Sales Primer

UNIVERSITY OF NORTHERN PHILIPPINES SALES
SCHOOL OF LAW SECOND SEMESTER, AY 2015-2016
SALES
"You have to take risks. We will only understand the miracle of life fully
when we allow the unexpected to happen." -- Coelho
I. NATURE AND FORM OF THE CONTRACT

A. Definition
B. Distinguished from other contracts
1. Contract to sell
2. Donation
3. Barter
4. Contract for a piece of work
5. Agency to Sell
6. Dacion en Pago
7. Chattel Mortgage
8. Lease
C. PARTIES TO CONTRACT OF SALE

D. SUBJECT MATTER
E. PRICE
1. When price considered certain
2. Gross Inadequacy and Simulation
F. RULES GOVERNING AUCTIONS
G. PROMISE TO BUY AND SELL
H. FORM OF CONTRACT OF SALE
I. SALES OF GOODS BY DESCRIPTION
AND/ OR SAMPLE
j. SALE BY INSTALLMENT
II. OBLIGATIONS OF THE VENDOR

A. PRESERVE THE THING PENDING
DELIVERY
B. TRANSFER OWNERSHIP OF AND
DELIVER THING WITH FRUITS
AND ACCESSORIES
1. Ways of effecting delivery
2. Place and Time of Delivery
3. Completeness of Delivery
4. Contracts of Sale or Return, and of
Sale on trial or Approval
5. Where Specific Goods are Shipped
6. Sale by Person Not the Owner
7. Negotiable Documents of Title
8. Double Sales
C. WARRANTY AGAINTS EVICTION
1. Definition and requisites
2. Kinds and Effects of Waiver
3. Effect of Acquisitive Prescription
4. Rights of Vendee in Case of Total eviction
5. Rights of the Vendee Incase of Partial Eviction
6. Rights Of Vendee Where Immovable is
Encumbered With Non-Apparent Burden
D.WARANTY AGAINTS HIDDEN DEFECTS
OR ENCUMBRANCES
1. Requisites For warranty Against
Hidden defects
2. Implied Warranty of Quality
3. Alternative Remedies to Enforce the
Warranty
COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

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4. Effect of Loss of Thing With Hidden Defect

5. Sale of animals
E. ADDITIONAL; PROVISIONS
GOVERNING WARRANTIES FOR
CONSUMER PRODUCTS.
1. Express Warranties
2. Breach in case of implied Warranties
III. OBLIGATIONS OF THE VENDEE

A. ACCEPTANCE OF DELIVERY
1. Deliver in Installment
2. Right of Examination
3. refusal to Accept
B. PAYMENT OF PRICE
1. Liability OF Vendee for Interest
2. Suspension of Payment
3. Rescission of sale of Immovable Property
4. Rescission of Sale of Movable Property
IV. REMEDIES FOR BREACH OF CONTRACT

A. REMEDIES OF THE SELLER
1. For Payment of the Price in the Sale Of Goods
2. For Damages for Non-accept6ance of the Goods
3. For Rescission of the Contract of Sale of Goods
4. Special Remedies of the Unpaid Seller
B. REMEDIES OF THE BUYER
1. For Specific Performance
2. For breach of Warranty
V. ESTINGUISHMENT OF SALE
A. COMMON TO OTHER OBLIGATIONS
B. SPECIFIC TO SALES
C. CONVENTIONAL REDEMPTION
1. General Provisions
2. Rights in Redemption
3. Presumption of Equitable Mortgage.
D. LEGAL REDEMPTION
1. Definition
2. Right of Co-owner
3. Right of Adjacent Owners
4. Other Instances of Legal Redemption
VI. ASSIGNMENTS OF CREDIT

A. GENERAL PROVISIONS
B. WARRANTIES AND LIABILITIES
OF THE ASSIGNOR
C. LEGAL REDEMPTION OF RIGHT
LITIGATION
I. NATURE AND FORM OF THE CONTRACT
A. DEFINITION
Article 1458. By the contract of the sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a
price certain in money or its equivalent.
A contract of sale maybe absolute or conditional.
CHARACTERISTICS:

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1. Nominate
2. Principal
 does not on other contract for its validity or existence
3. Bilateral
 imposes obligations on both parties to the contract
 power to rescind is implied and need not be stipulated in order for the innocent
party to invoke such remedy.
4. onerous
 all doubts in construing the contract shall be settled in favor of the greatest
reciprocity of interest.
5. commutative
 equal value is exchange for equal value (based on the point of view of the parties
in the contract)
6. consensual
 perfected by mere consent
 for there to be a meeting of the minds, the offer must be certain and the
acceptance absolute.
Fule v. CA
A contract of sale is perfected at the moment there is a meeting of the minds upon the thing
which is the object of the contract and upon the price. Art. 1358 CC which requires the
embodiment of certain contracts in a public instrument, is only for convenience and registration
there of only adversely affects 3rd parties. Non compliance therewith does not adversely affect
the validity of the contract not the contractual; rights and obligation of the parties there under.
7. title, not a mode

 legal basis by which to affect dominion or ownership
 does not transfer ownership per se but creates the obligation to transfer
ownership
ESSENTIAL REQUISITES:
1.consent
 there is a meeting of the mind as to the price and the object (article 1475)
 acceptance must be absolute
 if the agreement is covered by the Statute of Frauds, only the enforceability of the
agreement is affected
2. Determinate (or determinable)subject matter
 particularly designated or physically segregated from all others of the same class
(Article 1460)
3. cause or consideration (price certain in money or its equivalent)
 “equivalent”=check or promissory note; does not include goods or merchandise.
Torres v. CA
Where the contract of sale of parcel of land clearly provides that the consideration for the
sale was the expectation of profits from a subdivision project, it constituted valid cause or
consideration to validate the sale and delivery of the land. Consideration can take different
forms, such as the presentation or promise of a thing or service by another.
Co v. CA
A definite agreement of the manner of payment of the price is an essential element in the
formation of the binding and enforceable contract of sale.
Absolute sale: ownership passes to the buyer upon delivery of the thing sold.
Conditional sale: ownership does not transfer upon delivery of the thing until fulfillment of
the condition such as full payment of purchase price. (Articles1478 and 1503)

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 If the obligation of the party is subjected to any condition and it is not fulfilled, such
party may (Article 1545)
 Refuse with the proceed with the contract
 Waive the performance of the condition and proceed with the contract.
 If the condition is in the nature
 Or a promise that it should happen, the non performance of such condition maybe
treated as breach of warranty (Article 1545)
 Where the ownerships has not passed, the buyer may treat fulfillment by the seller of his
obligation to deliver, as described and as warranted, as a condition of the obligation of
the buyer to perform his promise to accept and pay for the thing(Article 1545)
B. DISTIGUISHED FROM OTHER CONTRACTS
1. Contract to Sell
 In a contract to sell, the non- payment of the price is a suspense condition which prevent
the obligation to sell(on the part of the seller) from materializing :in a contract of sale,
the non payment of the price is a resolutely condition which become a legal basis to
rescind the perfected contract.
 In a contract to sell, delivery does not transfer ownership until fill payment of the price;
in a contract of sale, ownership generally passes upon the delivery of the thing sold.
Coronel v. CA
A contract to sell may not even be considered as a conditional contract of sale because in a
conditional contract of sale, the element of consent is present such that if he suspense condition
is fulfilled the contract of sell, ownership will not automatically transfer to the buyer upon
fulfillment of the suspensive condition. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.
2. Donation
 Donation is gratuitous: sale is onerous
 Donation is a formal contract: sale is consensual
3. Barter
 In barter, the parties bind themselves to give things; in sale, the vendor gives a thing in
consideration for a price in money or its equivalent
 In barter, the discrepancy in value does not matter; it is based on the premise that the
value are equal
 If consideration consist party in money and partly in another thing. Look at manifest
intention ; if intention is not clear (Article 1468):
a. Value of thing is equal or less than amount of money = sale
b. Value of thing is more than amount of money = barter
4. Contract for a piece of Work

 In a contract for a piece of work, the thing sold is one not in existence but is
manufactured especially upon the special order of the costumer; in a contract of sale, the
thing sold is manufactured or procured in the ordinary course of the vendor’s business
for the general market (Article 1467)
 Contracts for a piece of work, unlike contract of sale, are not within the Statute of
Frauds.
Celestino Co. & Co> v. collector

The company claims it was only subject to 3% contractor’s tax instead of 7% tax imposed for
sales. The Sc rules against the company. Although the windows and doors are manufactured
only when the customers place their orders, the company ordinarily manufactured or was in a
position habitually to manufacture these in the usual course of their business. When this 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, filling especial orders
within the meaning of article 1467. The orders herein exhibited were not shown to be especial
requiring extraordinary service of the factory.

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Commisioner of Internal Revenue v. Engeeniring Equipment and Supply Co.

The distinction between a contract of sale and one for work, labor and materials is tested by the
inquiry whether the thing transferred is one not in existence and which never would have
existed but has been the subject of sale to some other persons even if the order of the party
desiring to acquire I, or a thing which would have existed but has been the subject of sale to
some other persons even if the ordered by the purchaser’s request, it is a contract of sale even
though it may be entirely made after, and in consequence of the purchaser’s order for it.
5. Agency to Sell
 In an agency to sell, the agents receives the goods of the principal who retains his
ownership over them; in a sale, the buyer receives the goods as owner
 In an agency to sell, the agent has to account for the proceeds of the sale made on the
principal’s behalf; in a sale the buyer has to pay the price.
 In agency to sell, the agent assumes no risk or liability as long as he acts within the
scopes of authority given; in sale, the seller warrants.
 A contract of agency to sell is not covered by the Statute of Frauds and is valid and
enforceable in whatever form maybe entered into.
6. Dacion en Pago
 Dation in payment requires delivery and transfer of ownership of a thing owned by the
debtor to the creditor as an accepted equivalent of the performance of the obligation
 Dacion en pago is governed by the law on sales.
7. Chattel Mortgage
 In chattel mortgage, the thing is a security for an obligation; if the debtor is unable to
pay, the ownership cannot be transferred automatically to the creditor but is still subject
to foreclosure proceedings.
8. Lease
 In lease, use of the thing is for a specified period only with obligation to return; in sale,
the obligation is to absolutely transfer ownership of thing.
 In lease, the lessor need not be the owner; in sale the seller needs to be owner of thing to
transfer ownership.
 Lease with option to by: really a contract of sale but designated as lease in name on ;it is
a sale by installments (Article 1485)
C. PARTIES TO A CONTRACT OF SALE
GEN. RULE: any person authorized under the law to obligate himself, may enter into a contract
of sale, whether as a seller or as a buyer. (Article 1489)
EXCEPTIONS:
1. Where necessaries are sold and delivered to a minor or other person without capacity to act,
he must pay a reasonable price thereof (Article 1485)
 Necessaries are things which are needed for sustenance, dwelling, clothing and medical
attendance in keeping with the financial capacity of the family.
2. Sale between legally-wed spouses and common- law spouse (Article 1490)
 Exceptions to the exception;
i. Where a separation of property was agreed upon in the marriage settlements
ii. Where there has been a judicial separation of property under Art. 135 of the
Family Code
 Rationale:
i. Protect creditors from fraud]
ii. Avoid situation where dominant spouse take advantage for others
iii. Avoid circumvention on prohibition on donation between spouse
Medina V. Collector of internal Revenue

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Contracts violative of the provisions of the Article 1490 of the Civil code are null and void. The
government is always an interested party to all matters involving taxable transactions and
needless to say, is qualified to questions their validity or legitimacy when ever necessary to tax
evasion.
3. purchase by the following persons, even at public or judicial auctions, in person or through
another (Article 1491);
a) Guardians, with respect to the property of their wards
b) Agents, with respect to the property entrusted to them ( unless consent of principal is
given )
c) Executors and administrators, with respect to the property of the state under
administration.
d) Public officers and employees, with respect to government property under their
administration; including judges and government experts who take part in the sale
e) Judicial officers and employees with respect to the property/rights in litigation or
levied upon before the court within whose jurisdiction they exercise their respective
functions.
f) Lawyers,with respect to the property or rights object of any litigation in which they may
take part by virtue of their profession
g) Others disqualified by law
 Aliens are prohibited from purchasing private agricultural lands
@ Nos. 2, 3 (d) to (g) = sale is NULL and VOID

Nos. 3 (a) to (c) = sale is VOIDABLE
Philippine Trust V. Roldan

Bernardo, a minor, inherited land from his father. His stepmother, Roldan, was appointed his
guardian. Thereafter, the court authorized the execution of a deed of sale in favor of Ramos, the
brother-in-law of Roldan. Subsequently, adeed of conveyance was executed in favor of Roldan.
Philtrust replaced Roldan as guardian and sought to rescind the contract. The court held that
Ramos acted as an intermediary for Roldan. Whenever the guardian acquires the ward’s
property through an intermediary, he violates the Civil Code and such transaction and
subsequent ones emenating there from shall be annulled.
Municipal Council of Iloilo v. Evangelista

Vda. De Tan Toco sought to recover just compensation for expropriation of her property by the
Municipal Council. There were several claimants over the amount of the judgement, one of
which is att. Soriano, who claimed payment for professional; serviceshe r5endered for Vda.de
Tan Toco in other cases. The court held that the prohibition in the Civil Code did not apply
since there was no attorney-client relation between Soriano Vda. De Tan Toco in the
expropriation case in the question.
Rubias v. Batiller
Rubias was the counsel of Militante in an application for the registration of the land title, which
land is is possession of Batiller. The case was dismissed. Pending appeal, Militante sold the
subject land to Rubias. The decision of the trial court was upheld. Rubias was sought to recover
the land from Batiller. The court held that even if Militante had title to the land (which he
didn’t) the sale between him and rubies is void. Pursuant to Article 1941 of the Civil Code.
Rubias is barred from purchasing from his client the same property which was the subject of the
case he handled for Militante.
Valencia V. Cabanting
Cabanting served as counsel for Serapia in a land dispute with Valencia. The trial court
rendered a decision in favor of Serapia. Valencia filed a petition for certiorari with the CA.
While this was pending, the trial court issued an order of execution on its decision. Thereafter
Serapia sold part of the subject land to Cabanting. The SC declared Cabanting guilty of the
malpractice for Violation of art. 1492 and the Canons of Professional ethics. While it is true that
the sale occurred after finality of the judgement, ther was still a pending certiorari proceeding.
Hence, it is not safe to conclude, for purposes of Art. 1941 that the litigation has terminated.

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Fabillo v. IAC
Article 1941 prohibits lawyers from acquiring properties and rights which are the objects of
litigation in which they may take part by virtue of their profession. The said prohibition,
however, applies only if the sale or assignment of the property takes place during the pendency
of the litigation involving the client’s property. A contract between a lawyer and his client.
Stipulating a contingent fee is not covered by said prohibition because the payment of the said
fee is not during the pendency of the litigation but only after judgment has been rendred in the
case handled by the lawyer. In fact, under the 1988 code of Professional Responsibility, a lawyer
may have a lien over funds and property of his client and may apply so much thereof as may
be necessary to satisfy his lawful fees and disbursements. As there is no undue influence or
fraud on the part of the lawyer or that of the compensation is clearly not excessive as to amount
to extortion, a contract for contingent fee is valid and enforceable.
Gan Tiangco v. Pabinguit

A judge can not take part in the sale of property that had been the subject of litigation on his
court. He also can not intervene in the auction of property which, though not directly litigated
in his court, is nevertheless levied upon the and sold as the result of a writ of execution issued
by hi. What the law intends to avoid is the proper interference with and interest of a judge in
property levied upon and sold by his order.
Article 1492. The prohibitions in the Art. 1490 and 1491 are applicable to sale in legal
redemption, compromises and renunciations.
D. SUBJECT MATTER
* object must be licit ( Article 1459)
 Within the commerce of man
 Rights are transmissible
 Not contrary to law, morals, public policy
* object must not be impossible
*determinable: 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 (Article
1460)
*exact quantity is not essential
* future goods with potential existence (emptio rei speratae ) or goods whose acquisition by the
seller depends upon a contingency may be the subject matter of the sale( Articles 1461 & 1462)
* sale of a hope is allowed ( emptio spei) but the sale of a vain hope or expectancy is void
(Article 1461)
* undivided interest maybe the object of sale (Article 1463)
*Undivided share in a mass of fungible goods maybe object of sale ( Article 1464)
 The buyer becomes owner of the whole mass in the proportion in which the share
bought bears to the mass
 If the mass contains lees than that was sold, the buyer becomes the owner of the whole
mass and the seller shall supply whatever is lacking, subject to any stipulation to the
contrary.
* Things subject to a resulotory condition maybe the object of the contract of sale (Article 1465).
Atilano v. Atilano
Eulogio I owned a lot subdivided into 5 parts. He sold one portion to Eulogio II, who had
possession of and whose house was built on the said portion even before the sale was executed.
Years later, the heirs of Eulogio II had the lot resurveyed and they discovered based on the deed
o0f sale , that the land they posses was actually the lot in the name of Eulogio I and vise versa.

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The court held that although there was a mistake in the designation of the lots, it was clear that
the parties intended the object of the sale to be the lot occupied by Eulogio II and no other.
Yu Tek andCo. V. Gonzales

Gonzales received P3000 from Yu tek and Co. for which he obligated himself to deliver to the
latter 600 piculs of sugar. No sugar was delivered. In the suit against him, Gonzales interpose
the defense of force majeure as he was not able to produce any sugar from his crop,. However
the court still held him liable since there was no mention in the contract that the sugar is to
come exclusively from his crop. The object being generic, there is no risk of it being lost
Gaite v. Fonacier
Gaite sold 24,000 tons of iron ore, more or less, to Fonacier for the Sum of P75,000. Fonacier
contends that only 7, 573 tons were delivered to him. The sale in this case is that of a specific
mass of Fungible goods for lump sum. The price agreed upon by the parties was not based on
the measurement of the ore. The subject matter of the sale is a determinate object, the mass and
not the actual number of tons contain therein. All Gaite had to deliver was the mass of ore,
notwithstanding that the quantity is less than the amount estimated by them.
Johannes Schuback and Sons v. CA

A contract of sale is perfected at the moment there is a meeting of minds upon the things which
is the object of the contract and upon the price. In this case, the item number, part number and
description of the parts to be purchased were already agreed upon. Although the quantity was
yet determined, there was already a perfected contract of sale. Quantity i9s immaterial in the
perfection of sales contract. Quantity is immaterial in the perfection of sale contract. What is of
importance is the meeting of the minds as to the object and cause.
E. PRICE
1. When Price is Considered Certain (Article 1469):

a) If the parties have fixed or agreed upon a definite amount
b) If it be certain with reference to another thing certain
c) If it be certain with reference to a definite day particular exchange or market (Article
1472)
 Applies specially to securities, grain and liquids which are subject to fluctuations
in the market
d.) if the determination of the price is left to the judgment of specified persons.
 When the third person acts in bad faith or by mistake, the court may fix the price
 Effect if price is not fixed by the third person designated:
i. by refusal of 3rd person; the contract shall become ineffective, unless the
party agrees on price.
ii. By prevention of seller or buyer; the party not in fault may seek
rescission or fulfillment (court will fix the price ) with damages in either
case.
GEN. RULE: The fixing of the price can never be left to the discretion of one of the parties.
EXCEPTION; The sale is perfected if the price fixed by one of the parties is accepted by the
other (Article 1473)
Effect of failure to determine price

(article 1474):
1. where contract is executory- the contract is in efficacious (without effect)
2. where delivery has been made- the buyer must pay a reasonable price for the things
already delivered.
GSIS v. CA

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A seller cannot unilaterally increase the purchase price previously agreed upon with the buyer ,
even when such adjustment is due to increased contraction cost. Art. 1473 provides that “ the
fixing of the price can never be left to the discretion of one of the contracting parties. ‘
2. Gross Inadequacy and Simulation
Article 1471. if the price is stimulated, the sale is void, but the act maybe shown to have been in
reality a donation or some other act or contract.
GEN. RULE; Gross inadequacy of price does not invalidate a contract of sale .
EXCEPTIONS:
1. Gross in adequacy of price maybe a ground for setting aside a judicial sale, only when
it is shocking to the conscience of man and there is showing that, in the event of the
resale, a better price can be obtained.
 Unless there is right of redemption.
2. In instances covered by Article 1381, lesion of more than ¼ the value of the thing makes
the thing remissible unless approved by the court.
3. In a sale a retro, gross inadequacy of price raise a presumption of equitable mortgage.
(Article 1602)
 If the price is false( there is actually another price), the contract is valid, but subject to
reformation.
Balabat v. CA
Delivery of thing bought or payment of the price is not necessary for the perfection of the
contract. The failure of the buyer to pay the price after the execution of the contract does
not make the sale null and void for lack of consideration, but puts him in default.
Bagnas v. CA
Two deeds of sale were purportedly executed by Mateum in favor of the private
respondents, the consideration being P 1.00, including services rendered to and to be
rendered for Mateum’s benefit. However, Matuem remained in posseddion of the lands
and he also made tax payments for them until he passed away. Upon assessment, it turns
out that the actual value of the land is P 10, 500. The court held such sale as null and void.
The gross disproportions in price demonstrate false and fictitious consideration. Moreover
the private respondents did not show any other true and lawful cause for the sale.
Vda. De Gordon v. CA
The inadequacy of price is not material “when the law gives the owner the right to redeem
as when a sale is made at public auction, upon the theory that the lesser the price, the
easier it is far the owner to effect the redemption”.
F. RULES GOVERNING AUCTIONS (Article 1476)
 Sales of separate lots are separate contract of sale.

 Sale is perfected by the fall of the hammer.
 Before perfection of the sale , the bidder may retract his bid and the
auctioneer may withdraw the goods from the sale ( unless the auction is
without reserve)
 The seller or his agent has the right to bid in auction sale provided:
 Such right was reserve
 Notice was given
 Right to bid by seller is not prohibited by stipulation or law
G. PROMISE TO BUY AND SELL
Article 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.

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An accepted unilateral promise to buy or to sell a determinate thing for a price

certain is binding upon the promissory if the promise is supported by a consideration
distinct from the price.
Policitacion: unaccepted unilateral promise
Option Contract: a privelge existing in one person, for which he had paid a
Consideration and which gives him the right to buy certain specified property, from
another person, at any time within the agreed period at a fixed price (Enriquez de la
Cavada v. diaz)
Option money: price given in consideration for the option contract
earnest money(Article 1482): partial payment of the purchase price and is considered proof of
the perfection of the contract
 Cannot be forfeited when the buyer backs out, unless stipulated
OPTION MONEY EARNEST MONEY

Applies to a sale not yet perfected Given only when there is already a sale
Party who gives option money is not Party who gives earnest money is required
required to buy to pay the balance.
 The option maybe withdrawn at any time. However if there is consideration for
the option, the seller will be liable for damages for breach of the option.
 If another buyer in good faith purchases the thing that is the object of the option
contract , such sale is valid but the seller willliable for damages.
 Acceptance by letter /telegram binds only at time it came to knowledge of seller;
prior thereto the offer may still be withdrawn.
Villonco Realty Co. v. Bormaheco, Inc.

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 acceptance absolute. A
qualified acceptance constitutes a counter offer. However , where the changes or qualifications
made by the seller on the buyer’s offer are not material or are mere clarifications of what the
parties had previously agreed upon, such changes would not even prevent a perfection of the
contract.
Villamor v. CA
The consideration of the Deed of Option is the essential reason which moves the parties to
enter into the contract. In this case , the consideration was the difference in price between the
offer of the buyers and the reasonable prevailing price. The former was greatly higher than the
latter. However, the Deed of option did not provide for the period within which the parties may
demand performance the parties could not have contemplated that the delivery of the property
and the payment thereof could be made independently and render uncertain the status of the
land. The failure of either parties to demand performance of the obligation of the other for an
unreasonable length of time renders the contract ineffective.
Carceller v. CA
A lease agreement with option to purchase was executed. Fifteen days prior to the expiration of
the option period, the lessee sent a written notice requesting for a 6 months extension of the
period. This request was denied after the expiration of the option. The SC held that the delay of
18 days by the lessee cannot be considered substantial not fundamental since the lessee
exercised the option
within a reasonable time after the end of the period, immediately after the lessee was informed
of the denial of his request.
Cavite Dev’t Bank v. Lim (2000)

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CBd sold land to Lim, which land it previously foreclosed from Guansing. Lim paid 30,000 as
option money. Subsequently the title to land was reverted to Guansing’s father, on the ground
that it was fraudulently secured by Guansin. Lim then filed an action for specific performance
against CBD. As a defense, CBD alleged that there was no perfected contract of sale with lim.
The Sc held that there was a perfected cotract of sale, the ‘option money paid”being in the
nature of the earnest moneyor down payment. In this case, the contract (offer to
Purchase)provides for the payment only of the balance of the purchase price, implying that the
“option money” forms part of the purchase price.
Right of first refusal: different from an option contract since it merely pertains
To a specific property without containing an agreement as to the price or terms of payment.
Paranaque Kings Entrprise v. CA

In order to have full compliance with the right of first refusal, there should be identity of terms
and conditions to be performed to the buyer holding such right and all other prospective buyers
. if the terms is the offered to the buyer holding such right and all other prospective buyers. If
the terms of the offered different it becomes necessary for the seller to go back to the party with
the right of the first option.
The third person who bought the property from the seller who violated the right of the first
refusal can not claim to be a stranger to the arrangement since he steps into the shoes of the
owner lessor of the property be virtue of his purchased and assumes all the obligations of the
previous owner under the lease contract.
Asuncion v. CA
In a right of first refusal, while the object might be made determinate, the exercise of the right is
dependent not only on the grantor’s eventual intention to enter into a binding juridical relation
with another but also on terms, including the price, that obviously are yet to be later firmed up.
Prior thereto, it belongs to a class of preparatory juridical governed not by contracts but by,
among other laws of general application, the provisions of the Civil Code on Human conduct.
Even if such right of first refusal has been decreed under a final judgment, it breach cannot
justify the issuance of a Writ of Execution under a judgment that merely recognizes its
existence, nor would it sanction an action for specific performance. It is not to say, however, that
the right refusal would be inconsequential, for an unjustified disregard thereof can warrant a
recovery for damages.
San Po Ek v. Martinez(2000)
Martinez and her mother before her, Leased property to San Po Ek for a total of 28 years. After
this period, Martinez wrote the Lessee to inform the latter of her intention to sell the leased
property. However, the property was ther5after sold to a 3 rd party. San Pok Ek filed a case
praying for the Nullity of this Sale . the Sc held the that San Poke k does not have a right of first
refusal to assert against Martinez. Although the right of the first refusal may be provided for in
lease contract, such right was never stipulated in any of several lease contracts. The grant of the
right of first refusal must be clearly embodied in a written contract.
H. FORM OF CONTRACT OF SALE
Article 1483. subject to the provisions of the Statue of Frauds and of any applicable Statue, a
contract of Sale maybe made in writing, or by word of mouth, or partly in writing and partly by
word of mouth, or by inferred by the conduct of the parties
GEN. RULE: A contract maybe entered into any form.
EXCEPTIONS:
!. Those require to be in writing by the statue of Frauds(Article 1403 [2]) for its enforceability by
court action.
a. Sale of personal property of a price not less than P500
b. Sale of real property or an interest therein regardless of the price involved.
c. Sale of property not be performed within a year from date thereof
* Exception to the exceptions:

Page 11 of 40
a. When there is a note or memorandum in writing and subscribed to by party or his agent
(contains essential terms of the contract)
b. When there has been partial execution or performance
c. When there has been failure to object to presentation of oral evidence
2. Those required to be in writing in applicable statute for its validity and enforceability.
a. sale for realty through agent (Art. 1874)
b. sale of large cattle
* Expenses for execution and registration of the sale shall be borne by the vendor, unless there is
an stipulation to the contrary. ( Article 1487)
Dalion v. CA
Dalion executed a private document of absolute sale in favor of Sabessaje. Dalion claims that the
document is fictitious, and that since the alleged sale was embodied in a private instrument
(and not in public instrument), it didn’t convey title or rights. The Sc upheld the validity of the
sale. A contract of sale is perfected by mere consent and no particular form is required for its
validity. The process provided for under Art. 1358. CC is only for convenience, not for validity
or enforceability.
Ortega v. Leonardo
Ortega and Leonardo disputed over the occupancy of a parcel of land. Leonardo asked Ortega
to desist from pressing her claim, and promise to sell her a portion of the lot, provided the latter
paid for the surveying and subdivision of the lot. Ortega then caused the survey and
subdivision of the portion Leonardo promise to sell. She even made some improvements on the
said. However Leonardo refused to accept tender of payment. The SC ruled that while as
general rule, an oral agreement to sell a piece of land is not provable, where there is partial
performance of the sale contract, the principle excluding evidence of parol contract for the sale
of realty is not apply. In this case the following indicates partial performance: relinquishment of
rights of rights, continued possession, building of improvements, tender of payments rendition
of services of payment of taxes, surveying of the land at he vendee’s expense, etc.
Baretto v. Manila Railroad Co.

Delivery of the deed to the agent of the buyer, with no intention to the part with the title until
payment of the purchase price, does not constitute partial performance and dose not take the
case out of the statute of Frauds.
I. SALE OF GOODS BY DESCRIPTION AND/OR SAMPLE (ARTICLE 1481)
 sale by description OR sample: contract maybe rescinded if bulk of goods

delivered do not correspond with the description or sample.
 Sale by description AND sample: bulk of the goods must correspond to both the
description and the sample
Bulk of the goods: does not designate by the greater portion of the goods, but the goods
themselves as distinguished from the sample or description
J. SALE BY INSTALLMENT
Article 1484. In a contract of sale of personal property, the price of which is payable in
installments, the vendor may exercise any of the following remedies:
1.) Exact the fulfillment of the obligation, should the vendee fail to pay;
2.) Cancel the sale, should the vendee’s failure to pay cover two or more installments:
3.) 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,
 The remedies are alternative and not cumulative.

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 This provision incorporate the Recto Law or the Installment Sales Law.
 Rationale: to prevent abuses of mortgagees who seize the mortgage
property, buy the same for a law price at the for closure sale and then
bring suit against the mortgagor for a deficiency judgment.
 Article 1484 applies to leases of personal property with option to buy, when the
lessor has deprived the lessee of the possession or enjoyment of the thing (Article
1485).
Article 1486. In cases falling under Art. 1484 and 1485, 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.
Levy Hermanos V. Gervacio

In order to apply the provisions of article 1454- A CC (old) it must appear that there was a
contract is not one on installment s, but on straight term, in which the balance, after payment of
the initial sum, should be paid in its totality at the time specified in the promissory note.
Accordingly, the mortgagee is not bound by the prohibition therein contained as to its right to
the recovery of the of the unpaid balance. Where the price is payable in several installments,
generally payable in relatively small amounts, there is a great temptation for improvident
purchasers to buy beyond there means. There is no such temptation where the price is to be
paid in cash, or, as in the instant case, partly in cash and partly in one term, for, in the latter
case, the partial payments are not so small as to place purchaser off their guard delude them to
a miscalculation of their ability to pay.
Zayas jr. V. Luneta Motor Company

Zayas purchased a car from Escano Enterpise, a dealer of LMC. A chattel mortgage was
constituted on the car and Escano assigned its rights to LMC. When Zayas defaulted, LMC extra
judicially foreclosed the mortgage and subsequently a civil suit to recover the deficiency in
price,The SC held that Escano Enterprise was the agent of LMC and that LMC, as assignee, had
no better rights than assignor Escano Enterprise under the same transaction. Aricle 1484 applies
that LMC cannot recover deficiency in price.
Industrial Finance Corp. v. Ramirez

The rule is that in installment sales , if the action instituted is for specific performance and the
mortgaged property is subsequently attached and sold, the sale does not amount to the
foreclosure of the mortgage. Therefore, the seller has the rights to recover on unpaid balance of
the purchaseprice from the buyer.
Delta Motor v. Niu Kim Duan

Where the seller retakes possession of the thing sold from the buyer, through a writ of replevin,
it can no longer exact payment from the buyer for the balance of the purchase price.
Elisco TOOL Manufacturing Corp. v. CA

If the main purpose for seeking recovery of personal property under a writ of replevin was
merely to ensure enforcement of the remedy of the specific performance under Art. 1484 (1),
then there would be no bar to recover any amount from the lessee by reason by the enforcement
of the writ.
Northern Motors v. Sapinoso

Although the seller had already filed an action for foreclosure, 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 such payments after foreclosure and actual sale of the mortgaged
chattel that bar further recovery by the vendor of any balance of the purchaser’s outstanding
obligation and satisfied by the sale.
Cruz v. Filipinas Investment and Finance Corp.

The seller may not recover deficiency judgment by foreclosing on a mortgage constituted by 3 rd
party mortgagors, after foreclosing on the chattel mortgage constituted on a subject matter of
the sale. This is because the guarantor would be entitled to reimbursement from the debtor-

Page 13 of 40
vendee who will be made to pay for the deficiency in price after foreclosure. The action barred
under Art. 1484 includes not only judicial proceedings
II. OBLIGATIONS OF THE VENDOR
A. PRESERVE THE THING PENDING DELIVERY (Art. 1163)
RULES IN CASE OF LOSS, DETERIORATION, OR IMPROVEMENT OF THING:

 Before perfection of the contract: the seller bears the risk of loss/deterioration
 At the time of perfection(Art. 1493)
 If the thing is entirely lost, the contract shall be without any effect
 If the thing is loss in part only, the vendee may withdraw from the contract or
demand the remaining part, paying its proportionate price
 After perfection but after delivery (Articles 1504 and 1538):
 GEN. RULE: the risk of loss is borne by owner of the thing under the rule res
perit domino
 Remember that generally, delivery transfers ownership.
EXCEPTIONS:
i. buyer assumes risk at the time of delivery wher5e the seller reserves ownership, despite
delivery, to secure performance of buyers obligations.
ii. Party who cause delay in actual delivery bears the loss which might have occurred but for
such fault.
ii. party who cause delay in actual delivery bears the loss which might have occurred but for
such fault.
LOSS OF THING
Without sellers fault thru sellers fault
The obligation shall be extinguished seller shall be obliged to pay
damages
DETERIORATION OF THE THING

Without seller’s fault thru seller’s fault
The impairment is to be borne by the the buyer may choose between:
Buyer *rescission
*specific
Performance in either case
IMPROVEMENT OF THE THING

By nature or time at seller’s expense
Improvements shall inure seller shall have no right than that
To the benefit of the buyer granted to the usurfructuary
 VILLANUEVA: The rules are different for loss and deterioration/improvement because in
the former, the obligation to transfer ownership arises upon delivery while in the latter, the
buyer becomes owner of the fruits, accessions and accessories upon mere perfection of the
contract.
Aricle 1480. any injury to or benefit from the thing sold, after the contract has been perfected,
from the moment of perfection of the contract of the delivery, shall be governed by articles
1163 to 1165 and 1262.
This rule shall apply to the sale of fungible things, made independently and for a single
price or without consideration of their weight, number or measure.
Should fungible things, made independtly and for a single price or without consideration
of their weight, number or measure.

Page 14 of 40
Should fungible things be sold for a priced fixed according to weight, number or measure,
the risk shall not be imputed to the vendee until they have been weighed, counted or
measured and delivered, unless the latter has incurred in delay.
 Under this provision, the risk of loss is borne by the buyer after the perfection of the
contract and even before deliver, as an exception to the rule of res perit domino
 After delivery goods are at the buyer’s risk.
Chrysler Philippines Corp. v. CA

The general rule is that before delivery, the risk of loss is borne by the seller who is still the
owner, under the principle of res perit domino.
B. TRANSFER OWNERSHIP OF AND DELIVERY THING WITH FRUITS AND

ACCESORIES
 The vendor must have ownership of the thing sold at the time when the ownership is
to pass, and not necessarily at time e of the perfection of the contract (article 1459).
 Generally, the ownership of the thing sold is transferred upon actual or
constructive delivery (Article 1477)
Quijada v. CA
Ownership by the seller of the thing sold at the time of the perfection of the contract of sale ids
not an element of its perfection. What the law requires is that the seller has the right to transfer
ownership and a perfected contract of sale cannot be challenged on the ground of non –
ownership on the part of the seller at the time of its perfection.
 The thing sold and its accession and accessories must be delivered in the condition in
which they were upon the perfection to the contract ( Article 1537).
 The vendee has a right to the fruits form the time of perfection of the contract (Article
1573).
1. Ways of Effecting Delivery

a. ACTUAL or PHYSICAL delivery(Article 1497)
b. COSTRUCTIVE delivery
i. Execution of a public instrument ( Article 1498)
Exceptions:
*When ther is stipulation of the contrary
*when at the time of execution of instrument, subject matter was not subject to
control of the seller
ii. delivery of the key where the thing sold is stored = symbolic delivery (Article
1498)
iii. traditio longa manu: delivery by mere consent or agreement of the contracting
parties, where the seller points to the thing without physical delivery, if the thing sold cannot
be transferred to the possession of the vendee at the time of the sale (Article 1499)
iv. traditio brevi manu: when the vendee already has possession of the thing sold,
before the sale, by virtue of another title (Article 1499)
v. tradition constitutum possesurium:When the vendor continues in possession of the

property sold not as owner but in some other capacity (Article 1500)
vi. placing titles of ownership of incorporeal property in the possession of the vendee
(Article 1501)
vii. quasi-traditio of incorporeal property (Article 1501 ): use by the vendee of his rights
with the vendors consent
Pasaqui v. villablanca
While the execution of the deed of absolute sale in a public instrument is equivalent to delivery
of the land, this presumptive delivery only holds trough when there is no impediment that
may prevent the passing of the property from the vendor to the vendee. It can be negated by

Page 15 of 40
the fact that the vendees actually failed to obtain material;l possession of the land subject otf the
sale.
Dy, jr. V. Ca
Constructive delivery be the execution of a public instrument would produce the effect of
tradition, insofar as titled concern, provided that at the time of the execution there was no legal
impedimentof the part of the seller to transfer tille to the buyer, even if at the time of the asle,
control or possession of the land subject matter was not in the hands of the seller.
2.Place and time of Delivery(Aricle 1521)
RULES GOVERNNG PLACE OF DELIVEY,

In the following order:
a. place agreed upon, express or implied

b. place determined by usage of trade
c. the seller’s place of business
d. the seller’s residence
 In case of specific goods, the place of delivery is that where such goods were at time the
contract was made.
 The seller shall not be released until the 3 rd person with possession of goods
acknowledges being the bailee of the buyer.
 The seller bears the expenses to place the thing in a deliverable state, unless otherwise
agreed.
RULES GOVERNING TIME DELIVERY, in the following order:

a. time agreed upon
b. time determined by the usage of trade
c. if no time is fixed, the seller is bound to send the goods to the buyer within a reasonable
time
GEN. RULE: the vendor shall not be bound to deliver the thing sold unless the price be paid
(Article 1524).
EXCEPTION: The thing must be delivered through the price be not first paid, iof a time for such
payment has been fixed in the contract.
3. Completeness of the delivery

a. in case of MOVABLES 9 article 1522);
i. If the deliverd goods are less than the quantity contracted:
 Buyer may reject t the goods
 Buyer may accept the goods and pay:
 The stipulated pric, if he knows that the seller is not going to
perform the contract in full
 The fair value of the goods, if he did not know that the seller is
not going to deliver in fullo
ii. if the delivered goods are more than the quantity contracted:
 buyer may accept what was agreed upon and reject the excess
 buyer may accept all the goods and pay for all the contract rate
 buyer may reject all if the goods are indivisible
iii. if delivered goods are mixed with others
 buyer may accept those covered in the contract and reject the
others
 buyer may accept all and be liable for the price thereof
 buyer may reject all if the goods are indivisible
* The above rules are subject to any usage of trade, special agreement or
course of dealing between the parties.

Page 16 of 40
b. in case of IMMOPVABLES:
* Vendor must deliver the entire property specified in terms of area and quality.
i. If the area or quantity is/less than that stipulated (Article 1539)
 Buyer may ask for a proportional reduction of the price
 Buyer may rescind the sale if the lack in area is not less than 1/10 of the
stated or if the deficiency in quality exceeds 1/10 of the price agreed upon.
 Buyer may also rescind the sale if he would not have bought the property had
he known of its smaller area or inferior quality, irrespective of the extent of
lack in area or quality
ii. if the area be greater than that stipulated (Article 1540):
 buyer may accept the area included and reject the rest.
 Buyer may accept the whole area and pay for it at the contract rate
iii. if a sale is made for lump sum (Article 1542)
 there is no increase or decrease in price although there be a greater or less
area or number.
* Articles 1539 and 1540 are applicable to judicial sales (Article 1541).
* Action arising from Arts. 1539 and 1542 shall prescribe in 6 months from the day of the
delivery(Article 1543)
Sta. Ana v. Hernandez

Where two parcels of land sold were identified by the conspicuous boundaries that separated
the lands in question from the rest of the property, the sale made was a definite and identified
tract that obligated the vendors deliver to buy all the land within the boundaries, irrespective
of the whether the real area should be greater or smaller than what is recited in the deed This is
particularly true where the area given is qualified to be approximate only, i.e,. More or less. To
hold the buyer to no more than the area recited on deed. It must be made clear therein that sale
was made by unit of measure at a definite price of its unit. As between the absent of a recital of
a given price per unit measurement , and the specification of the total area sold, the former
must prevail and determines the applicability of the norms concerning sales for a lump sum.
4. Contracts of Sale of return, and of Sale on trial or Approval or Satisfaction Article (1502)
a. Sale or return: where the buyer has the option to purchase or return the goods, ownership of
the goods passes to the buyer upon delivery but is re- vested in the seller upon its return.
b. sale on trial or approval: where the satisfaction of the buyer is condition precedent to the
perfection of the contract, the ownership passes to the buyer upon:
i. the buyers approval of the goods
ii. retention of the goods by the buyer without giving notice or rejection
Industrial Textile Manufacturing Co. v. LPJ Enterprises. Inc.

For sale to considered and construed as a “sale or return” or sale on approval, there must be a
clear agreement to either or such effect. Parol or extrinsic testimony could not be admitted
could not be admitted for the purpose of showing that an invoice purporting to embody a sale
without condition or restriction constituted a contract of sale or return. If the purchaser desired
to incorporate a stipulation securing to him the right of return, he should have done so at the
time the contract was made. On the other hand, the buyer cannot accept part and reject the rest
of the goods since this falls outside the normal intent of the parties in the “on approval”
situation.
5. Where Specific Goods are Shipped (Article 1503)
Gen. Rule: The ownership in the goods sold passes to the buyer upon their delivery to the
carrier (Article 1523)
EXCEPTIONS: The seller reserves ownership in the goods:

a. a contrary intention appears by the terms of the contract
b. by the bill of lading the goods are deliverable to the seller, his agent or to the order of the
seller or his agent

Page 17 of 40
c. possession of the bill of lading is retained by the seller or his agent

d. the seller transmits the bill of exchange and the bill of lading together to the buyer to secure
acceptance or payment of the bill of exchange.
EFFECTS WHERE BILL OF EXCHANGE IS NOT HONORED BY THE BUYER:

a. buyer is bound to return the bill of lading
b. if buyer wrongfully retains the bill of lading, he inquires no additional right thereby
c. a purchaser in good faith for value from the buyer will obtain ownership in the goods
SELLER’S DUTY AFTER DELIVERY TO CARRIER (Article 1523)

a. to make such contract with carrier on behalf of the buyer as maybe reasonable under the
circumstances
 if the sellers fail to do so, the buyer maybe :
 decline to treat the delivery to the carrier as delivery himself
 hold the seller responsible to the damages
b. to give notice to the buyer regarding necessity to ensure the goods, unless the buyer had all
the information necessary to insure
 if the sellers fails to do so, the goods shall be deemed to be at his risk during such
transit.
DELIVERY THROUG CARRIER

a. free along side (FAS)
 the seller pays all charges and is subject to risk until the goods are placed alongside
the vessel
b. free on board (FOB)
 the seller shall bear all expense until the goods are delivered where they are to be
FOB ( the point of shipment or the point of destination )
 the points of destination determines the time when the property passes; when
goods reach the port there is delivery to the buyer even if they are not yet
disembarked from the vessel
c. cost6 insurance and freight (CIF)
 the price fixed covers not only the cost of the goods, but the expenses of freight and
insurance to be paid by the seller up to the point especially named
 2 schools of thought
i. delivery to the carrier is delivery to buyer since cost of insurance and freight is
ultimately borne by the buyer
ii. delivery by the seller to the carrier is not equivalent to delivery to the buyer and
the seller must continue to bear the risk of loss during shipment
Behn, Meyer & Co. v. Yangco

Behn, Meyer & Co. (vendor) entered into a contract of sale in delivery with Yangco (vendee).
The shipping terms were “c. i. f. manila” on the goods coming from New York. Yangco only
received 9 of the 80 drums of caustic soda order5ed, and such in bad condition. The court held
that the loss is to be borne by the vendor. The phrase. i. f. Manila” signifies that the price fixed
covers not only the cost of the goods, but also the expense of freight of insurance to be paid by
the seller. The term C. I. F. and “F.O. B. merely make rules of presumption which yield to proof
of contrary intention, which was not present in the case.
General Foods v. NACOCO

Under an ordinary C.I.F agreement, delivery to the buyer is complete upon delivery of the
goods to the carrier and tender of the shipping and other documents required by the contract
and the insurance policy taken in the buyers behalf. However the parties may, by express
stipulation or impliedly, modify a CIF contract and throw the risk upon the seller until arrival
in the port of destination. In this case, the parties agreed that the payment of the price was to be
according to the “net landed weight “ upon arrival in the port of destination. Therefore,
notwithstanding the CIF contract6, delivery to the carrier in Manila was not delivery to the
buyer and the vendor bore the risk of loss.
6. Sale by person Not the owner (Article 1505)

Page 18 of 40
GEN Rule: The buyer acquires no better title to the goods than the seller.
EXCEPTION:
a. where the owner is preclude by his conduct from denying the seller’s authority to sell.
b. where the enables the apparent owner to dispose of the goods as if he were the owner
thereof
c. when the contrary is provided for in recording laws
 e.g Torrens system in PD 1529
d. where the sale is sanctioned by the statutory or judicial authority
e. where the sale is made of merchant’s stores, fairs or markets

 rationale: to facilitate commercial sales on movables and to give stability to business
transactions
f. where the seller subsequently quires titles
g. where the seller has avoidable title which has not been avoided at the time of the sale
( Article 1506), provided the buyer buys the goods
 in good faith or value
 without notice of seller’s defect of title
 according to VILLANUEVA “at the time of sale” would mean before delivery
which would transfer ownership
City of Manila v. Bugsuk

A principal office is not a store. A store is defined as any place, whether by wholesale or retail,
or any place where goods are deposited and sold by one engaged in buying and selling them.
Aznar v. Yapdiangco
Under article 1506, it is essential that the seller should have a avoidable title at least . It is
clearly an applicable where the seller had no title at all. Where the would –be buyer took
possession of the subject matter by stealing the same while it was in the custody of the vendors
agent, there is unlawful deprivation and the owner has the right to recover the thing not only
from the finder. Thief or robber, but also from third persons who may have acquired it in good
faith from such finder, thief or robber, pursuant to article 559,CC.
EDCA Publishing v. Santos

An impostor, identifying himself as a professor, obtained delivery of books from EDCA for
which he issued a check that subsequently bounced. The impostor sold the books to Santos for
value. According to the SC, the non payment of the purchase price by the impostor , although
amounting to fraud. Did not amount to unlawful deprivation under Art 559. Such fraud maybe
considered a vitiation of consent, making the contract avoidable, but valid until annulled.
Hence, the sale to Santos was valid .
7. Negotiable Documents of title
Documents of title (Article !636): includes any bill of lading, dock warrant quedan or ware
house receipt or order for the delivery of the 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 will b, or authorizing or purporting to authorizing or purporting to authorized
the possessor of the document to transfer or receive, either by endorsement or by delivery,
goods represented by such document
Negotiable document of title: a document or title where the goods will be delivered to the
bearer, or to the order of any person named therein (Article 1507)
NEGOTIABLE OF NEGOTIABLE DOCUMENT BY DELIVERY (Article 1508)

a. if goods are deliver to the bearer
b. when the negotiable document of title is endorsed by the person to those order the goods
are deliverable or by a subsequent indorse in blank or to the bearer

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NEGOTIABLE OF NEGOTIABLE DOCUMENT BY INDORSEMENT( Article 1509):where by

terms of the negotiable document the goods are deliverable o a person specified therein
 Endorsement does not make the endorser liable for the failure of the bailee or previous
endorsers to fulfill their obligations (Article 1517)
 The transferor maybe compelled by the transferee to endorse the document if such
endorsement is essential for negotiation of a document transferred for value by
delivery. (Article 1515)
 The words “non-negotiable” when placed upon a document of title in which the goods
are to be delivered to order or to bearer, shall no effect and no document continues to be
negotiable (Article 1510)
 If the document is negotiable, the goods cannot be attached or levied unless the
document be first surrendered to the bailee or its negotiation enjoined (Article 1519)
 The remedy of the creditor is to sek the aid of the courts through injunction
(Article 1520)
WHO CAN NEGOTIATE(Article 1512)

a. owner
b, any person to whom the possession or custody of the documenthas been entrusted if:
i. Goods are deliverable by the order of the person to whom the possession or custody of
the document is negotiable by delivery at the time it was entrusted
ii. The document is negotiable by delivery at the time it was entrusted
 Exception to Article 1512 = Negotiation is valid if the persons who acquires

the document paid value in good faith, despite. (Article 1518)
 Breach of duty on the part of the person making the negotiation
 Deprivation of possession of owner by loss, theft fraud, accident
mistake duress or conversation
RIGHTS OF PERSON TO WHOM DOCUMENT HAS BEEN NEGOTIATED (Article1513):

a. Title of the person negotiating the document over the goods
covered by the document
b. Title of the person to whose order by the terms of the document
the goods were to be delivered, over such goods
c. Direct obligation of the bailee to hold possession of the goods for
him
 Non- negotiable documents can be transferred or assigned by delivery to a purchaser or

donee (Article 1511). The transferee acquires( Article 1514)
 Title to the goods as against the transferor
 Right to notify the bailee of the transfer]
 Right to acquire the obligation of the bailee to holds the goods for him
o Before notice is given, the bailee is not bound to the transferee whose
right maybe defeated by a levy to the attachment or execution or by a
notification to such bailee of the subsequent sale of the goods by the
transferor
o Possession and ownership of the document of title ( by assignment) does
not necessarily bring with it possession or title over the goods it covers: it
is the fact of notification of the bailee of the assignment that is the
operative act with transfers tile to the possession
WARRANTIES ON NEGOTIATION OR TRANSFER OF DOCUMENTS (Article 1516)

a. that the document is genuine
b. that the transferor has a legal right to negotiate or transfer the document
c. that he has knowledge of no fact w/c would impair the validity/worth of the document
d. that he has aright to transfer title to the goods
e. that goods are merchantable or fit of a particular purpose

Page 20 of 40
Siy Cong Bieng v. Hongkong and Shanghai Banking Corp.

Between the owner of a negotiable document of the 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 and
who received it in good faith and for value, the latter is preferred. This is because of the
principle that as between two person, he who made the loss possible should bear the loss.
8. Double Sales
Double sales: where the same property is sold to different vendees>
REQUISITES:
a. same subject matter
b. same immediate seller
c buyers represent conflicting interest
d. both sales are valid
RULES GOVERNING BOUBLE SALES:

a. movable property – ownership shall be acquired by the vendee who first takes possession
in good faith
b. immovable property-
 Ownership of property shall belong to the vendee who first register the sale in good
faith in the Registry of Property
 In the absence of registration, ownership shall belong to the vendee who first take to the
possession in good faith
 In the absence of registration and possession, ownership shall vest in the vendee who
present the oldest title (who bought the property first ) in good faith.
 Sales of immovable property are subject to the Mortgage Law and Land
Registration Law ( Article 1637)
Agricultural and Home Extension v.CA

A purchaser in good faith is one who buys the property of another without notice that some
other person has a right to or interest in such property and pays a full and fair price for the
same at the time of such purchase or before he has notice of the claim or interest of some other
person in the property. The annotation of list pendens on the title to the property by 3 rd parties
does not place the buyer in bad faith since such does not established a lien or encumbrance on
the property affected.
Cheng v. Genato
The rules on double sales under Article 1544 are not applicable to a contract to sell. For Article
1544 to apply there must be valid sales transaction and the buyers must be odds over the
rightful ownership of the subject matters who must have bought from the very same seller.
Such circumstances are lacking in a contract to sell since there is no transfer of ownership and
no sale has yet been consummated. Nevertheless the governing principle of art. 1544 should
apply, mainly the principle of Primus Tempore, portior jure (first in time stronger in right )
Gatmaitan v. CA
If immovable property is sold to different parties, the ownership shall pertain to the person
acquiring it who, in good faith first registered if in the Registry of Property. This rule however
admits of an execution, and that is where the 2 nd purchaser had knowledge of other sale, prior
to or at the time of sale. In such case, his knowledge is equivalent to registration and taints his
purchased with bad faith. The applicable rule in the case would be that ownership shall pertain
to the person who in good faith, first entered into possession, to the person who presents the
oldest title, provided there is good faith.
Navera v. CA
Where both sales were not r4ecorded in the Registry of the property, the Law clearly vest the
ownership upon the person who in good faith was first in possession of the disputed lot. The
possession mentioned in Article 15444 for determining who has better right when the same
piece of alnd has been sold several times by the same vendopr includes only not the material

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but also the symbolic possession, which is acquired by the execution of a public instrument. In
the case at bar, both sales were executed through public instruments. Ownership should
therefore be recognized iv favor of the first vendee.
Cruz v. Cabana
Prior registration by the 2nd buyer does not by itself confer ownership or a better right over the
property. Such registration must be coupled with good faith. The governing rule is primus
tempore, portior jure ( first in time, stronger in rights,)Knowledge gained by 2 nd buyer of the
first defeats his rights even if he is first to register the sale, since such knowledge taints his prior
registration in bad faith.
Baricuatro v. CA(2000)
Galeos sold 2 lots of a subdivision, on installment basis, to Baticuatro and subsequently sold the
entire villages to the Amores. Galeos told Baricuatro failed to make payment to Amores, the
latter sold the same to lots to the Nemenios spouse. The 2 nd vendee obtained title to the lots and
asked Baricautro to vacate. When the latter refused to do so, the Nemenios filed an action to
quite title. The SC declared the sales to Amores and Nemenio as Null and void. It ruled that
even if Amores and Nemenios were purchasers in good faith when they registered their totles
to the disputed lots as they already had knowledge of the sale to Baricuatro before such
registration. For a 2nd buyer to successfully invoke Art. 1544 he must possess good faith when
they registered their titles to the disputed lots as they already had knowledge of the sale to the
Baricuatro before such registration> For a 2 nd buyer to successfully invoke Art. 1544, he must
possess good faith from the time of acquisition to the property until the registration of the deed
of conveyance covering the same.
Carumba v. CA
While under Article 1544, registration in good faith prevails over possession in the event of the
doubt by the vendor of the same piece of land to different vendees, said article is of no
application to unregistered land at an execution sale. The reason is that the purchaser of
unregistered land at a sheriffs execution sale only step into the shoes of the judgment debtor.
He merely acquires the latter interest in the property before the land was levied upon. Therefore
he has a better right to the land even if the 2nd vendee was first to register the land in good faith.
CONDITON WARRANTY
Goes into the existence goes into performance
Of obligation of the obligation
Must be stipulated to be part may form part of the obligation
Of an obligation provision of law.
Express warranty (Article 1546): affirmation, fact or promise by the seller relating to the thing,
by natural tendency of which is to induce the buyer to purchase the thing, and the buyer
purchases the same
 To be construed a warranty, the seller must make the affirmation as an expert and such
should be relied upon by the buyer.
Implied warranties article (article 1547):

a. that the seller has the right to sell the thing when ownership is to pass
b. that the buyer shall enjoy legal and peaceful possession of the thing
c. that the thing shall be free from:
 Hidden faults or defect
 Charges or in cumbrances
d. that the thing sold is reasonable fit for the known particular purpose for which it was
acquired (Article 1562)
e. where the thing sold was bought by description, that it is of merchantable quality (Article
1562)
* the ff. people are not liable ( for the implied warranties) to a person with legal or equitable
interest in the thing sold:

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 Sheriff in these cases the rule

 Auctioneer of canveat emptor or buyer
 Mortgagee beware apply.
 Pledge
 Person professing to sell by virtue of authority in fact or law
C. WARRANTY AGAINST EVICTION
1. Definition and Requisites
Eviction (Article 1548): a judicial process whereby the vendee is deprived of the whole of the
part of the thing purchased by the virtue of:
 A final judgment base on a right prior to the sale
 Such final judgment is essential (article 1557)
 Vendor must be summons in the suit for eviction at the instance of the vendee to
be made liable for the breach of warranty (Article 1158)
 Vendee shall ask the vendor be made his/her co-defendant (Article 1559)
 To give vendee a chance to defend the title he transferred
 Vendor is liable even if vendee does not appeal from the judgment(Article 1549)
 An act imputable to the vendor
 Vendor is liable where property is sold at public auction for non- payment of
taxes due him and unknown to vendee (Article 1551)
GEN. RULE: the vendors liability for breach of warranty against eviction maybe increased,
diminished or suppressed by stipulation (Article 1548)
EXCEPTION: Where the vendor acts in bad faith, stipulation waiving liability is void (Article
1553).
 Bad faith by vendee = selling the thing even with knowledge that there is cause
for risk of eviction
 Exception to the exception: where the vendee is also in bad faith, vendor cannot
be held liable for the eviction.
Escaler v. CA
The Reynoso spouses sold a parcel of land to the petitioners, which sale was warranted against
eviction. When the TCT in favor of the petioners was declared null and void ( on the ground
that the property covered by said title is already previously registered in favor of 3 rd party), the
petitioners sued for the violation of the warranty against eviction. The SC held that the vendors
were not liable because they were not summoned and made co-defendants in the suit of the
instance of the vendees. The vendees merely furnished the vendors a copy of the opposition
filed in the eviction suit by registered mail.
2. Kinds and effects of waiver of Eviction (Article 1554)

a. consciente: waiver is voluntarily made by the vendee without knowledge and assumption
of risk of eviction
 Effect: vendor shall only pay the value which the thing sold had at the time of eviction.
b. intencionada: waiver made by the vendee with knowledge of the risks of eviction and
assumption of its consequences
 Effect. the vendor shall not be liable provided he did not act in bad faith
 the rule on warranty against eviction applies to a judgment applies to a judgment

(article 1552)
3. Effect of Acquisitive Prescription (Article 1550)

a. completed before the sale- the vendor shall be liable for breach of warranty
b. completed after the sale- the vendor shall not be liable for eviction since the vendee could
easily interrupt the prescriptive period by bringing the necessaryu action.

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4. Rights of the Vendee in Case of total Eviction (Article 1555)

a. return of the value which the thing sold had at the eviction, be it greater or less than the
price of the sale
b. give income or fruits, if the vendee has been ordered to deliver the same top the party who
won the suit
c. cost of the suit of eviction and suit brought against the vendor for breach of warranty
d. expenses (registration and execution) , if paid for by the vendee
e. damages and interests and ornamental expenses if the sale was made in bad faith
5. Rights of the Vendee in Case of Partial Eviction (Art. 1556)

a. enforce vendors liability for eviction
b. rescind the contract
 when exercised:
i. if he would not have bought the thing without the part lost through eviction
ii. when 2 or more things have been jointly sold and the vendee would not have
purchased one without other
 vendee has obligation to return the thing without other encumbrances than those which
it had when he acquired it.
6. Right of vendee where immovable is encumbered with non-apparent burden (article 1560)
a. rescind the contract

b. ask for indemnity
* to exercise these rights, the burden and servitude:

> must be of such nature that the vendee would not have acquired the thing had been
aware thereof
> must not be recorded in the Registry of property ( constructive Notice)
- unless there is an express warranty that the thing is free from all burdens and
encumbrances
> must not be known to the vendee
* action for rescission or damages must be brought within 1 year from the execution of the deed
> if one year period has elapsed, only the action for damages may be brought within a year
from discovery of the burden or servitude
D. Warrant against hidden defects or encumbrances
1. Requisites for warranty against Hidden Defects ( Article 1961)

a. defects must be important or serious
 renders the thing unfit for the use it was intended for
 diminishes the fitness of the thing for such use that the vendee would not have
acquired it or would have asked for a lower price if he had been aware thereof
c. defect must be hidden
 not patent or visible
 exception; the vendor is not liable for hidden defects if the vendee is an expert
who. By reason of his trade or profession, should have known of the defect.
Filinvest Credit Corp. v. CA
In this case , the vendor was not held liable for breach of warranty against hidden defects. Aside
from the fact that the vendee signed waiver which released the vendor from any liability in
relation to the warranty, he was also engaged in business which deals with the particular type
of machinery subject of the sale. Accordingly, the vendee should shoulder the responsibility of

Page 24 of 40
protecting himself against product defects. Common sense dictates that a buyer inspects a
product before purchasing it ( under the principle of caveat emptor or “ buyer beware’ )
 DOCTINE OF CAVEAT VENDITOR;

The ignorance of the vendor as to hidden defects or faults does not relieve him from
liability to the vendee for the same( Art. 1566)
 Exception: where the contrary is stipulated and the vendor acted in good faith
 The rules on warranty against hidden defects are applicable to judicial sale, except that
the judgment debtor shall not be liable for damages ( Art. 1570 )
2. Implied warranties of quality ( art. 1562 )

 Where there is a sale of goods.
a. Fitness;
 Warranty that the goods are suitable for the special purpose of the buyer
 Applies only where the buyer –
i. makes known to the seller, expressly or impliedly, the particular purpose for
which the goods are acquired
ii. release on the seller’s skill or judgment
b. merchantability;
i. warranty that goods are reasonable fit for the general for which they are sold
ii. applies where;
i. goods are bought by description
ii. goods are bought by sample, and the seller is a dealer in goods of that
kind( Art. 1565)
 If the thing is specified under its patent or trade name, there is no warranty as to its
fitness for any particular purpose, unless otherwise stipulated ( art. 1563 ).
iii. In this case, the buyer relies on his own judgment ( instead of that of the
seller’s ) by contracting for a particular trade name or brand
1. Usage of trade may show the intention of the parties as to the particular purpose of the
thing sold, so that there maybe an implied warranty or condition as to fitness ( Art. 1564
)
3. Alternative Remedies to Enforce the Warranty ( art. 1567)
a. accion redhibitoria; withdraw from the contract

b. accion quanti minoris: demand a proportionate reduction of price
 There is a right on damages in either case

 These action prescribe after 6 months from delivery of the thing sold ( art. 1568)
4. Effect of Loss of Thing with Hidden Defect
a. loss due to hidden defects ( art. 1568);

iv. If vendor acted on bad faith –
i. return the price
ii. refund prices of the contract
iii. pay damages
 if vendor acted in bad faith-
i. return the price with interest
ii. reimburse the expenses of the contract which the vendee might have paid
b. loss through fortuitous event or fault of vendee ( Article 1569)

 if vendor acted in good faith- demand price paid to the vendor, less its value at
the time of loss

Page 25 of 40
 if vendor acted in bad faith, he shall pay damages to the vendee, in addition to
the price of the thing ( less its value at the time of loss)
5. sale of Animals
 where 2 or more animals are sold together, the redhibitory defect of one shall only
give rise to its redhibition and not that of the others ( Art. 1572)
 unless it appear that the vendee would not have purchased the sound one
without the others ( this is presumed when a team, yoke, pair or set is bought)
 this applies even two or more things are sold together and only some, not all
have defects ( art. 1573)
redhibitory defect in animals ( Art. 1576):

defect is not only hidden, but of such nature that expert knowledge is not
sufficient to discover it
 if failure of veterinarian to discover or discloses through ignorance or bad faith, he
shall be liable for damages
 in sale of animals with redhibitory defects, the vendee may also ask for a proportionate
reduction of price or accion quanti minoris ( article 1580)
 redhibitory accion or action quanti minoris ( art. 1580)
 there is no warranty against hidden defects of ( art. 1574):

 animals sold are suffering from contagious disease
 where the animals are unfit for the use or service for which they are acquired, as
stated in the contract
 if the animal dies within 3 days after its purchase, the vendor shall be liable if the disease
which caused the death existed at the time of the sale ( Art. 1578)
 if the loss is caused through fortuitous event or fault of the vendee. article 1567
should apply.
LIABILITY OF BUYER IN CASE SALE OF ANIMAL IS RESCINDED ( Art. 1579):

a. animal shall be returned in the condition in which it was sold and delivered
b. vendee shall be liable fort any injury due to his negligence and not arising from the defect
E. ADDITIONAL PROVISIONS GOVERNING WARRANTIES FOR COUSUMER

PRODUCTS (art. 68, RA 7394, Consumer Act of the Philippines)
1. Express Warranties
a. Express warranty is operative from the moment of sale
b. Seller or manufacturer shall:

 State the products or parts covered
 State that the warrantor will do in the event of a defect, malfunction of failure to
conform to the warranty, the warrantor will perform any obligation under the
warranty
d. Sales made by distributors must be reported to the manufacturer, producer or importer

of the product sold within thirty ( 30 ) days from date of purchase, unless otherwise
agreed upon
 Report shall contain the date of purchase, model of the product bought, its serial
number, name and address of the buyer
 Such report shall be equivalent to warranty registration with the manufacturer,
producer or importer sufficient to hold them liable
 Failure to make the report or send them the form required by the manufacturer,
producer or importer shall relieve the latter of its liability under the warranty
provide, the distr5ibutor shall be personally liable under the warranty
- the manufacturer shall obligated to make good the warranty at the expense of the
distributor

Page 26 of 40
d. Retailer is subsidiarily liable under the warranty

 in case of failure of both the manufacture and distributor to honor the warranty
 nothing therein shall prevent the retailer from proceeding against the distributor or
the manufacturer
e. Enforcement of warranty
 purchaser needs only to present to the immediate seller either the warranty
card of the official receipt along with the product to be serviced or returned to
the immediate seller
f. designation of written warranties;
i. full warranty – meets the minimum requirements

ii. limited warranty- does not meet the minimum requirements
* minimum requirements:
> remedy the product within a reasonable time and without charge in
case of a defect, malfunction or failure to conform to such written warranty
> permit the consumer to elect whether to ask for a refund or replacement
without charge of such product or part
g. Remedies in case of breach

> have the goods repaired
- Warranty work must be made to conform to the express warranty
within 30 days by either the warrantor or his representatives.
- period may be extended by conditions beyond the control of the
warrantor/his representatives
> refund of purchase price

- the amount directly attributable to the use of the consumer prior to the
discovery of the non – conformity shall be deducted
2. Breach in case of Implied Warranties

> the consumer may:
i. retain in the goods and recover damages
ii. reject the goods, cancel and contract and recover from the seller so much of the
purchase price as has been paid, including damages
III. OBLIAGTION OF THE VENDEE
A. ACCEEPTANCE OF DELIVERY
 The vendee is bound to accept delivery of the thingy sold at the time and place
stipulated in the contract ( Art. 1582)
 If no time and place is stipulated = see rules under Place and Time of Delivery
Express acceptance( article 1585 ): when the buyer intimates to the seller acceptance of
delivered goods.
Implied acceptance ( Article 1585)

 when the buyer does an act, in relation to the delivered goods, which is consistent with
the seller’s ownership
 when the buyer retains the goods after the lapse of reasonable time, without intimating
to the seller that he has rejected the goods
General Rule : acceptance of goods buy the buyer shall not discharge the seller from liability for
breach of any promise or warranty.
EXCEPTIONS:

Page 27 of 40
1. where there is an agreement to the contrary

2. where the buyer retains the goods after the lapse of reasonable time after he comes to
know or ought to have known of it
1. delivery installments ( Article 1583 )
GEN RULE: The buyer is not bound at accept goods delivered in installments.
Exception; where there is a stipulation to the contrary
WHERE GOODS ARE TO BE DELIVERED IN INSTALLMENTS AND PAID FOR

SEPARETLY. :
 if sellers make defective delivery or if the buyer fails to take delivery or make payment,
it defends upon each case whether the breach affects the entire contract or just a part
thereof
 where breach affects entire contract injured party may refuse to proceeds further and
sue for damages for breach of the entire contract
 where the breach is severable , it will give rise to a claim for compensation for the
particular breach only
2. Right of Examination ( art. 1584)

* unless otherwise stipulated, the buyer is not deemed to have accepted the goods delivered to
him until he has had reasonable opportunity to examine them
 when the seller tenders the goods, the buyer must request; for the opportunity
to examine the goods
 where the goods are delivered to a carrier and delivery to the buyer is withheld
until payment of the price, in the absence of the agreement or usage pof the
trade permitting the examination
3. Refusal to Accept
a. justified refusal ( Art. 1587 ):

> buyer is not bound to return the goods to the seller, it being sufficient that he notifies
the seller of his refusal to accept
> goods are at the risk of the seller even if such are in the possession of the buyer,
unless the latter should voluntarily constitute himself a depositary thereof
b. wrongfully refusal ( Art. 1588 ) : title passes to the buyer, and he bears the risk of loss
La Fuerza v. CA
The thing sold is understood as delivered when it placed in the control and the possession of
the vendee. From the time of installation and trial run out of conveyors, the vendees where in a
possession to decide whether or not it was satisfied with the good, and hence to estate whether
they accepted or rejected. The vendee’s failure to express categorically whether the same are
accepted or rejected the conveyors does detract from the fact that the same were actually in its
possession and control , and that the period prescribed in Art. 1571, CC had begun to run.
B. PAYMENT OF PRICE
1. Liability of Vendee for Interest ( art. 1589)
 for the period between delivery and payment
a. if stipulated
> stipulated rate governs; otherwise, the rate is 12 %
> stipulation may be oral
B. if the thing delivered produce fruits or income

Page 28 of 40
c. in the buyer is in default, from the time of judicial or extrajudicial demand for
payment
2. Suspension of Payment ( art. 1590)

a. should the vendee be disturbed in possession or ownership of the thing by vindicatory
action or foreclosure of mortgage
b. should the vendee have reasonable grounds to fear disturbance of possession or

ownership by vindicatory action or foreclosure of mortgage
 vendee may suspend payment until the vendor has caused the disturbance or danger to
cease
 where vendee cannot suspend payment:
 if the vendor gives security for the return of the price
 if it has been stipulated that the vendee should pay notwithstanding the
disturbance or danger
 if the vendor causes the disturbance or danger to cease
 if the disturbance is a mere act of trespass
3. Rescission of sale of Immovable Property
ACTION BROUGHT BY VENDOR ( Article 1591 ) should he have reasonable grounds to

fear the loss of the immovable and its price
 contemplates a situation where the immovable has been delivered but the price
has not yet been paid
 after demand, the court may not grant the vendee a new term
 vendee may no longer pay6 the price after the expiration of the period:
 in sales on installments wherein the parties have laid down the procedure to be
followed in case of default by vendee
 in a mere promise to sell where the title remains with the vendor until full
payment of the price
IN CASE SUIBDIVISION OR CONDOMINIUM PROJECTS ( P.D 957):

 no installment payments made by the buyer shall be forfeited in favor of the owner or
developer when the buyer desist from further payment due to the failure of the owner or
developer to develop according to the approved plan and within the time limit for
complying with the same
Buyer must give due notice to the owner or developer
The buyer is granted the option to be reimbursed the total amount paid
Legarda Hermanos v. Saldana

Legarda Hermanos sold 2 lots to Saldana on installment basis. After 8 years of continous
payments, Saldana defaulted and because of this Legarda Hermanos cancelled the contract.
According to the SC, the vendor could not rescind the sale of both lots since the payments made
by Saldana were enough to cover the cover the purchase price of one lot. In this case, there was
substantial performance on the part of Saldana as to prevent rescission.
Siska Development v. Office of the Presidents

The sending of a notice of cancellation to the buyer is mandated by R.A 6552 ( the Maceda Law )
which took effect on Sept. 14, 1972., section 3 (b) provides that the actual cancellation of the
contract shall take place 30 days from receipt of the buyer of the notice of the cancellation or the
demand rescission of the contract by a notarial act and upon full payment of the cash surrender
value to the buyer. “ While the contract was entered into before the affectivity of said law,
jurisprudence made necessary a notice or rescission. As stressed in University Of the
Philippines v. Walfrido De los Angeles, the act of the party in treating a contract as cancelled
should be made known to other. Moreover unilateral cancellation of a contract to sell is not
warranted if the breach is slight or casual.

Page 29 of 40
Odyssey Park, Inc. v. CA
In a contract to sell, the payment of the purchase price is a positive suspensive condition, the
failure of which is not breach contemplated under Art. 1191 CC ( where breach is the obligors
failure to comply with an obligation already extant, not a failure of a condition to render
binding that obligation).
Bricktown Dev’t Corp. v. Amor Tierra Dev,t
A grace period is a right, not an obligation of the debtor. When unconditionally conferred, the
grace period is effective without further need of demand either calling for the payment of the
obligation or for honoring the right. The grace period must not be likened to an obligation. The
non- payment of which, under art. 1169 of the civil code, would generally still require judicial or
extrajudicial demand before “ default “ can be said to arise.
4. Rescission of Sale of Movable Property (Art. 1593 )
 Vendor can rescind the sale as matter of right if thje vendee does not:
a. accept delivery
b. pay the price
 exception: where a longer period has been stipulated for payment
 reason why immovable property treated differently from movable property;
 personal properties are not capable of maintaining a stable price
such that any delay in their disposal may prejudice the vendor
IV. REMEDIES FOR BREACH OF CONTRACT
A. REMEDIES OF THE SELLER
1. For Payment of the price in the Sale of Goods
WHEN ACTION MAYBE BROUGHT (Art. 1595 )

 When ownership of goods has passed to the buyer and he neglects or refuses to
pay
 When the price is payable on a certain day and the buyer neglects or refuses to
pay irrespective of ownership or transfer of title.
 Buyer may claim as a defense the seller manifestation of inability to
perform the contract of sale before the judgment
 When the sellers holds the goods as bailee for the buyer in case the
latter refuses to accept the goods and they cannot be resold for a reasonable
price, the 4th part of art. 1596 not being applicable
 Art. 1596, par. 4 pertains to a situation where the expenses of for labor
or materials is borne by the seller and the sell is repudiated; the buyer
shall be liable for that expenses made before notice of repudiation is
received by the seller.
2. For Damages for Non- acceptance of the Goods ( Art. 1596)
WHEN ACTION IS BROUGHT;

 Where the 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 of contract ( usually the difference between the contract and market
prices)
 Where there is an available market for the goods in question –
 Proximate damages as sees from special circumstances

Page 30 of 40

Difference between the contract and market prices at the time when the goods
ought to have been accepted or time of refusal to accept
 Where the contact is repudiated, the ff. are included in the computation of damages –
 Expenses incurred by the for labor or materials before receiving notice of
repudiation
3. For Rescission of the contract of sale of goods
WHEN ACTION MAYBE BROUGHT;

 Where goods are not yet delivered ( Art. 1597) –
 When the buyer has repudiated the contract of sale
 When the buyer has manifested his inability perform his obligations under the
contract
 When the buyer has committed a breach
 Where the goods have been delivered –
 Immovables; should the seller have reasonable grounds to fear the loss of the
immovable and its price ( Art. 1591 )
 Movables;if the vendee does not accept delivery or pay the price ( Art. 1592 )
4. Special Remedies of an unpaid Seller ( Art. 1526 )
Unpaid seller ( art. 1525): one who has

 Not been paid
 Not been tendered the whole price
 Received a bill of exchange or other negotiable instrument as conditional payment and
the condition on which it was received has been broken by reason of the dishonor of the
instrument or insolvency of the buyer.
a. lien on the goods or right to retain the good

 When possesory lien is exercised ( Art. 1527 ):
i. where the goods has been sold without any stipulation as to credit
ii. where the goods has been sold to credit, but the term of credit has expired
iii. where the buyer becomes insolvent
 right of lien may be exercised even if seller holds the goods as agent or bailee for
the buyer
 where part delivery of goods has been made, right of lien maybe exercised on the
remainder, unless such right is waive ( Art. 1528 )
 when possesory lien is lost ( Art. 1529)

i. when goods are delivered to agent or bailee of buyer without reserving ownership
or right to possess
ii. when buyer of his agent lawfully obtains possession of the gods
iii. by waiver
 effect of sale of good subject to lien ( Art. 1535):
i. goods not covered by negotiable document = right of lien is not affected, unless the
seller has assented thereto
ii. goods covered by negotiable document of title = seller’s lien cannot prevail against
the rights of a purchaser for value in good faith to whom the document has been
indorsed
b. in case of the insolvency of the buyer, a right of stopping the goods in transits
insolvent buyer ( art. 1636): one who-

 has ceased to pay his debt in the ordinary coursed of business
 cannot pay his debts as they become due
 when goods are in transit ( Art. 1531):

Page 31 of 40
i. after delivery to carrier or other bailee and before the buyer or his agent
takes delivery of the goods
ii/ if the goods are rejected by the buyer and the carrier of other bailee
continuous in possession of them
 when goods are no longer in transit ( Art. 1531 ):

i. if the buyer of his agent obtains possession of the goods before their arrival at their
appointed destination
ii. if the carrier of bailee acknowledges to hold the goods on behalf of the buyer after
their arrival at the appointed destination ( attornmet by the bailee)
iii.if the carrier or bailee wrongfully refuses to deliver the goods to the buyer
 where part delivery of the goods has been made, the right to stop goods in transit may
still be exercised
 whether delivery to a carrier chartered by the buyer is delivery to the buyer depends
upon the circumstance; but delivery to a carrier owned by the buyer is delivery to the
buyer
 ways of exercising right to stop. ( art. 1532 ):
i. by akin actual possession of the goods

ii. by the unpaid seller giving notice of his claim to the carrier or bailee
 notice or resale to the original buyer is not essential, but failure to give notice shall be
relevant upon the question of the whether or not the buyer has been default for un
unreasonable time
 seller cannot directly or indirectly buy the goods subject of a resale
d. a right to rescind
 when the seller may rescind ( art. 1534 ):

i.where the right to rescind is expressly reserved in case the buyer should default
ii. where the buyer has been in default in payment for un unreasonable time
 effect of rescission;
i.seller not liable to the buyer upon the contract of sale
ii. seller may recover from the buyer damages for any loss
iii. seller resumes ownership of the goods
 hoe seller may rescind; manifestation by notice to the buyer or some overact
showing intention to rescind
 communication of overact to buyer is not necessary, but failure to give notice
shall be relevant upon the question of the wether or not the buyer has been
in default for an unreasonable time
where the ownership has not passed to the buyer, a right of withholding delivery should the
vendee lose the ri
e. B ght to make use of the term for payment ( Art. 1536 )
 when vendee loses right to make use of the term ( art. 1198)
i.when after the obligation has been contracted, the vendee becomes insolvent, unless
he gives a guaranty or security
ii.when the vendee does not furnish the guaranties or security which he has promised
iii.when the vendee has impaired the guaranties or sdecurity given and when they dis
appear through a fortuitous event, unless he immediately gives new ones equally
satisfactory
iv.when the vendee violates any undertaking in consideration of which the period was
granted
v.when the vendee attempts to abscond

Page 32 of 40
B. REMEDIES OF THE BUYER
1.for Specific performance ( art. 1598 )
WHEN ACTION MAYBE BROUGHT;

 where the seller has broken a contract to deliver specifc or ascertained goods
 The seller cannot retain the goods on payment of damages because damages
cannot substitute the fulfillment of the contract
2. For Breach of Warranty ( Art. 1599)
REMEDIES AVAILABLE;
a. accept or keep the goods and set up the sellers breach to reduce or extinguished the
price ( recoupment )
b. accept or keep the goods and maintain an cation for damages for breach of warranty
c. refuse to accept the goods and maintain an action for damages for breach of warranty
d. rescind the contract, return the goods and recovered the price paid;
 buyer cannot rescind if he knew when the braech when he acceped the goods
and he-
i. did not protest
ii. failed to notify the seller within a reasonable time of the election to rescind
iii. failed to return or offer to return th goods in substantially as goods condition as
when ownership was transferred
exception: where the injury of the deterioration is due to the breach of

warranty
 shall be liable to repay the buyer;

i. concurrently width the return of the goods
ii. immediately after an offer to return the goods
> if the seller refuses to accept the offer to return the goods, the
buyer shall hold the goods as bailee for the seller
>also upon refusal to accept the buyer shall have a lien on the
goods for the price he paid to the seller, which lien he may enforce as if he were an unpaid seller
 the remedies are alternative

 exception; where the buyer chooses specific performance and it should
become impossible, he may sue for rescission ( Art. 1191)
MEASURE OF DAMAGES;
 difference between the value of the goods at the time of delivery and the value they
would have had if they had answered to the warranty
V. EXTNGUISHMENT OF SALE
A. COMMON TO OTHER OBLIGATION
 Under Art. 1231, the following cause the extinguishment of obligations;

 Payment
 Loss of the thing
 Condonation or remission
 Confusion or merger of rights
 Compensation novation
 Annulment
 Rescission
 Fulfillment of a resolutory condition
 prescription

Page 33 of 40
B. SPICIFIC TO SALES;
 Under the provision governing sales;
 Art. 1484; rescission in case of failure to pay 2 or more installment
 Art.1539; rescission in case of failure to deliver complete area or same
quality of immovable
 Art. 1556; rescission due to breach of warranty against eviction
 Art. 1567; rescission due to breach of warranty against hidden defects
 Art.1591; rescission for fear of loss of immovable property
 Art.1592; rescission to accept failure to accept goods or pay the price
 Articles 15954- 1599; remedies for breach of contract of sale of goods
B. CONVENTIONAL REDEMPTION
1. General provisions
Conventional redemption ( Art. 1601 ): when the vendor reserves the right to
repurchase the thing sold, provided the fulfills the obligation agreed upon and
reimburse the :
 P[purchase price
 Expense of the contract
 Necessary and useful expenses made on the thing sold ( Art. 1616 )
 Both movables and immovable may be subject or conventional redemption
PERIOD TO EXERCISE RIGHT OF REDEMPTION ( Art. 1606 ):

 If there is an agreement, the period cannot exceed 10 years
 If there is no agreement, the period shall last 4 years from date of the contract
 If there has been a civil action which declared the contract a sale with right to
repurchase, 30 days from the time final judgment was rendered
 Reason for limiting period; to prevent the uncertainity of the ownership of the thing for
the long period
Villarica v. CA
The right of repurchase is not the right granted the vendor by the vendee in the subsequent
instrument, but it is right reserved by the vendor in the same instrument of sale is executed, the
vendor can no longer reserved the right to repurchase but some other right like the option to
buy in the instant case.
Vda. De Zulueta v. Octaviano

Villarica rulling may apply if there is adequate showing that the parties acted in good faith in
executing the two separate documents, and not to hide the fact that their transaction is one of
sale with right of repurchase, or one of equitable mortgage.
Catangcatang v. Legayada
In the exercise of the right of repurchase, it is not sufficient that the vendor a retro manifest his
desire to repurchased. This statement of intention must be accompanied with an actual and
simultaneous tender of payments which constitutes the legal exercise of the right to repurchase.
While consignation of the redemption price is not necessary in order to allow the repurchase
with in the time provided by law or by contract, a mere tender being enough, said tender does
not relieve the vendor from obligation of paying the price. However, when tender of payment
cannot be validly made, the vendor a retro should file a suit for consignation with the courts of
redemption price within the redemption period.
Ong Chuqa v. Carr

The pendency of an action brought in good faith and relating to the validity of a sale with pacto
de retro, tolls the term for the right of redemption.

Page 34 of 40
2. Rights in Redemption
a. in general:
 The right to redeem/repurchase is a REAL RIGHT ; the vendor may enforce this against
every possessor whos right is derived from the vendee ( Art. 1608 )
 Exception; provision of the mortgage Law
and Land Registration Law with respect 3rd
persons.
 Vendee is subrogated to vendors right and actions ( Art. 1609)
 Right to redeem is answerable for the debts of the vendor provided the vendors
properties are first exhausted ( Art. 1610)
 The action for redemption can be exercised against the heirs of the vendee only as to
their respective shares, whether thing be undivided or partitioned ( art. 1615)
 Exception; if the thing sold is awarded to one of the heirs, the action for
redemption may be instituted against him for the whole
 Vendor has aright to redeem the thing free from charges or mortgages ( Art. 1618)
 However, the –the vendor shall respect the leases executed by the vendee in
good faith, and in accordance with the customs of the place
where the land is located
b. specific for immovable

 Consolidation of ownership in the vendee shall not be recorded in the Registry
of Property without a judicial order, after the vendor has been duly heard ( Art.
1607)
 The vendee of an undivided immovable who acquires the whole therof, may
compel the vendor to redeem the whole property, if he is to exercise this right
( art. 1611)
 Purpose; to discourage co ownership since it does not encourage
improvement of property
 Co owners of an undivided immovable, who enter into a joint sale with a right of
repurchase, may exercise the right tpo redeem only as to their respective share (Art.
1612)
 This is applicable in case a person who sold an immovable has left several heirs
 The vendee may demand all the vendors or co- heirs that they agree to
repurchased the whole thing. If they fail to agree, they cannot compel the
vendee to consent to ap partial redemption ( Art. 1613 )
 If the co owners sell their shares separately , each may independently exercise
the right of repurchase as to his own share; the vendee cannot compel him to
redeem the whole property ( art. 1614)
 Right to fruits of land ( art. 1617 ):
If there were visible or growing fruits the time of the sale and the vendee did
not pay for them, he shall not be entitled to reimbursement at the time of
redemption
If there were no fruits at the time of the sale but some exist at the time of
redemption, they shall be prorated between the redemptioneers and the
vendee.
De Guzman v. CA
Should one of the co- owners or co- heirs succeed alone in redeeming the whole property.
Such co- owner shall be considered as a mere trustee with respect to the share of his co- owners
or co- heirs. Therefore, no prescription will lie against the right of any c0- owners to demand
from the redemption for the amount paid by him corresponding to the value of the share.
3. Presumption of Equitable Mortgage ( art. 1602)
Equitable mortgage : a mortgage which for formalities of a mortgage but shows the intention of
the parties to use the property as security for the fulfillment of a n obligation

Page 35 of 40
 Provisions on equitable mortgage were drafted to provide safeguards and restriction

against the evils of sales with aright of repurchase. ( pacto de rtro sales.
 Any money, fruits or other benefit to be received by the vendee as rent or otherwise
shall be considered as interest which shall be subject to the usury laws.
 In case of doubt, Art. 1602 applies to pacto de retro sales and absolute sale ( art. 1603 and
1604).
 This an exception to the rule that doubts affecting an onerous contract shall be
settled in favor of the greatest reciprocity of interest
Art. 1605. In the cases referred to in articles 1602 and 1604. the apparent vendor may ask for the
reformation of the instrument
 In reformation there has been a meeting of the minds between the parties, but the
written instrument does not expressed true intention( Art. 1359) if there has been
meeting of the of the minds, the remedy is annulment ( art. 1390).
Matanguihan v. CA
A doc . which appears on its face to be sale- absolute or with pacto de retro- may be proven by
the vendor to be one of loan with mortgage. In this case, parol evidence becomes competent and
admissible to prove that the instrument was given merely as security for payment of the loan.
Solid Homes, Inc. v. Ca

In a contract of sale with pacto de retro, the buyer has the right to the immediate possession of
the property sold, unless otherwise agreed upon. This is because title and ownership of the
property sold are immediately vested vendee a retro; subject only to the resolutory condition of
repurchase by the vendor a retro within the stipulated period.
C. LEGAL REDEMPTION
Legal Redemption (Article 1619): the right to be subrogated, under the same terms and
conditions stipulated in the contract, in the place of one who acquires a thing by purchase or
dation in payment or other transaction where ownership is transferred by onerous title.
 Conventional redemption arises from the agreement of the parties; Legal redemption
proceeds from law.
PERIODS TO EXERCISE RIGHT OF PEREDEMPTION (Article 1623):
 Within 30 days from notice in writing by prospective vendor
 Deed of sale to be recorded in the Registry of Property only if accompanied by the

vendor’s affidavit that he has given written notice of the sale to all possible
redemptioneers.
 In pre-emption land is about to be resold; in redemption, the resale has already been
perfected.
 If 2 or more owners wish to exercise the right of pre-emption and redemption,
the owner whose intended use appears best justified shall be preferred.
 Right of redemption of co-owners is preferred over right of redemption of adjoining
owners
San Po Ek v. Martinez (2000)

Martinez, and her mother before her, leased property to San Po Ek for a total of 28 years. After
this period, Martinez wrote the lessee to inform the latter of her intention to sell the leased
property. However, the property was thereafter sold to a 3rd party. San Po Ek filed a case for the
nullity of this sale. The Sc held that San Po Ek does not have a right of preemption /redemption
or first refusal to assert against Martinez. Art.1622 only deals with small urban lands that are
bought for speculation where only adjoining lot owners can exercise the right of pre-emption or
redemption. In this case, San PO Ek is not an adjoining lot owner but a lessee trying to buy the
land that it was leasing. And although the right of first refusal may be provided for in a lease

Page 36 of 40
contact, such right was never stipulated in any of the several lease contacts. The grant of the
right of first refusal must be clearly embodied in a written contact.
Other Instances of Legal Redemption
a. Redemption of homesteads (Sec.199. CA 141, Public Land Act)

 Every conveyance of land acquired under the free patent homestead provisions
shall be subject to repurchase
 May be exercised by:
i. applicant
ii. his widow
iii. legal heirs
 Redemption period is 5 years from the date of reconveyance.
Lee v. CA
The Simeons sold to Lee a parcel of land acquired under a free patent. Subsequently, the
Simeons advised Lee, in writing, of their “desire to repurchase” the land. Three other letters
were to sent by the Simeons, but in no instance did they offer or tender the repurchase price.
Lee ignored the letters, except the last to which she replied that she cannot agree to the
repurchase because the redemption period of five (5) years has already expired. The SC held
that the mere sending of letters by the vendor expressing his desire to repurchase the property
without an accompanying tender of redemption price fell short of the requirements of the law.
Sec.119 of CA 141 should be construed with Art. 1616 CC.
b. redemption in tax sales (Sec.215, National Internal Revenue Code)
 in case of delinquency sale of property of a taxpayer for failure to pay tax

assessments
 redemption period is 1 year from the date of sale
 the owner shall not be deprived of possession of the property and shall be
entitled to the rents and other income until the expiration of the redemption
period
 redemption price is the amount of taxes and interest thereon from the date of
delinquency to the date of the sale
c. redemption by judgment debtor (rule 39, Rules of Court)
 maybe exercised by:

i. judgment debtor
ii. successor-in-interest
iii. creditor having a lien by attachment,judgement or mortgage
on the property sold at public auction
 redemption period is 12 months from sale by public auction
 redemption price is the amount paid by the purchaser, plus any taxes or
assessments, with interest up to the time of redemption
Torres v. Cabling
Written notice of the sale is required to be given to the judgment debtor before the sale of
property on execution to give him the opportunity to prevent the sale by paying the judgment
debt sought to be enforced. Moreover, when there is a 3rd party claim, the sheriff should
demand payment in cash from the judgment creditor, if he becomes the highest bidder, instead
of just crediting the amount to the partial satisfaction of the debt.
d. Redemption in extrajudicial foreclosure

(Sec. 6, Act No. 3135)
 May be exercised by:

i. debtor
ii. successor-in-interest

Page 37 of 40
iii. any person having a lien on the property subsequent to

the mortgage or deed of trust
 redemption period is 1 year from the date of the sale and registration thereof
Soriano v. Bautista
The stipulation in a deed of mortgage which renders the mortgagor’s right to redeem defeasible
at the election of the mortgagee is not illegal or immoral, being merely an option to buy
sanctioned by Article 1479 of the Civil Code, when supported by a consideration distinct from
the purchase price.
e. Redemption in judicial or extrajudicial foreclosure of real estate mortgage (Secc. 47,

General Banking Act)
 may be exercised by the mortgagor or debtor
 redemption period is 1 year after the sale of the real estate
 redemption price includes:
i. amount due under the mortgage deed, with interest
ii. all costs/expenses incurred by the bank from the sale and custody of
the property, less income derived therefrom.
 Nothwithstanding Act 3135, juridical persons whose property is being sold

pursuant to extrajudicial foreclosure, can redeem the property until the
registration of the certificate of foreclosure sale with the register of deeds, which
no case shall be more than 3 months after foreclosure
f. redemption in foreclosure by rural banks

 redemption period is 2 years form the date of foreclosure or registration of
the certificate of sale, if the property is not covered by Torrens title
 if the mortgator fails to exercise such rights, he or his heirs may still
repurchase the property with 5 years from expiration of the two-year
redemption period
g. redemption under the Agrarian Reform Code(Sec. 12 of RA 3844)

 agricultural lessee is granted 180 from notice in writing, to redeem property
sold 3rd person without his knowledge.
ASSIGNMENT OF CREDIT
General Provisions
Assignment of credit contract by which one person transfers to another his right and actions
against a third person in consideration of a price certain in money or its equivalent.
 Accessory rights , such as guaranty, mortgage, pledge or preference may be
assigned. (Art. 1627)
PNB v. CA
In assignments, a consideration is not always a requisite, unlike in sales. Thus, an assignee, may
maintain an action based on his title, and is immaterial whether or not be paid any
considerations therefore.
 To bind third persons, the assignment of credit must (Art. 1625):
 Appear in public instrument,
 Be contained in an instrument recorded in the Regisrty of Property
 If the assignment involves real property
 If the debtor pays the creditor before knowledge of the assignment, he
shall be released from his obligation (Art 1626)
 Consent of the debtor is not needed to make an assignment; however,
notice to the debtor ids needed for the protection of the assignee

Page 38 of 40
DBP v. CA
An assignment to guaranty an obligation is virtually a mortgage and not an absolute
conveyance of title which confers ownership on the assignee. The assignment cannot be
considered as the dacion en pago since not payment on the loan cannot authorized the assignee
to register the assigned property in its name as it would constitute pactum commissorium
Warrantees and liabilities of the Assignor (Art 1628)
Wariness of the assignor;

a. the existence and legality of the credit unless it should had been sols as doubtful
b. The solvency of the debtor only, where;
 It is expressly stipulate
 The insolvency of the debtor is prior to the sale and of common knowledge
c. his character as an heir, in case of sale of succession rights without enumeration of sale
comprising it (Art 1630)
d. The legitimacy of the whole of certain rights, rent or product sold for a lump sum, and
not the various parts which comprise it (Art 1631)
 Exception; in case of eviction from the whole or part of greater value
 Where the debtors solvency is guaranteed, then duration of the
assignors liability shall be (Art 1629):
i. the period stipulate
ii. if no p[period is stipulate:
 One year from maturity, if the credit should be payable within a term which
has not yet expired
 On year from the assignment, if the period has already expired
 Assignor must be in GOOD FAITH
 LIABLITIES OF THE AASSIGNOR:
a. to pay for the prick receive
b. to pay for the expenses of the contract and any other legitimate
payments made by reason of the sale
c. to pay damages if he is in bad faith
d. to pay the vendee what he has forfeited from fruits receive from the
inheritance sold (ART 1632)
 The vendee shall reimburse the vendor what he has paid for the
debts of and charges oon the state, unless there is a stipoulation to
the contrary (ART 1623)
D. LEGAL REDEMPTION OF RIGHTS AND LITIGATION
Requisites for Exercise of Legal Redemption (ART 1634)

a. there must be sale of assignment of credit
b. there must be a pending litigation of the time of the
assignment (the debtor has answered the complaint before the sale of the
credit
c. the debtor must pay the assignee;
i. the price p0aid by the assignee
ii. the judicial caused incurred by him
iii. interest on the price from the day on which it was
paid
d, right is exercise within 30 days from the date the assignee
demands payment from him
EXCEPTIONS TO RIGHT OF LEGAL REDEMPTION (art 1635)

A. sales or assignment made to a co-heir or co-owner of the right assigned
B. sales or assignment made top a creditor in payment of his credit (dation
in payment)
C. sales or assignments made to the possessor of a tenement or piece of land
which is subject to the right in litigation assigned

Page 39 of 40
You are so young, so much before all beginning, and I would like to beg you, dear Sir, as well as I can,
to have patience with everything unresolved in your heart and to try to love the questions themselves
as if they were locked rooms or books written in a very foreign language. Don't search for the answers,
which could not be given to you now, because you would not be able to live them. And the point is, to
live everything. Live the questions now. Perhaps then, someday far in the future, you will gradually,
without even noticing it, live your way into the answer. – Rilke in Letters to a Young Poet

Page 40 of 40

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UNIVERSITY OF NORTHERN PHILIPPINES SALES

SCHOOL OF LAW SECOND SEMESTER, AY 2015-2016

I. NATURE AND FORM OF THE CONTRACT

C. PARTIES TO CONTRACT OF SALE

II. OBLIGATIONS OF THE VENDOR

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

4. Effect of Loss of Thing With Hidden Defect

III. OBLIGATIONS OF THE VENDEE

IV. REMEDIES FOR BREACH OF CONTRACT

VI. ASSIGNMENTS OF CREDIT

I. NATURE AND FORM OF THE CONTRACT

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

7. title, not a mode

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

B. DISTIGUISHED FROM OTHER CONTRACTS

4. Contract for a piece of Work

Celestino Co. & Co> v. collector

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

Commisioner of Internal Revenue v. Engeeniring Equipment and Supply Co.

C. PARTIES TO A CONTRACT OF SALE

Medina V. Collector of internal Revenue

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

@ Nos. 2, 3 (d) to (g) = sale is NULL and VOID

Philippine Trust V. Roldan

Municipal Council of Iloilo v. Evangelista

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

Gan Tiangco v. Pabinguit

* object must not be impossible

*exact quantity is not essential

* undivided interest maybe the object of sale (Article 1463)

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

Yu Tek andCo. V. Gonzales

Johannes Schuback and Sons v. CA

1. When Price is Considered Certain (Article 1469):

Effect of failure to determine price

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

2. Gross Inadequacy and Simulation

F. RULES GOVERNING AUCTIONS (Article 1476)

 Sales of separate lots are separate contract of sale.

G. PROMISE TO BUY AND SELL

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

An accepted unilateral promise to buy or to sell a determinate thing for a price

Policitacion: unaccepted unilateral promise

Option money: price given in consideration for the option contract

OPTION MONEY EARNEST MONEY

Villonco Realty Co. v. Bormaheco, Inc.

Cavite Dev’t Bank v. Lim (2000)

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

Paranaque Kings Entrprise v. CA

H. FORM OF CONTRACT OF SALE

GEN. RULE: A contract maybe entered into any form.

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

Baretto v. Manila Railroad Co.

I. SALE OF GOODS BY DESCRIPTION AND/OR SAMPLE (ARTICLE 1481)

 sale by description OR sample: contract maybe rescinded if bulk of goods

 The remedies are alternative and not cumulative.

COURSE SYLLABUS as of 10/5/2019 12:37:38 AM

Levy Hermanos V. Gervacio

Zayas jr. V. Luneta Motor Company

Industrial Finance Corp. v. Ramirez

Delta Motor v. Niu Kim Duan

Elisco TOOL Manufacturing Corp. v. CA

Northern Motors v. Sapinoso

Cruz v. Filipinas Investment and Finance Corp.