any other
manner indicating an agreement that possession is transferred from the seller to the
buyer.

• If not agreed by the parties, when does risk in relation to the goods pass to the
buyer?
 Under the Civil Code, the goods remain at the seller's risk until title is transferred to the
buyer. When title to the goods has passed to the buyer, the goods are at the buyer's risk
regardless of actual delivery, except that:
Where the goods have been delivered to the buyer or a bailee for the buyer and the seller
has retained title to secure performance by the buyer, the goods are at the buyer's risk from
the time of delivery.
Where actual delivery has been delayed due to the buyer's or seller's fault, the goods are at
the risk of the party at fault.
The Consumer Act and the Consumer Act IRR govern product liability and defects
in respect of consumer products. A product is defective when it does not offer the
safety rightfully expected of it, taking relevant circumstances into consideration,
including the:

• Presentation of the product in terms of packaging, labelling or advertising.

• Use and hazards reasonably expected of it.
• Time it was put into circulation.
• Level of research and technology available to the manufacturer, builder, producer
or importer when it placed the product on the market.

Under the Consumer Act and Consumer Act IRR, manufacturers, builders,
producers and importers of consumer products are liable for damages caused to
consumers by defects resulting from the:
Design, manufacture, construction, assembly and erection, formulas, handling, and
presentation or packing of their products.
Insufficiency or inadequacy of the information on use and hazards provided to
consumers.
  What are the main remedies and rules for losses and damages for breach of
a sale of goods contract?

The following main remedies are available for breach of a sale of goods contract:

• Action for the price.

• Damages.
• Rescission.
• Specific performance.
• Price reduction.
• What are the buyer's remedies for breach of a sale of goods contract?

Where the seller has breached a contract to deliver specific or ascertained

goods, a court can, on application of the buyer, direct that the contract be
performed, without giving the seller the option to retain the goods. The
judgment or decree may be unconditional, or subject to any terms and
conditions the court may deem just, such as damages, payment of the price, and
so on.

Where the seller breaches a warranty , the buyer can choose between the
following remedies:

• Accept or keep the goods and request a price reduction.

• Accept or keep the goods and claim damages.
• Refuse to accept the goods and bring an action against the seller for
damages.
• Rescind the contract and refuse to accept the goods or, if it is has already
received the goods, return them or offer to return them to the seller and
recover the price paid (or any part of it).
 

 What are the seller's remedies for non-payment or late payment?

Under the Civil Code, the unpaid seller has the following remedies:
A lien over the goods or right to retain them, if it is in possession of the goods.
If the buyer is insolvent, a right to stop the goods in transit after it has parted with
possession of them.

• A right of resale.
• A right to rescind the sale.
• An action for the price.
• Rescission of the contract.
• Damages.