Sales Review Transcription

January 10, 2015
DEFINITION OF SALE
Article 1458. By the contract of sale one

of the contracting parties obligates
himself to transfer the ownership and
to deliver a determinate thing, and the
other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or
conditional. (1445a)
Article 1458 does not only define a contract
of sale but also gives the two kinds.
Characteristics
1. Nominate- given particular name by
law
2. Principal, it can stand on its own does
not depend on other contracts for its
existence.
a. Accessory contract attached to
contract of sale- its invalidity
does not make contract of sale
invalid as well.
b. Preparatory contract: contracts
entered into for the puspose of
further
juridical
relations
(contract
of
partnership,
agency)
NO person would enter into a
contract of partnership/ agency for
the sake of being called partners or
agent.
Sale is entered into for its own sake. Its not
preparatory or accessory.
3. Consensualperfected
by
mere
consent;
manifested
by
parties
meeting of the minds.
It is by the meeting of offer and cause
which are to constitute contract
4. Bilateral and reciprocal- both parties
are mutually obliged
5. Onerous
6. Commutative
7. Title, not a mode
Consequence of the characterization of a
contract of sale being consensual and
reciprocal
Macasaet vs R. Transprt Corporation GR
NO. 172446 October 10, 2007
SC said that sale is perfected at the moment
there is a meeting of the minds on the thing
which is the object of the contract and the
price and from that moment, the parties may
reciprocally demand performance, subject to
the provisions of the law, governing the form
of contracts. A perfected contract of sale
imposes the reciprocal obligation on the
parties whereby the vendor obligates himself
to transfer the ownership of and to deliver a
determinate thing to the buyer who in turn is
obligated to pay a price certain in money or
its equivalent.
Failure by either party to comply with the
obligation entitles the other party to
rescission as the power to rescind is implied
in reciprocal obligations.
To make matters easier for recollection, the
consequence of sale considered a contract
with reciprocal obligations is the fact that
you dont have to stipulate on the ability of a
party to rescind in the cases of breach of
contract. No need to write.
Also
remember
the
Consequence
of
rescission with respect to contracts - mutual
restitution of whatever had been received by
virtue of the contract.
So if ipauli nimo ang butang, kailangan pud
iuli ang gibayad.
Consequences of the characterization as
reciprocal:
Art. 1169 (last par)
Sales Review- Atty. Jess Zachael Espejo Prepared by RAIA ANGELIE TUMANDA Page 1
In reciprocal obligations, neither party

incurs in delay if the other does not
comply or is not ready to comply in a
proper manner with what is incumbent
upon him. From the moment one of the
parties fulfills his obligation, delay by
the other begins.
Art. 1191obligations
implied
power
to
rescind
Art. 1191. The power to rescind

obligations is implied in reciprocal ones,
in case one of the obligors should not
comply with what is incumbent upon
him.
The injured party may choose between
the fulfillment and the rescission of the
obligation,
with
the
payment
of
damages in either case. He may also
seek rescission, even after he has
chosen fulfillment, if the latter should
become impossible.
Onerous the cause is understood to be the
prestation or promise of a thing or service by
the other.
In remuneratory ones, the service or benefit
which is remunerated and in contracts of
pure beneficence, the mere liberality of the
benefactor.
SECTION 3. - Cause of Contracts
Art. 1350. In onerous contracts the

cause is understood to be, for each
contracting party, the prestation or
promise of a thing or service by the
other; in remuneratory ones, the
service
or
benefit
which
is
remunerated; and in contracts of pure
beneficence, the mere liberality of the
benefactor.
Sale is onerous because it imposes valuable

consideration as a prestation, which is a
price certain in money or its equivalent.
Can there be a gratuitous sale? No. If
there is no consideration, it cannot be a sale.
It may be donation, or commodatum.
If theres an obligation to return the thing
without payment or consideration, it
becomes a commodatum rather than it being
a sale.
Consequence of characterization as onerous:
applicability of Art. 1378
Art. 1378. When it is absolutely
impossible to settle doubts by the rules
established in the preceding articles,
and the doubts refer to incidental
circumstances of a gratuitous contract,
the least transmission of rights and
interests shall prevail. If the contract is
onerous, the doubt shall be settled in
favor of the greatest reciprocity of
interests.
If the doubts are cast upon the principal
object of the contract in such a way that
it cannot be known what
may have
been the intention or will of the parties,
the contract shall be null and void.
Art. 1378 deals with how to interpret
contracts in cases of doubts in different
types of contracts such as onerous,
remuneratory, or gratuitous.
If the contract is clearly onerous and the
doubt is whether or not the contract is a sale
or a lease, what would give the greatest
reciprocity of interests? To determine the
greatest reciprocity of interests, you have to
look at the value that has been parted with.
If it is a price, that would be in keeping with
the nature of a contract of sale. Kay kugn
dako ang gibayad, you settle the doubt in
favour of a contract of sale because it would
provide
the greatest transmission
of
interests. If there is a doubt, resolve the

doubt in favour of most transmission of
rights and interests.
So that is how you settle doubts relating to
contracts that are onerous.
How about gratuitous contracts?
Ex. Commodatum, Donation
In case of doubt, you settle that according to
the least transmission of rights and interests.
Therefore, if there is doubt as to whether a
contract is a commodatum or a donation,
how do you resolve the doubt? You resolve it
in favour of commodatum because it
involves the least transmission of rights and
interests.
Commutative
This one is the most difficult to explain.
It is a classification of contracts according to
risk of fulfilment- where the parties
contemplate a real performance therefore
equivalent values are given, that kind of
contract is commutative.
As opposed to aleatory contracts, where
fulfilment is dependent on chance so the
values given vary. Ex. Contract of Insurance.
You pay a premium of 5,000/mo, you get
nothing, but when you die, you are paid
millions of pesos.
In a sale, you pay P5,000, you also get
something that is supposed to be valued at
P5,000.
The test is subjective. Lets say you want to
buy a second-hand car but you are buying it
for P900,000 beside the fact that it is a 2 nd
hand car. Would that consideration make the
contract no longer commutative? No.
because the test is subjective. So long as the
party in all honesty believes that he has
received full value for what he gave for, it
does not derogate from the commutative
nature of the contract.
Title, not a mode

When you say not a mode it means mode
or acquisition or loss of ownership. How do
you obtain ownership over a thing.
Ownership of rights are acquired
pursuant to a legal mode or process
only
Title, on the is the juridical justification,

mode is the actual process of acquisition or
transfer of ownership over a thing in
question
Art. 712 Civil Code, modes of acquiring
ownership generally classified into two
classes.
Original Mode:
1. Application
2. Prescription
Derivative Mode:
Succession mortis causa
By tradition as a result of certain contracts
such as sale, donation.
It is delivery as a consequence of certain
contracts that transfers ownership, not the
contract itself.
Sale by itself does not transfer ownership. It
is the act of the seller of delivering the
property that transfers ownership to the
buyer.
Sale is merely title that creates obligation on
the part of the seller to transfer ownership
and deliver possession, but not
transfer
ownership on its own.
ACAP VS CA GR NO. 118114 DEC 7, 1995
Mode is the legal means by which
dominion or ownership is created,
transferred, or destroyed. Title, on the
other hand, only constitutes the legal
basis by which it would affect dominion
or ownership. Therefore, sale in itself
does not affect dominion or ownership.

The most a sale does is to create the
obligation to transfer ownership. It is
tradition or delivery as a consequence
of sale that actually tranfers ownership.
FACTS: X is the agricultural tenant of Y. Y
died. The heirs executed a Declaration of
Heirship and Waiver of Rights whereby they
waived their rights to the property in favour
of Z. There was no consideration for the
waiver that appeared in the deed.
Thereafter, Z claimed ownership over the
property and demanded from x the leasehold
rentals. X refused to recognize Zs claim. He
does not recognize Z as the owner and did
not pay him rentals.
ISSUE: Can Z eject X on the basis of
declaration of heirship and waiver of rights?
Held: First, the SC looked at the difference
between a sale of hereditary rights and a
waiver of hereditary rights. The first
presumes the existence of a contract or deed
of sale between the parties. The second is a
mode of extinction of ownership where there
is
an
application
or
intention
of
relinquishment of a right in favour of other
persons who are CO-HEIRS in the
succession. Z here is not a co-heir. He is a
third person.
Z, being a stranger in the succession of Y,
cannot conclusively claim ownership over the
subject lot on the sole basis of a waiver
document which neither cites the elements
of neither sale, or donation, or any other
derivative mode of acquiring ownership. That
deed alone of declaration of heirship does
not of itself prove that Z is the owner of the
property and Z cannot eject X.
Elements of a Contract in General:
Essential Requisites of Contracts
General Provisions
Article 1318. There is no contract unless

the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject
matter of the contract;
(3) Cause of the obligation which is
established. (1261)
Remember, a contract of sale is a consensual
contract. So Art. 1318 is a recitation of the
elements of a contract of sale. When you add
delivery as a fourth requirement for
perfection, it converts the contract from a
consensual one to a real contract. Where the
delivery that perfects the contract. An
example of a real contract is a contract of
commodatum .once the object is delivered to
the borrower, the contract is perfected.
Because unless there is delivery, the
obligation of the borrower to take care of the
thing and to return it to the owner of the
thing does not arise.
How to convert to a real contract:
Delivery
Formal contract:
If perfection dependent on execution of form:
Ex. certain types of donations, acceptance of
donations or benefits
Chattel mortgage- it has to be in a public
instrument. There has to be an affidavit.
Otherwise, the contract of chattel mortgage
is not valid.
Applying Art. 1318 to a contract of sale, you
have these Specific elements of Contract of
Sale (Coronel vs CA, 263 SCRA 141)
1. Consent or meeting of the minds to
transfer ownership in exchange
2.
a
determinate
subject
matterindeterminate objects cannot be considered
a valid SM in a contract of sale.
3. price certain in money or its equivalent

If one or more elements are missing:
Mapalo vs Mapalo - contract void
Rongavilla vs CA- contract void
However, Villanueva criticizes these ruling
and cites that the more appropriate ruling is declare a no contract situation
Does the Civil Code treat a No Contract
situation?
It actually mentions a similar term. Its Art.
1318 mismo that says that. There is no
contract.
But the SC is very clear about it. Its an Art.
1409 Contract, VOID. So no need to name it
something that the law does not even
discuss. Its just Villanueva being Villanueva.
SALE DISTINGUISHED
CONTRACTS
FROM
OTHER
Quiroga vs Parsons G.R No. L-11491

August 23, 1918
And Ace Foods vs Micro
Technologies CO. Dec. 11, 2013
Pacific
1. The contract is what the law

defines it to be taking into
considerations
its
essential
elements and not what the
contracting
parties
call
it.
Therefore, the law will not respect
our own determination of what
the contract is. If according to the
elements, the contract is one of
sale, we are not at liberty to call
it a different contract. We are also
prohibited from choosing to be
governed by a different set of
rules or law. Its always what the
law says.
2. A contract which is called a sale
or some other contract by the
parties but is actually some other
contract altogether is susceptible

to reformation, or annulment or
worse being declared void ab
ignition under Art 1409.
If we mask a donation as a contract
of sale, it means its not valid as a
sale but may be valid as donation
and it can be reformed.
Article 1409. The following contracts are

inexistent and void from the beginning:
(1) Those whose cause, object or purpose is
contrary to law, morals, good customs,
public order or public policy;
(2) Those which are absolutely simulated or
fictitious;
(3) Those whose cause or object did not exist
at the time of the transaction;
(4) Those whose
commerce of men;
object
is
outside
the
(5) Those which contemplate an impossible

service;
(6) Those where the intention of the parties
relative to the principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared
void by law
Sale vs Barter
Article 1468. If the consideration of the
contract consists partly in money, and
partly in another thing, the transaction
shall be characterized by the manifest
intention of the parties. If such
intention does not clearly appear, it
shall be considered a barter if the value
of the thing given as a part of the
consideration exceeds the amount of
the money or its equivalent; otherwise,

it is a sale.
First basis: intention of the parties,
It is only when the intention of the parties do
not clearly appear that you look at value of
thing or money given.
If it does not clearly appear, it shall be
considered a barter if the value of the thing
given as consideration exceeds the amount
of the money or its equivalent. Otherwise, it
is a sale.
Ex. You want to obtain a car, for that you
give a piece of land and cash. It is a barter or
a sale.
First, determine the intention of the parites.
If it does not clearly appear, unsa may mas
taas ug value? The thing given or the
money? If the vaue of
Merely academic ang distinctions. Matters
shall be governed by preceding title relating
to sales.
with a right to damages, or he may only

demand an indemnity for damages.
However, he can only make use of the
right to recover the thing which he has
delivered while the same remains in the
possession of the other party, and
without prejudice to the rights acquired
in good faith in the meantime by a third
person. (1540a)
Article 1641. As to all matters not
specifically provided for in this Title,
barter shall be governed by the
provisions of the preceding Title
relating to sales. (1541a)
Art. 1640- similar to warranty against
eviction, you also have damages; the
difference is in Art. 1640, you have the right
to demand the return of the thing that you
gave by way of barter.
How do distinguish? Define each first. (just
see 2nd year trans
TITLE VII
SALE
BARTER
SOF
applies
SOF does
not apply
BARTER OR EXCHANGE
Article 1638. By the contract of barter
or exchange one of the parties binds
himself
to
give
one
thing
in
consideration of the other's promise to
give another thing. (1538a)
Article 1639. If one of the contracting
parties, having received the thing
promised him in barter, should prove
that it did not belong to the person who
gave it, he cannot be compelled to
deliver that which he offered in
exchange, but he shall be entitled to
damages. (1539a)
Article 1640. One who loses by eviction
the thing received in barter may
recover that which he gave in exchange
Sale- one of the contracting parties obligates

himself to transfer the ownership- gives
..others promise to give..
Exchange of thing for price- for another thing
Statute of frauds applies- does not
Right of redemption- none
Sale vs Contract for a Piece of Work (on
paper)
Here is where majority of jurisprudence is
devoted to.
SIMILARITIES:
CONSENT: CONSENSUAL
OBJECT: DETERMINATE THING

CONSIDERATION: PRICE
On paper, they have identical elements of
consent, object, and considertion. But take
note of the following provisions:
SECTION 3
Contract for a Piece of Work
Article 1713. By the contract for a piece
of work the contractor binds himself to
execute a piece of work for the
employer, inconsideration of a certain
price or compensation. The contractor
may either employ only his labor or
skill, or also furnish the material.
(1588a)
Article 1714. If the contractor agrees to
produce the work from materials
furnished by him, he shall deliver the
thing produced to the employer and
transfer dominion over the thing. This
contract shall be governed by the
following articles as well as by the
pertinent provisions on warranty of title
and against hidden defects and the
payment of price in a contract of sale.
(n)
So, similarly with barter, still governed by the
Law on Sales.
What is the difference between the
two?
CIR vs CA and AdMU (271 SCRA 605)whether the contract be one of sale or one
for a piece of work, a transfer of ownership is
involved and a party necessarily walks away
with an object.
FACTS: In institutions of higher learning, it is
a requirement that you have a research and
publication department in the university in
order to maintain your status as a university.
We are talking here about the Institute of

Popular Studies in the AdMU which is
habitually engaged in conducting research
for entities in the university and entities
outside the university. AdMU would charge
the contractor a certain amount of money for
the research to be conducted. The BIR was
able to learn of these transactions. AdMU
was getting a lot of money in honoraria. BIR
charged it contractors tax on its gross
receipts. BIR said assuming you are not an
independent contractor when you make that
work, is it not a fact that youre selling your
services, your output, to the principal?
ISSUE: Is the BIR correct in taxing the AdMU
IPC?
HELD: The questioned transactions cannot
be deemed as contracts of sale or contracts
for a piece of work. (so, none of the above.)
By its very nature, a contract of sale requires
a transfer of ownership. Here, after they
conduct the research, the research output is
still considered proprietary information or
property of the AdMU IPC. They reserved the
right to control the publication of the
research work.
It also cannot be a contract for a piece of
work because here, the contractor binds
himself to execute a piece of work for the
employer in consideration of a certain price
or compensation.
The SC made a determination that this is not
a tax-covered situation. What it is would be
in the nature of a donation or a grant that is
afforded to a university. And based on the
NIRC, If you do that to a university, that is
tax exempt.
Whether the contract be one of sale or one
for a piece of work, a transfer of ownership is
involved and a party necessarily walks away
with an object.
This is a pronouncement that interests me

because it articulates how similar a contract
of sale and a contract fo a piece of work are.
What is the difference between them?
Article 1713. By the contract for a piece of
work the contractor binds himself to
EXECUTE a piece of work for the employer,
inconsideration of a certain price or
compensation.
Piece of Work- Execute. Not merely to deliver
a determinate thing or to deliver a piece of
work. It is to execute and therefore it is a
Personal obligation to do, not susceptible of
specific performance (involuntary servitude).
Sale- real obligation to deliver, susceptible to
specific performance
What is your Remedy if the person does
not deliver on his obligations?
You can have the obligation finished at the
contractors cost. Convert the obligation from
an obligation to do to an obligation to give
(payment).
STATUTORY TESTS IN THE DISTINCTIONS
BETWEEN A CONTRACT OF SALE AND A
CONTRACT FOR PIECE OF WORK
Article 1467. A contract for the delivery
at a certain price of an article which the
vendor in the ordinary course of his
business manufactures or procures for
the general market, whether the same
is on hand at the time or not, is a
contract of sale, but if the goods are to
be manufactured specially for the
customer and upon his special order,
and not for the general market, it is a
contract for a piece of work. (n)
Not available for purchase somewhere else,
made upon the special order of the customer
and not for the general market, that is a
contract of piece of work.
If you go to somebody, magpabuhat kag

painting, thats a contract for piece of work
because its not available for purchase. It can
only be made upon the special order of the
customer. But our problem here for the
purpose of Bar examinations is theres a lot
of jurisprudence to be taken up for us to
answer the questions.
Jurisprudence:
Inchausti vs Cromwell (20 PHIL. 345)
Facts: Hemp. In the pricing of the hemp,
there is an additional item for baling of
hemp. The seller here wanted to claim that
gamay lang iyang bayaran na tax because
the tax base is not supposed to be the full
price because the portion received was for
the service of baling the hemp.
Held: Thats just simply a contract of sale.
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 for the order
of the party desiring to acquire it or a thing
which would have existed and been the
subject of sale to some other person even if
the order had not been given.
Hemp would be in bale form regardless of
whether or not there is an order for it.
TEST OF EXISTENCE (SALE)
Celestino Co vs Collector (99 Phil 841)
FACTS: Celestino Co was doing business in
the name and style of Oriental Sash. They
were habitually in the manufacture of doors,
windows, and sash (door/window frame).
They wanted to claim that this was
a
contract for piece of work because when a
customer comes in, they have to make
alterations before he purchases.
HELD: Its just a contract of sale.

HABITUALITY TEST- Its not one of timing or
habit but actually drawn from the nature of
the work to be performed
It must be of the nature that products are not
ordinary products of the manufacturer and
they would require the use of extraordinary
skills or equipment if to be performed by a
manufacturer (SALE).
Next:
Cir vs Engineering Equipment 64 Scra
590
SPECIAL ORDERS TEST
FACTS:
Engineering
Equipment
was
fabricating
airconditioning
units;
it
specializes in centralized airconditioning
system- piece of work
Can you buy that off-the-shelf? Yes. But if
centralized
airconditioning
system
is
fabricated according to the peculiar needs
and circumstances of the clients. No
centralized airconditioning system is the
same with that of another making the SC to
conclude that when it comes to central type
airconditioning systems, it can only exist for
the order of the party. Special orders,
specifically.
The ariconditioning units installed in a
central type of air conditioning system would
not have existed but for the order of the
party desiring to acquire it and if it existed
without the special order of Engineerings
customer, the said air conditioning units
were not intended for sale ot the general
public. The logic in Celestino would not apply
as in EEI, the latter was habitually engaged
in the fabrication of airconditioning systems.
(CPW)
ENGINEERING AND MACHINERY CORP VS

CA G.R NO. 52267 JANUARY 24, 1996same ruling
To Tolentino, the distinction between the two
contracts depends on the intention of the
parites. If the parites intended that at some
future date an object has to be delivered
without considering the work or labor of the
party bund to deliver, the contract is one of
sale.
But if one of the parties accepts the
undertaking on the basis of some plan,
taking into account the work to be employed
personally or through another, there is a
contract for piece of work.
But the ruling is the same, pag centralized
airconditioning systeme, that will always be a
contract for piece of work.
CIR VS ARNOLDUS
SCRA 199
CARPENTRY
159
If youre a client of Arnoldus Carpentry, you

go there, you look at their samples and you
choose. They provide samples then make
one for you.
Arnoldus company has for its purpose the
preparing,
processing,
buying,
selling,
exporting, importing, manufacturing,
ISSUE: If I select from the samples and a
similar one is made for me, is that a contract
of sale or a contract for piece of work?
HELD: Contract of sale.
The true test of WON a contract is a contract
of sale or piece of work is the mere existence
of the product at the time of the perfection of
the contract such that if the thing already
exists, the contract is of sale. If not, piece of
work.
WON the thing has been manufactured

especially for the customer and upon his
special order. Thus, for a thing specially done
at the order of another is a contract for piece
of work. If, on the other hand it is
manufactured or procured for the general
market in the ordinary course of business, it
is a contract of sale.
DMPI vs ARAGONES G.R. NO. 153033

June 23, 2005
FACTS: Del Monte Phil, Inc entered into a
supply
agreement
with
Megawaft,
a
construction contractor and Dinablock as
subcontractor, whereby the latter undertook
to supply and install modular pavement at
DMPIs warehouse.
Dinablock assembled the machines for the
fabrication and casting of the blocks which
Megawaff specified to be hexagonal shape.
Megawaff through Garcia, later on directed
Aragones (Dinablock) to instead fabricate
machines for S-shaped blocks.
DMPI released to Megawaft a check of
171,000 representing DMPIs balance of it its
obligation to Megawaft. Problem is Dinablock
was not paid. DInablock was the one who
fabricated the blocks. So it sued Megawaft
and DMPI under Art 1721 of the Civil Code
which provides:
Contract for Piece of Work
Materialmens Lien
Article 1729. Those who put their labor upon
or furnish materials for a piece of work
undertaken by the contractor have an action
against the owner up to the amount owing
from the latter to the contractor at the time
the claim is made. However, the following
shall not prejudice the laborers, employees
and furnishers of materials:
(1) Payments made by the owner to the

contractor before they are due;
(2) Renunciation by the contractor of any
amount due him from the owner.
This article is subject to the provisions of
special laws.
If you furnish labor or materials upon a piece
of work, if there is any amount owing from
the principal to the contractor, you have a
lien in that. So technically speaking, what
you can do is sue the contractor and the
principal or owner. Thats your lien. If the
supply agreement was a sale, Dinablock has
no cause of action to enforce the lien. If it
was a contract for piece of work, Art. 1729
can be enforced against Megawaft and DMPI.
Held: It is a contract for piece of work. The
articles ordered by the purchaser is not
exactly such as the seller makes and keeps
on hand for sale to anyone and no change or
modification of it is made at purchasers
request it is a contract of sale even though it
may be entirely made after and in
consequence of the purchasers order for it.
The modular paving blocks are not exactly
what the plaintiff usually makes and keeps
on hand for sale to anyone. But with a
modification that the same be S-shaped.
Hence, it falls within the ambit of Art. 1467,
making Art. 1729 applicable.
Villanueva: the essence between the
distinction of a contract of sale and piece of
work is why the parties entered into. If the
essence is the object, irrespective of the
party making or giving it, the contract is sale.
If the essence is service, knowledge or even
reputation of the person who executes or
manufactures the work, the contract is for
piece of work which is essentially the sale of
service or labor.
How will it be asked in the Bar exams?
Problem. There are facts. You have to
Sales Review- Atty. Jess Zachael Espejo Prepared by RAIA ANGELIE TUMANDAPage 10
determine it yourself. Ex. It may ask you,

would a materialmens lien apply?
SALE
Consist of real
obligations to pay
and deliver
Susceptible
to
specific
performance
Buyer may have
3rd party deliver
the SM and have
the same charged
to the seller if the
SM
is
generic
under Art. 1465
POW
Consist of real
and
person
obligations to pay
and to execute
No
Owner/ principal
may
have
3rd
party execute the
work
at
the
expense of the
contractor under
Art. 1715. (its
transformed from
personal to real
obligation and can
now be compelled
by
specific
performance.
Article 1715. The contract shall execute

the work in such a manner that it has
the qualities agreed upon and has no
defects which destroy or lessen its
value or fitness for its ordinary or
stipulated use. Should the work be not
of such quality, the employer may
require that the contractor remove the
defect or execute another work. If the
contract fails or refuses to comply with
this obligation, the employer may have
the defect removed or another work
executed, at the contractor's cost.
SALE v. DACION EN PAGO
Art. 1245. Dation in payment, whereby
property is alienated to the creditor in
satisfaction of a debt in money, shall be
governed by the law of sales.
TAN SHUY vs SPS. MAULAWIN GR. NO
190375, FEB. 8, 2012
In dacion en pago, the debtor delivers and

tarnsmits to the creditor the formers
ownerhisp over the thing as an accepted
equivalent of the payment of an outstanding
debt. The law on sales shall apply really
partakes in one sense of the nature of sale,
that is the creditor is really buying the
property of the debtor that the payment of
which is to be charged against debtors
obligation.
Sir: Its like a reverse sale. Whatever you pay
will be charged with the outstanding
obligation.
SSS vs AG & P GR NO. 175952 APRIL 30,

2008
Consent is an essential prerequisite be it a
sale or a novation to have the effect of
totally extinguishing a debt or obligation.
What takes place in dation en pago is
objective novation of the obligation where
the thing offered as an accepted equivalent
of the performance of the obligation is
considered the object of the contract.
Note: loan- sum of money (MTC);
dation- specific performance (RTC)
DATION
IN
PAYMENT
Transfers
ownership
Extinguishes
obligations
Delivery of object
for purpose of
performing
obligation
Creditor allowed
to
appropriate
property
belonging
to
debtor
with
consent of latter
PLEDGE
Possession
creates
obligations
delivery
securing
obligation
for
Creditor
not
allowed
to
appropriate thing
given
without
following
strict
legal
requirements
There is valid and

preexisitng
principal obli that
will be satisfied by
delivery
of
property-
there is valid and

co-existing
obli
that
can
be
satisfied
by
foreclosure
of
property
Pledge: nangutang ka. Whatever you bring

will secure the obligation. Apart from the fact
that whatever you brought as security for the
obligation will determine up to how much
you can borrow. Thats in a pawnshop
situation.
There
is
greater
freedom in
determinat
ion of price
deemed
equivalent
of thing
Less
freedom as
it is usually
agreed
to
be
commensur
ate
to
amount of
debt
Delivery of
object
transfers
ownership
and
extinguish
es
the
main
obligation
of
the
seller
Delivery of
object may
partially or
totally
extinguishe
s
credit,
there is also
transfer of
ownership
Why is there a need to compare this to

dation in payment?
In dation in payment, there is no security but
there is that added element of giving a thing.
But in dation in payment, it is by way of
extinguishing an obligation. In pledge, its a
way of creating an obligation. It secures an
obligation
rather
than
performs
an
obligation.
Sales
No
preexising
credit
Dation
There
is
pre-existing
credit
Give rise to
obligation
Cause/
considerati
on is price
from
viewpoint
of
seller;
acquisition
of
determinat
e
thing
from
viewpoint
of
the
buyer
Extinguishe
s obli
Cause/
considerati
on:
Extinguish
ment
of
debt
(debtor)
Acquisition
of
thing
given
in
dation
(creditor)
pledge
There is a
principal
co-existing
credit
secured by
the pledge
Secures
obli
Cause
or
considerati
on:
Same
as
that for the
principal
obli and for
creditor is
mere
security
Value
of
thing given
in pledge
must
be
accepted
by creditor
as
sufficient
to secure
payment
of loan so
that in the
case
of
default,
the
thing
can
be
proceeded
against by
C.
Delivery of
object
perfects
contract
No transfer
of
ownership;
it is the
effects of
foreclosure
that
extinguish
es
main
obligation
SALE v. LEASE
Lease- use of thing for a price and return of
the same after the period
RENT TO OWN- when the lease gives the
lessee the option to buy for a small
consideration at the end of the term after
crediting to the price all the so-called rents,
such contract may be regarded as contract
of sale on instalments. Art. 1484 AND 1485
will apply. Filinvest vs CA 178 SCRA 188
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 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.
(1454-A-a)
Article 1485. The preceding article shall
be applied to contracts purporting to be
leases of personal property with option
to buy, when the lessor has deprived
the lessee of the possession or
enjoyment of the thing. (1454-A-a)
BASIC ELEMENTS OF A CONTRACT OF
SALE
1ST ELEMENT: CONSENT
Basic Premise: only capacitated parties can
give their consent to buy or sell
Where necessaries are those sold and

delivered to a minor or other person
without capacity to act, he must pay a
reasonable price therefor. Necessaries
are those referred to in article 290.
Capability to obligate oneself is dependent
on civil personality.
Kinds of incapacity
Absolute- incapacity of persons to bind
themselves under all circumstances as a
general rule
Relative- incapacity of persons to bind
themselves with reference to certain
persons, circumstances, or property.
Persons
labouring
incapacity:
under
absolute
Article 1327. The following cannot give

consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and
deaf-mutes who do not know how to
write. (1263a)
Contracts entered into by such persons
are not void but are merely voidable
subject to annulment or ratification.
Effects of Sale:
If you are not capacitated to enter into

contracts, you cannot enter into contract of
sale.
Art. 1328. Contracts entered into during

a lucid interval are valid. Contracts
agreed to in a state of drunkenness or
during a hypnotic spell are voidable.
Capacity to Buy or Sell
Period for annulment - 4 years
Article 1489. All persons who are

authorized in this Code to obligate
themselves, may enter into a contract
of sale, saving the modifications
contained in the following articles.
Article 1391. The action for annulment

shall be brought within four years.
This period shall begin:
In cases of intimidation, violence or

undue influence, from the time the
defect of the consent ceases.
Sustenance, dwelling and clothing and

perhaps medicine and educational books and
materials
In case of mistake or fraud, from the

time of the discovery of the same.
If a minor eats at a canteen, he must pay a

reasonable price therefor.
And when the action refers to contracts

entered into by minors or other
incapacitated persons, from the time
the guardianship ceases. (1301a)
Why does the law consider this valid?

Because whatever happens, you have to
spend for it. You have to eat. Therefore, if
you dont require payment from an
incapacitated person for the sale of
necessaries, it would lead to unjust
enrichment.
Mercado et al vs Espiritu GR no. L11871 Dec. 1, 1973- estoppel, minors not

allowed to nullify
FACTS: KOS effected by minors when they
pretended to have already reached the age
of majority when in fact they had not. At the
time of the suit, they were already adults.
The sale is valid and they cannot be
permitted afterwards to excuse themselves
from compliance with the obligations
assumed by them or seek their annulment.
Requisites:
1. Perfection of contract of sale
2. Delivery of subject necessaries
If there is no delivery, theres no
requirement on the buyer to pay.
SPECIAL DISQUALIFICATION
(RPC) Art. 34. Civil Interdiction
RULE WHEN BOTH PARTIES INCAPACITATED
You cannot enter into contract of sale if you

cannot manage your property.
Ex. Minor selling to a minor; a hyptonized

person selling to a drunk person
ABSOLUTELY INCAPACITATED PARTIES
The contract is Uneforceable under Art.

1403. This type of contract is susceptible of
ratification.
NECESSARIES- same definition of support
resulting contract valid and not voidable.
Art. 1489. Where necessaries are those
sold and delivered to a minor or other
person without capacity to act, he must
pay
a
reasonable
price
therefor.
Necessaries are those referred to in
article 290. The resulting contract is valid
and not voidable.
Art. 1327. The following cannot give

consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and
deaf-mutes who do not know how to
write. (1263a)
Art. 1328. Contracts entered into during
a lucid interval are valid. Contracts
agreed to in a state of drunkenness or
during a hypnotic spell are voidable.
ART 34
RELATIVE INCAPACITY
Art. 290 CC, Art 194 Family Code
Persons incapacitated to bind themselves but

only with reference to certain persons,
circumstances, or property.
1. SPOUSES AS PARTIES
They may be parties to contracts with
third
persons
but
they
are
incapacitated to become parties to a
contract of sale or donation as a
general rule. Subject to a few
exceptions.
Between themselves
Contracts with Third Persons
Can one spouse enter into contracts
with third persons without the consent
of the other?
Art. 73 Civil Code
Qualification
Other spouse may object on valid, serious,
and moral grounds. The court will decide if
the objection is proper.
Ability of spouses to enter into contracts
would depend on the type of contract
entered into.
There are types of contracts which the
parties may enter into individually and are
covered by the general rule in Art. 73.
Contracts which the law requires the spouses
to enter into jointly. These are contracts with
direct consequences upon the family and the
prevailing property regime. These are the
types of contract where the law requires the
husband and wife to formally give consent.
Lets say mupali ug land. Both spouses must
consent.
What are the status of contracts entered into
without the others consent?
Concepcion Ainza vs Sps Padua GR No.
165420 June 30, 2005
- SC says its a voidable contract
because there is a vice in consent
Gimenas contract is not rescissible for in
such a contract all essential elements are
untainted but Gimenas consent was tainted.

Neither can the contract be classified as
unenforceable because it does not fit any of
those described in Art. 1403. Finally, the
contract cannot be void or inexistent
because it is not one of thoseenumerated in
Article 1409. By the process of elimination, it
must perforce, be a voidable contract.
This is weird. The proper should be there is a
vice in consent why do you consider this a
vice in consent? Because of the principle that
husband and wife are only one under the law.
Therefore, when only one of the spouses
gives consent, that is incomplete or
imperfect consent. Then it is voidable. Its a
defect.
CONTRACTS BETWEEN
THEMSELVES
THE
SPOUSES
UNICA PERSONA QUIA TARO UNA ET

SANGUIS ONUS Husband and wife are one
person in the eyes of the law. Their estates
are merged resulting to an increase and a
man could not thus grant or give anything to
his wife.
DONATION
SPOUSES
OF
PROPERTY
BETWEEN
ART. 87
Agapay vs July 28, 1997
Art. 87 provides that the prohibition against
spouses now applies to donations between
persons living together as husband and wife
without valid marriage. For otherwise, the
conditions of those would turn out better
than those who are under matrimony.
Would Art 87 apply to persons in the same
sex cohabitation? No. because they cant live
together as Husband and Wife.
So sale between spouses, generally no
unless there has been an agreement agreed
upon in the marriage settlements or when
there has been separation of property under

Art. 111.
Take note, you can only agree extrajudicially
on the separation of property prior to the
marriage. And that is by marriage
settlements or prenuptial agreements.
Subsequent to marriage, can there be
separation of property? Yes but only
JUDICIAL.
What if theres a sale between H and
wife, who can question the sale?
Modina vs CA Oct 29,1989
In pari delicto; heir and creditors can
question
H or wife cant question since they are both
part of the illegal act. It arises in cases
where illegality arises from the consideration
or purpose of the contract where the persons
are equally at fault, the law does not protect
them.
Therefore, only the heirs and creditors can
question the nullity and not the spouses
themselves who executed the contract with
full knowledge.
Medina vs CIR May 29, 1944

The government is always an interested
party to matters relating to taxable
transactions and needless to say,
qualified to question their validity or
legitimacy whenever necessary to block
tax evasion.
FACTS: Antonio married Antonia. Before
1946, the spouses had neither property nor
business of their own. Later, petitioner
acquired forest concessions. From 1946
-1948, the logs cut and removed by
petitioner from its concessions were sold to
different persons in Manila thru his agent.
Sometime in 1949, Antonia went into
business for herself and engaged as lumber

dealer. The petitioner sold to her almost all
the logs produced in the concession. The
wife then sold to Manila through the same
agent the logs. On the thesis that the sales
were null and void, the collector made the
sales made to his wife as the petitioners
original sales taxable under Sec. 186 of the
NIRC and imposed a tax assessment and
deficiency sales tax.
ISSUE: Is there a proper sale between the H
and W?
HELD: Violative of Art. 1490, null and void.
OTHER
PERSONS
RELATIVE INCAPACITY
LABORING
UNDER
Art. 1491. The following persons cannot

acquire by purchase, even at a public or
judicial auction, either in person or
through the mediation of another:
(1) The guardian, the property of the
person or persons who may be under
his guardianship;
(2)
Agents,
the
property
whose
administration or sale may have been
entrusted to them, unless the consent
of the principal has been given;
(3) Executors and administrators, the
property
of
the
estate
under
administration;
(4) Public officers and employees, the
property of the State or of any
subdivision
thereof,
or
of
any
government-owned
or
controlled
corporation,
or
institution,
the
administration of which has been
intrusted to them; this provision shall
apply to judges and government
experts
who,
in
any
manner
whatsoever, take part in the sale;
(5)
Justices,
judges,
prosecuting
attorneys, clerks of superior and
inferior courts, and other officers and
employees
connected
with
the
administration of justice, the property
and rights in litigation or levied upon an
execution before the court within whose
jurisdiction or territory they exercise
their
respective
functions;
this
prohibition includes the act of acquiring
by assignment and shall apply to
lawyers, with respect to the property
and rights which may be the object of
any litigation in which they may take
part by virtue of their profession.
(6) Any others specially disqualified by
law.
These are sales against public policy.
1. Guardians and agents
With respect to agents, sale will be
valid if principal consents to the sale.
2. Trustees
Araneta vs Perez July 15, 1966
FACTS: Trustee donated more than 800
sqm. of land obtaining to the
trustyship to the City of Manila. This
was done with Court approval. The
trustee made the donation to relieve
the trustyship from expenses of tax
and maintainance of the estate.
ISSUE: Is it valid?
HELD: YES. That guardians and
trustees cannot donate properties
entrusted to them applies only to
simple donations. In the instant case,
the donation was made in the interest
of the estate trust or the trust
beneficiaries.
3. Executors with respect to properties of
estate under Execution
Q: Can this be applied to indirect
purchases? Estate- > X -> Y
Rodriguez vs Magtal April 4 1934
The prohibition cannot be made to
apply unless there was proof that the
third party buyer was a mere
intermediary of the guardian or that

the latter had previously agreed with
the third party buyer to buy the
property for the DQd guardian.
So unless there is proof of collusion, the sale
cannot be invalidated. The burden is on the
oppositor to prove that there was collusion.
However, in the case of Phil. Trust Co. vs
Roldan, the case of Rodriguez vs Magtal was
totally reversed by the SC.
Even arguendo, the guardian without malice,
the temptation which naturally besets the
guardian necessitates the annulment of the
transaction even if no such collusion is
proved between such guardian and the
immediate purchaser on the sound principle
of equity and justice.
So it seems that the sale is prohibited by
public policy if only to prevent any
temptation.
Note: This is the prevailing rule.
4. Public officers
Maharlika vs Tagle
Remember that the prohibition applies
only to cases where you are
administering government property
personally buying property belonging
to the same.
Facts: land was foreclosed by the GSIS
and sold by public auction. It was
bought not by the public officer but by
the wife of the Chief of Retirement
division of the GSIS.
The
public
officer
was
not
administering the property that was
sold.
Issue: does the prohibition apply?
Held: YES a division chief is not an
ordinary public officer. He is a public
officer and his wife acts for and in his
name in any transaction in the GSIS. If
he is allowed to participate in the
public bidding of properties foreclosed
by the GSIS, there is always suspicion

among the general public that the
official had access to information from
his fellow GSIS officials. The need to
forestall
such
and
to
restore
confidence in the public service is the
reason why such transactions are void
from the very beginning.
It places the officer in a position that
might become antagonistic to his
office.
January 17, 2015

PURCHASE OF PROPERTY BEFORE COURT
ACTION- VALID gregorio araneta vs tuazon
AFTER FINALITY OF DECISION VALID de laig
vs ca
Property to serve as payment to lawyer as
contingent fee- valid
Transfer or assignment takes effect only after
finality of favorble judgment. Director of
lands vs Ababa Heirs of Uy vs Castillo June 5,
2013, where the client had a contingent fee
arrangement with a lawyer and 3 rd party who
was financing the case
FORNILDA vs RTC 166 SCRA 281
Mortgaged property to lawyer while case is
pending. Foreclosed after termination of case
and lawyer bought. VOID. READ THIS CASE!
CONJUGAL PARTNERSHIP OF SPOUSES
CADAVEDO VS LACAYA G.R NO. 173188
JAN. 15, 2014
Fees stipulation:
FACTS: The plaintiffs were forced to hire a
lawyer on contingent basis and if they
become the prevailing parties in the case at
bar, they will have to pay the lawyer 2000.
Sept 21, 1981, Atty lacaya filed motion for
issuance of writ of execution in civil case
Sept 23, 1981, spouses filed civil case

against the sps cadaved
Oct 16, 1981, rtc granted motion filed for the
issuance of a wirt of execution in civil cas no.
1721, and sps cadavedo took possession of
subject lot
Subject lot was surveyed and subdivided into
two equal portions, and atty lacaya took
possession of one of the subdivided portions
alleging that the contingency arrangement
of fees was orally amended. He said that the
client already agreed that he would take
possession of the lot.
May 13, 1982, spouses ames and atty lacaya
executed compromise agreement over the
property
Atty lacaya undertook
expenses of litigation
to
advance
all
Is there anything wrong with the contingency

arrangement in this case? The first thing that
the lawyer did was to file a motion for
execution. Can this still be considered as
property relations under 1481?
INVALID.
HELD: The subject lot was still in litigation
when Atty. Lacaya acquired the disputed
portion. Whether by virtue of the alleged oral
contingent
fee
arrangement
or
an
agreement subsequently entered into, Atty.
Lacaya acquired the portion in a pending
case. The relationship of atty-client still
existed between them.
SC asked how the lawyer acquired the
property.
Contingent
fee
arrangement
was
champertous.
The
agreement
for
reimbursement of litigation expenses paid by
the lawyer is against public policy especially
if the lawyer has agreed to carry on the
action at his expense in consideration of
some bargain to have a part of the thing in

dispute. It violates the fiduciary relationship
between the lawyer and his client. This
might give him a greater stake in the action
which would lead him to pursue his own
recovery rather than that of his client in
violation of his duty of undivided fidelity to
his client.
Must be existing, future, or contingent;

licit and determinate or at least
determinable:
Prohibition also applies to lawyers who are

members of the firm involved; cannot be
indirectly violated by parter
The efficacy of the sale of a mere hope

or expectancy is deemed subject to the
condition that the thing will come into
existence.
Contracts violative of 1490 and 1491 are null

and void.
Rationale: Public policy disallows the
transactions in view of the fiduciary
relationship involved. The relation of trust
and confidence and the peculiar control
exercised by these persons. It is founded on
public policy because by virtue of such
relation, the person so named may easily
take advantage of the frivolity and ignorance
of those under their care and unduly enrich
themselves at the expense of the latter.
These prohibitions therefore seek to prevent
fraud on the part of such persons and
minimize temptations to exertions of undue
and improper influence. Federico N. Ramos
vs Atty. Patricio A. Ngaseo A.C. No. 6210
Remember the GSIS case, he is not the one
in the custody of the property and it was his
wife who purchased. SC said that is violative
because the question is, is there undue
influence? The mere possibility of undue
influence being exerted by these officers
including lawyers, judges, prosecuting attys,
would be enough to cancel out the
transaction on the ground that it violates
public policy.
2013 BQ IX p.68
2nd element: SUBJECT MATTER
Existing
Art. 1461. Things having a potential
existence may be the object of the
contract of sale.
The sale of a vain hope or expectancy is

void.
Existing: future- goods to be manufactured,
raised, or acquired by the seller after the
perfection of the contract.
When you look at the element that the SM
must be existing at the time of perfection, do
not view as to physical existence or nonexistence because if you do so, then there
could never be any sale of future property.
Check if industry, science, or technology
would allow it to come to existence.
Ex. To sell bread. Bread has not yet been
made but is of such nature that it could be
baked and produced and thus come into
existence
Contract to sell drug that would make one
immortal- SM impossible to come into
existence, void.
Ex. A expects/hopes to acquire a house and
lot in January 15, 2015. Can A sell the house
and lot he expects to acquire?
Yes, the sale is effective but subject to the
suspensive condition that he will acquire the
house and lot.
Suspensive condition: efficacy or obligatory
force is subordinated to the happening of a
future and uncertain event. If the condition
does not take place, the parties shall stand

as if the obligation had never existed.it has
the effect of postpoinig the obligation to give
until after the happening or fulfilment of
condition.
Under Art. 1461, the sale of mere hope or
expectancy is not necessarily void. To be
valid it must have the suspensive condition
that the thing will exist.
A sale of future thing subject to suspensive
condition is also known as Emptio rei
speratae. Its strictly a contract covering
future things and subject to suspensive
condition that the SM shall come into
existence. That is a valid sale.
Ex. Sale of the piglets in the womb of the
swine. Uncertain ka as to how many piglets
would be born and what the quality of the
piglets would be. They have potential
existence being in the womb and they have
suspensive condition that they will be born
alive. If they dont come into existence, the
contract is thereby extinguished. It is as if no
contract has been entered into in the first
place.
What is emptio spei?
It literally means Sale of a hope. Is this
valid? Yes. Provided, in the case of emptio
spei, the ff elements are present.
Elements:
1. Thing itself is not certain to exist
2. Object of contract is not thing but
the hope itself
3. Hope/ expectancy must not be
vain or has no longer any chances
of coming true.
Ex. Sale of lottery tickets for P10. The
buyer purchases the hope that he will
win millions. The object is the ticket
which
represents
the
hope
or
expectancy not the price itself of 20M.
if the ticket does not win, the sale is
still valid.
If vain hope- sale is void.

Ex. Falsified lotto ticket or expired already.
How do you distinguish between the two?
Eptio rei
SM-future thing or something
potential or future existence
that
has
Thing must exist for the sale to be valid

Emptio spei- SM is present thing (hope or
expectancy)
Whether the hope or expectancy is not
fulfilled, the sale is still valid, provided the
hope was not a vain hope.
In case of doubt as to whether it is emptio rei
or emptio spei, remember the nature of sale
as onerous and commutative ( there is
equivalence of values given) and there is
more equivalence and greatest reciprocity in
emptio rei it being an onerous contract. You
construe the doubt in favour of it being
emptio rei.
EXISTING
Article 1465. Things subject to a
resolutory condition may be the object
of the contract of sale. (n)
Ex. Sale of land subject to right of
repurchase. You sell it but you have reserved
for yourself by contract the right to
repurchase the thing sold. The resolutory
condition would be the repurchase of the
land and if it is exercised, the sale is
extinguished. You will revert to your previous
status from when you sold the property.
Must ownership of thing sold be vested in the
seller at the time of perfection of the
contract? NO. What the law requires is:
Article 1459. The thing must be licit and
the vendor must have a right to
transfer the ownership thereof at the

time it is delivered.
any further, its capable of being made

determinate.
Can I sell As motorcycle today but the

delivery will be a month from now? Is that a
valid sale? Was there a perfected contract of
sale? Yes. Because I can own it within the 1
month period that I have to deliver the
motorcycle. Its just that I must have
ownership already at the time the obligation
arises. That is when I should deliver.
Determinate: generic objects, undivided

interest of a sole owner (1463), undivided
share of a specific mass (1464)
WHY is it valid? Sale is merely a title and not

a mode of acquiring ownership. Delivery
transfers ownership. Ownership is not
required at the time of perfection but only at
the time of delivery.
Atilano vs Atilano- wrong designation of a

lot does not vitiate the sale since the parties
before entering into the contract saw the
actual setting and metes and bounds of the
SM.
Determinate
FACTS: Theres lot A and lot B. you were

negotiating for lot A and that is what you
thought you bought. But in the deed of sale,
it was lot B that was included. So the seller,
wanting to get out of the sale said its the
wrong SM. Its not determinate because its
wrong. What was put in the KOS was
different from what they were occupying.
Article 1460. A thing is determinate

when it is particularly designated or
physical segregated from all others of
the same class.
The
requisite
that
a
thing
be
determinate is satisfied if at the time
the contract is entered into, the thing is
capable of being made
determinate without the necessity of a
new or further agreement between the
parties. (n)
SM must be
determinable.
determinate
or
at
least
Determinate- particularly designated or

physically segregated from all the other of
the same class.
There must be a characteristic of the thing
that sets it apart from others of the same
class. (my red car, my crappy phone)
Determinable- capable of being made
determinate without the necessity of
entering into new or further agreement
between the parties. It may at first start as
non-determinate SM but without agreeing
Its okay to sell generic objects You buy

candy. When does it become determinate?
The moment that it is in your hands.
Determinable
SC said no need because the parties actually

saw the metes and bounds of the property
and it can be determined without entering
into a further contract between the parties
that what they intended to buy and sell was
lot A and not lot B.p
2013 BQ VII (Facts of Atilano vs Atilano)
Determinable
description
even
without
technical
SC: the SM is still determinable. The deed of

sale clearly identifies the subject properties
by indicating their respective lot numbers, lot
areas, and the certificate of title covering
them. Resort can always be made to the
technical description as stated in the
certificates of title covering the two
properties. (Naranja vs CA. April 17, 2009)
Determinable
quantity
despite
lack
of
specific
Is there a quantitative requirement for

determinability of sm? Yes. If youre going to
sell a particular thing, you need to agree on
how many of the particular thing is being
bought. (5 cars)
What happens when there is no definite
quantity?
National Grains vs IAC- SM was the rice to
be harvested from sellers farmland.
FACTS: Seller has a quota of 2,640 cavans of
palay. He only delivered 620 cavans.
National Grains Authority does not want to
pay because he did not reach the quota and
our contract is void because theres no
specific quantity.
SC: Seller can deliver as much of his produce
for as long as it does not exceed the agreed
quota. The fact that the quantity is not
determinate shall not be an obstacle to the
existence of the contract provided it is
possible to determine the same without the
need for a further agreement.
LICITIllicit- sale of future inheritance.

Illegal subject matter by virtue of special
laws:
Article 1347. All things which are not

outside the commerce of men, including
future things, may be the object of a
contract. All rights which are not
intransmissible may also be the object
of contracts.
No contract may be entered into upon
future inheritance except in cases
expressly authorized by law.
All services which are not contrary to
law, morals, good customs, public order
or public policy may likewise be the
object of a contract. (1271a)
without
PRICE
Definition the sum stipulated as the
equivalent of the thing sold and also
every incident taken into consideration
for fixing the price put to the debit of the
buyer and agreed to by him.- Inchausti
vs Cromwell (this is the only definition
acceptable)
LICIT
SM must be lawful
Narcotics
Wild birds and mammals
Rare wild plants
Poisonous plants and fruits
Dynamited fish
Gunpowder and explosives
Firearms and ammunitions
license ( PD no. 9)
Real
In money or its equivalent (it is
valid to stipulate that payment be
other than money. If its an accepted
equivalent for money, it can be
accepted as price)
Certain or ascertainable at the
time of perfection by:
- Third persons
- The courts reference to a
definite
day
particular
exchange or market
- Reference to another thing
certain (I will buy your car at
the price of mine)
- NEVER by one party to the
contract (void)
What if Contract states price but this was

never paid- null and void
Montecillo vs Reynes
Mapalo vs Mapalo
Illiterate farmers signed a contract which

provided 500 pesos consideration where the
amount was never paid. Since there was no
real consideration, the contract is void.
What if Simulated- represented to have been
paid but was not in fact paid
Sale is void but contract may be shown to
have been in reality a donation or some
other contract 1471
Examples:
Ong vs Ong- P1 and other valuable
considerations- void sale but may be a
donation
Bagnas vs CA- gross disproportion between
consideration stipulated and value of the
thing shows that the rice is false and
fictitious. Contract is void. Party can still
prove that it is valid as some other contract.
If price is Uncertain- contract inefficacious
but if the buyer appropriates the object he
must pay a reasonable and the manner of
payment must be agreed upon.
Article 1474. Where the price cannot be
determined in accordance with the preceding
articles, or in any other manner, the contract
is inefficacious. However, if the thing or any
part thereof has been delivered to and
appropriated by the buyer he must pay a
reasonable price therefor. What is a
reasonable price is a question of fact
dependent on the circumstances of each
particular case.(n)
If Inadequacy of price. Theres a lesion?
Voluntary sale- does not affect validity of
sale because of
Commutative nature of
contract of sale
If party believes that he is getting his
moneys worth, ok lang. it does not
invalidate sale.
Judicial sale- may avoid judicial sale when it

is shocking to the conscience of man
Exception: when there is a right of
redemption to make it easier for owner to
redeem
Sales a retro (pacto de retro sale; sale with a
right to repurchase)- raises the presumption
of equitable mortgage
Wards and guardians- when ward suffers
lesion of more than of the value of things
rescissible contract unless approved by
courts (Arts. 1381 and 1386)
SC did not invalidate sale made by guardian
even if price was very small if it was made to
get rid of certain tax consequences, to
relieve the estate of certain liabilities.
FORMATION OF A CONTRACT OF SALE
How does a contract of sale come into
being?
THREE STAGES (San Miguel Properties
vs Juan (2000))
Preparation/
conception/
generation->
perfection/ birth of contract of sale ->
consummation/ death of a contract
1. PREPARATORY STAGE
Period of negotiation and bargaining, ending
at the moment of agreement of the parties
Meeting of the minds of the parties
Death, consummation of contract of sale
Preparation
is
the
longest
stage.
Consummation can take a short while or long
time (payment in instalments); perfection is
the shortest- meeting of the minds lang for a
few seconds.
Contracts in First Phase
Policitation (technically not contract)
Option contract
Right of first refusal

Contract to sell (preparatory judicial
relation related to KOS)
Policitacion
Unaccepted unilateral promise to buy or sell.
Even if accepted by the other party, it is not
binding upon the promissor and may be
withdrawn at any time.
Violation of the promise does not give rise to
any relief on the part of the other party since
there is no contract
Public advertisements or solicitations are
ordinarily construed as mere invitations to
make offers or only as proposals. (MCQ
2011/2012)
Swedish Match vs CA Oct. 20, 2004
Bar 1999
A promised to sell property to B if B passes
the Bar exam. A sold the property before B
passed the Bar. Is the sale valid? Is B entitled
to rentals since there was a promise to sell to
him?
The sale to C is valid. A merely made an
unaccepted unilateral promise to sell to B in
the nature of policitacion. This contract does
not give rise to an obligation. It does not
prevent the owner from selling the thing.
He is not entitled to rentals because he is not
the owner. As promise to sell was unilateral
and unaccepted hence there was no
perfected KOS that will transfer ownership
over the thing to B.
OPTION CONTRACT (impt)- Accepted
unilateral promise to buy or sell a
determinate thing which is supported by a
consideration distinct from the price.
This is simply a privilege given to another
that he may buy something or sell
something. Its like a reservation.
If with consideration, gives rise to a case for

damages but not for specific performance. If
you paid something for him to give you
option. He violated it, can you compel him to
sell you the property? According to the SC in
many cases, NO. It only gives rise to a case
for damages.
Must have consideration separate and
distinct from purchase price otherwise,
option contract is void (sugar molasses
case), but still constitutes a valid offer.
If an offer is already accepted, it can give
rise to a valid contract if the offer was not
withdrawn prior to its acceptance then it still
constitutes a perfected contract. Consent is
manifested by the meeting of the offer and
acceptance on the thing and the cause which
are to constitute the contract. The offer must
be certain and the acceptance absolute.
Qualified acceptance constitutes a counteroffer.
If there is no consideration, contract is void
but may still be accepted before offer is
withdrawn.
Limson vs CA- Definition of
Contract (follow this definition)
Option
An option is a continuing offer or contract by

which the owner stipulates with another that
the latter shall have the right to buy the
property at a fixed price within a time certain
or under or in compliance of certain terms
and conditions for which he gives to the
owner of the property the right to sell or to
demand a sale. An option is not of itself
purchase but merely secures the privilege to
buy. It is not a sale of property but a sale of
the right to purchase.
*BQ 2002 XIII p217
BASIS FOR DAMAGES: Art. 19 Civil Code
The right to NOT to enter into contractual
relations is an absolute right. Nobody can
compel you to enter into a contract with

another person. But if you abuse your right
and you already had an agreement with a
person but you sold it to another person,
then you have abused your right and that is
a basis of damages.
Cases: Ang Yu Asuncion and Equatorial
Realties Mayfair
SUMMARY OF RULES ON OPTION CONTRACT
If without consideration and violatedNO cause of action because there is no
perfected contract
If with consideration and violated- can
ask for damages, NOT specific
performance
If without consideration but offer is
NOT withdrawn- can still offer to buy
RIGHT OF FIRST REFUSAL
Grants a person the right to buy

property before it is offered for sale to
another.
Common in contract of lease where it
is stipulated that should the owner
decides to sell the property he
undertakes to offer it for the purchase
of the lessor.
You are not compelled to buy. You have
the right to refuse it first. But if you
want to buy the property under the
same terms and conditions that it is to
be offered to other people not given
the right of first refusal, then you have
that absolute right.
This
doesnt
need
a
separate
consideration since such stipulation is
part and parcel of the contract which
grants the right which is usually (but
not necessarily) a contract of lease.
Ang Yu Asuncion vs CA 238 SCRA 602

In the law on sales, the so-called right of first
refusal is an innovative juridical relation. It
cannot be deemed a perfected contract of
sale under Art. 1458. Neither can the right of
first refusal, understood in its normal

concept, per se be brought within the
purview of an option, or possibly of an offer
under Art. 1319. An option or an offer would
require a clear certainty on both the object
and the case of the envisioned contract. In a
right of first refusal, while the object might
be made determinate, the exercise of the
right, however, would be dependent not only
on the grantors eventual intention to enter
into a binding juridical relation with another
but also on terms including the price that
obviously are yet to be determined.
So I give you a right of first refusal. Do you
know how much the property is to be sold for
if at all the owner of the property is going to
sell it? NO. so you dont know the elements
of the contract.
An option, on the other hand, would already
recite the elements of the sale: cause,
consent, consideration. It just asks if youre
going to buy.
In RFR, do you know the price? No. Do you
know the object? Yes. Is there consent
already? No. because it is not yet offered for
sale. Thats what happened in Ang Yu
Asuncion vs CA. Prior thereto, it can at best
be described as merely belonging to a class
of preparatory juridical relations governed
not by contracts since such elements
establish vincula juris
CONTRACT OF SALE WHICH VIOLATES THE
RIGHT OF FIRST REFUSAL?
It depends on whether or not your offer to
buy the real property having the right of first
refusal is identical with the terms for which
the property was sold. There has to be
uniformity.
If there is uniformity in terms and conditions
of the owner and lessee but owner sells to
another, the contract of sale is RESCISSIBLE.
Thats also a difference between OC and
RFR. An OC will not grant you the right to
rescind but just damages. In RFR, you are

granted the right to rescind. And because it
is governed by the provisions of CC on
human conduct, any violation of the RFR will
also give rise to cause of action for damages.
So youre better suited when you have RFR
rather than a mere option.
A deed of sale executed in favour of a third
party who cannot be deemed a purchaser in
good faith and which is in violation of a right
of first refusal ( Guzman vs Bonevie (?)
*BQ 1998 X p. 302
In a 20-year lease contract over a building,
the lessee is expressly granted a right of first
refusal should the lessor decide to sell both
the land and building. However, the lessor
sold the property to a third person who knew
about the lease and in fact agreed to respect
it. Consequently, the lessee brings an action
against both the lessor-lessee
buyer upon fulfilment of the condition agreed

upon and that is usually the fulfilment of the
payment of the purchase price.
Its not a contract of sale but if you fulfil the
conditions in the contract to sell, the net
effect is you enter into a contract of sale.
Theres no perfected KOS in a Contract to
Sell situation.
First element of consent of parties is absent
Seller does not consent to transfer ownership
to buyer until happening of event, which may
be the full payment of the price which is a
suspensive condition, the non-fulfillment of
which prevents the obligation from arising
(coronel vs CA)
Even if buyer in Contract to Sell is already in
possession of the property, that possession
of property is not equivalent to transfer of
ownership.
Suggested answer: the action filed should

prosper
Ex. Appliance on instalment, there is a

reservation of ownership
Equatorial Realty Development,

Mayfair Theatre, Inc. 264 SCRA 483
Contract of Sale vs Contract to Sell
Inc
vs
Another answer- Ang Yu Asuncion vs CA 238

SCRA 602
*BQ 1996 14 p.353
KOS
Ans: Ang Yu Asuncion vs CA/Equatorial

*2014
Equatorial- RFR
Ang Yu- Option
title passes to the buyer upon delivery

of SM
non-payment is negative resolutory
condition (if you dont pay, it doesnt
make the KOS ineffective but gives
rise to remedy of seller to rescind
vendor has lost control and can
recover only if the contract is
rescinded
CONTRACT TO SELL
BILATERAL CONTRACT
The prospective seller, while expressly
reserving the ownership of the subject
property despite delivery thereof to the
prospective buyer, binds himself to sell the
said property exclusively to the prospective
Contract to Sell
vendor reserves ownership and would

pass only upon full payment of the
price even if property has already
been delivered to the prospective
buyer.
Full payment of purchase price is

positive resolutory condition (if you
dont pay, seller only has to take back
the property since theres not transfer
of ownership in the first place)
Title remains in the vendor and he can
eject the vendee for non-compliance
with a suspensive condition.
*2014 BQ
IV. Nante, a registered owner of a parcel of

land in Quezon City, sold the property to
Monica under a deed of sale which reads as
follows: That for and in consideration of the
sum of P500,000.00, value to be paid and

delivered to me, and receipt of which shall
be acknowledged by me to the full
satisfaction of Monica, referred to as Vendee,
Contract to Sell vs Conditional Sale
I hereby sell, transfer, cede, convey, and
No
consent
to Element of consent isassign, as by these presents, I do have sold,
transfer of ownership present
althoughtransferred, ceded, conveyed and assigned a
conditioned
onparcel of land covered by TCT No. 2468 in
happening of event favor of the Vendee. After delivery of the
initial payment of P100,000.00, Monica
Purchase price
Any condition
immediately took possession of the property.
Five (5) months after, Monica failed to pay
the remaining balance of the purchase price.
Nante filed an action for the recovery of
possession of the property. Nante alleged
that the agreement was one to sell, which
was not consummated as the full contract
Coronel vs CA
price was not paid. Is the contention of Nante
The only document here is a receipt of
tenable? Why? (4%) (Sir: Contract of Sale
downpayment which contains the ff
daw)
facts:
That Juan has given Maria 50k as dp
January 24, 2015
for a lot
Since the lot is in the name of Marias
Vs _Pacific December 11, 2013
father, Maria will have the lot
MTC sent a proposal for the sale of _to be
transferred under her name
installed at various offices and-. Aside of the
After Maria has a TCT in her name,
itemization, the said proposal provided for
she will execute a deed of sale to Juan
the terms and conditions of the contract. In
and Juan will then pay the balance of
other words, theres already consideration
1,119,000
and price for the contract. This was accepted
Maria in the meantime sold the lot to
and issued a purchase order amounting to
Pedro. Can Juan sue for specific
646K. MTC delivered the products as
performance? Is it a contract to sell or
reflected in its invoice. However, the fine
a conditional sale?
print said that the title to property is
Its a conditional sale. The only
reserved in MTC until full payment of price.
condition being the transfer of the
name to Maria. Maria did not reserve
What is the relevance of that proviso in the
title to the lot. Juan can sue for
invoice receipt? The relevance of that would
specific performance. There was a
be that the supplier is making it appear that
perfected sale.
it is merely a contract to sell or if it is not a
contract to sell, its a conditional sale where
*1997 BQ Compare contract to sell from
there is reservation of ownership. And we
conditional sale
know very well the consequence of that

reservation of ownership. It will all boil down
to the remedy you are given.
After delivery, the subject contracts were
then
installed
and
configured.
Wala
nabayran. So NTCL filed a case to recover
possession not a case for rescission or
specific performance. Simply to recover
possession of the computers because of that
proviso in the invoice receipt where there is
reservation of ownership. Therefore all he
has to do is recover possession. The RTC
decided in its favour that since the contract
is a contract o sell, it was proper to pullout
the products.
HELD: Classification of contract, which
means that the sale is perfected by mere
consent. No more form is required for its
validity. The parties may reciprocally
demand performance. The vendee may
compel transfer of ownership over the
property and the vendor may require
payment. In contrast, a contract to sell is a
bilateral contract whereby prospective seller
while expressly reserving ownership of the
property despite delivery thereof to the
prospective buyer binds himself to sell
exclusively to the prospective buyer upon
fulfilment of the conditions agreed upon
which is usually the full payment of the
purchase price.
A contract to sell may even be considered a
conditional contract of sale where the seller
may likewise reserve title to the property
subject of the sale until the fulfilment of a
suspensive
condition
because
in
a
conditional contract of sale, the first element
of consent is present although it is
conditioned on the happening of
a
contingent event which may or may not
occur.
The parties agree to a contract of sale and
not to a contract to sell bearing in mind its
consensual nature. A contract of sale had
been perfected in the exact moment these

goods they sent a purchase order accepting
the latters proposal. At that point in time,
the obligations arose and consequently
demanded.
Q: what about the invoice receipt which
clearly has a stipulation relating to the issue
of ownership. What is the effect of that?
There is no effect. The reservation of
ownership changed it from a contract of sale
to a contract to sell. However, that cannot be
deemed to obviate the original perfected
contract of sale because it is simply a matter
unilaterally made by the seller.
Right of first refusal vs option to buy
Tuazon vs Del Rosario Dec. 8, 2010
Enforceability of Certain Contracts
What law will you apply? 1403 (2)
otherwise known as the Statute of
Frauds
Rosencor vs Inting March 8, 2001
This reiterates Equitorial Realty vs Mayfair
about Rights of First Refusal. Its not among
those listed as unenforceable in the SOF
which presupposes the existence of a
perfected albeit unwritten contract of sale. A
right of first refusal is not by any means a
perfected contract of sale of a property. The
statute of frauds does not contemplate cases
involving a right of first refusal as such a
right of first refusal need not be written to be
enforceable and may be proven by oral
evidence. This is good law decided in 2001.
What does Villanueva say?
He says that when the right of first refusal is
not stipulated in the lease contract, it cannot
be exercised. A verbal grant of such right
cannot be enforceable since such right of
first refusal must be clearly embodied in a
written contract. (wrong!)
He based this opinion in a 2000 case before

Rosencor. Here, what the SC said was a mere
obiter. Such right of first refusal must be
embodied in a written contract, but there is
none in the present case. This is not a
categorical statement of the SC. Its
Rosencor that prevails. It can be proven
orally.
(but SC said even it can be proven by oral
evidence it cannot be proven because there
is no proof that satisfies the SC that there
has been an oral promise.)
A right of first refusal can only cause
rescission of an offending sale which is
a prayer in the complaint if the sale was
made in bad faith, if the buyer knew the
existence of the right of first refusal
and yet he bought the property
(Equatorial vs Mayfair); if they are
identical (Guzman vs Bonevie ?)
Option contractdefinite price.
theres
already
PERFECTION
What happens here?
Theres a meeting of the minds. There is
consent. The offer must be certain and the
acceptance absolute. Theres a meeting of
the offer and acceptance of the thing and the
price which are to constitute a contract of
sale.
SECTION 1. - Consent
Art. 1319. Consent is manifested by the

meeting of the offer and the acceptance
upon the thing and the cause which are
to constitute the contract. The offer
must be certain and the acceptance
absolute.
A
qualified
acceptance
constitutes a counter-offer.
Acceptance made by letter or telegram
does not bind the offerer except from
the time it came to his knowledge. The

contract, in such a case, is presumed to
have been entered into in the place
where the offer was made.
Earnest Money
Its a deposit towards a purchase made by a
buyer towards the downpayment in evidence
of good faith. When the offer is accepted, the
earnest money becomes a part of the
downpayment. If the offer is rejected,
earnest money is given back. Earnest money
is forfeited if the buyer itself backs out of the
sale.
Whats the treatment of earnest money
under the Civil Code?
Art. 1482. Whenever earnest money is
given in a contract of sale, it shall be
considered as part of the price and as
proof of the perfection of the contract.
Means that theres already a perfected
contract of sale.
When do you say that what was paid was
earnest money as opposed to option money?
It depends on the circumstances behind the
payment of the supposed earnest money.
Negotiation stage- you pay something, its
not earnest money. Its a mere guarantee
that the buyer will not back out.
Perfection stage- earnest money and its
payment is proof of perfection of contract of
sale as payment of purchase price. And the
buyer will be obliged to pay the balance. As a
means to reserve the property for the
prospect of a future transaction, it stops
earnest money and the rules on option will
apply.
The SC had the occasion to distinguish
between option money and earnest money.
Adelfa
Properties
IMPORTANT
vs
CA
VERY
EARNEST MONEY is part of the purchase

price while OPTION MONEY is the money
given as a distinct consideration for an
option contract. EM is given when there is a
perfected sale while OM applies to a sale not
yet perfected and when EM is given, the
buyer is bound to pay the balance while
when the would-be buyer gives the OM, he is
not required to buy.
You can add- EM is evidence of a contract of
sale but merely creates a disputable
presumption of perfection.
OM- Payment is evidence of option contract
and the privilege to buy certain property at
certain terms and certain period.
EM can be recovered if stipulated or if there
is mutual restitution as a result of rescission.
OM, in general, can no longer be recovered
unless otherwise stipulated.
EM is an incident of sale is similarly
governed by the SOF. Because you are
already dealing with a perfected contract of
sale.
OM- as consideration of Option Contract not
governed by SOF.
If what you have is option money, your
remedy is only damages. You cannot
constrain or you cannot be constrained. (Ang
Yu case)
Advertisements-only invitations
FORM OF SALES
Favorite BQ
Art. 1483. Subject to the provisions of
the Statute of Frauds and of any other
applicable statute, a contract of sale
may be made in writing, or by word of
mouth, or partly in writing and partly
by word of mouth, or may be inferred
from the conduct of the parties.
It practically covers everything, every

situation that a contract of sale can be
entered into.
Exceptions:
1) SOF Art. 1403 (2)
a) Sale agreement which is not to be
performed within 1 year from the
making of the agreement.
b) Agreement for sales of goods,
chattels, or movables valued at P500
or more.
c) Sale of real property or any interest
therein (every sale of real prop or
interest therein should be in writing).
2) Sale of realty through an agent.
Sps Alcantara vs Milo April 20, 2010
SPA are necessary in the ff cases:
To enter into a contract by which the
ownership of an immovable is transmitted
or acquired either gratuitously or for a
valuable consideration.
If sale of personal property- can be oral
authority
Art. 1405. Contracts infringing the
Statute of Frauds, referred to in No. 2
of Article 1403, are ratified by the
failure to object to the presentation of
oral evidence to prove the same, or by
the acceptance of benefit under them.
CONSUMMATION AND PERFORMANCE
Obligations of the seller

Obligations of the buyer
Double Sales
Sale by land owner
Sale by one having voidable title
(last three are problematic sales)
OBLIGATIONS OF THE SELLER

1. To preserve the thing GFOF and deliver
the SM
Why deliver? Ownership is transferred to
the buyer upon actual or constructive
delivery under Art. 1477.
Art. 1477. The ownership of the thing

sold shall be transferred to the
vendee
upon
the
actual
or
constructive delivery thereof.
Any document used in the ordinary course of

business in the sale or transfer of goods
(dont pay too much attention to documents
of title daw)
Can
delivery
be
made
without
transferring ownership? You can reserve it
under Art. 1478
Delivery of goods to carrier
Art. 1478. The parties may stipulate

that ownership in the thing shall not
pass to the purchaser until he has
fully paid the price.
Ex. You purchased appliance payable in 6
months but you were not able to pay.
They can recover that.
TYPES OF DELIVERY
Actual- where the thing is placed in
possession and control of the vendee.
For personal property, personal property
changes from hand to hand because it is
capable of manual or physical delivery.
Real Property- institute or place the buyer
in possession of the property
Constructive Delivery
Usually made for immovable property.
Sale through public instrument, execution
of the instrument. It will have the effects
of delivery and therefore transfer of
ownership.
Traditio symbolica
Traditio longa manu- SM cannot be
transferred at the time of sale (delivery
by consent)
Traditio brevi manu- buyer already had
possession at the time of sale (sold to
lessee, no need to be placed in
possession)
Traditio constitutum possessorium- you
previously were the owner, you still retain
the property but no longer as owner
(opposite of traditio brevi manu)
Documents of title consist of:
Bill of lading
Warehouse receipt
Delivery of fruits and accessions

Art. 1164. The creditor has a right to
the fruits of the thing from the time the
obligation to deliver it arises. However,
he shall acquire no real right over it
until the same has been delivered to
him.
Art. 1527. Subject to the provisions of
this Title, the unpaid seller of goods
who is in possession of them is entitled
to retain possession of them until
payment or tender of the price in the
following cases, namely:
(1) Where the goods have been sold
without any stipulation as to credit;
(2) Where the goods have been sold on
credit, but the term of credit has
expired;
(3) Where the buyer becomes insolvent.
To bear expenses
registration
of
execution
and
Art. 1487. The expenses for the

execution and registration of the sale
shall be borne by the vendor, unless
there is a stipulation to the contrary.
To warrant the thing sold (warranty) most
important
Art. 1495. The vendor is bound to
transfer the ownership of and deliver,
as well as warrant the thing which is
the object of the sale
The vendor is bound to deliver the thing sold
with its accessions and accessories in the
condition in which they were upon the

perfection of the contract while the fruits
shall pertain to the vendee from the day
which the contract was perfected.
Art. 1164. The creditor has a right to
the fruits of the thing from the time the
obligation to deliver it arises. However,
he shall acquire no real right over it
until the same has been delivered to
him.
Difference between personal rights and real
rights
Personal right is power demandable by one
person over another person to compel him to
give, to do, or not to do
Real Right- power over a specific thing such
as those pertaining to ownership and
possession and binding upon the world.
Before delivery, no real right whatsoever.
After date of supposed delivery, he acquires
a personal right over the fruits (he can
compel another person to respect that right).
Jan 14- he already has real right over the
fruits.
WARRANTIES
May either be express or implied.
Breach of an express warranty makes the
seller liable for damages.
To be liable, there must be requisites:
An affirmation of facts or a promise by the
seller relating to the SM of sale and the
natural tendency of such affirmation or
promise is to induce the buyer to purchase
the same and the buyer purchases the thing
relying on the affirmation or promise. That is
when a breach of warranty exists.
An affirmation or promise of the thing
purporting to the sellers opinion only shall
not be construed as a warranty unless the
seller makes an affirmation or statement as

an expert and was relied upon by the party.
In other words, not every sales talk is
considered warranty but if youre an expert
in the field to which the property sold
belongs, then however you say, the sales
talk is actually considered a warranty.
Implied Warranties:
1. Warranty of right to sell- refers to the
right to sell at the time of
consummation (not at the time of
perfection) because warranty goes
into
the
performance
and
not
perfection of contract
Execution sales- sheriff sells property
2. Warranty Against eviction
When is there a breach?
This is doctrinal (check your book).
3. Against non- apparent servitudes
4. Against hidden defects
The vendor shall be responsible for
warranty against hidden defects which
the thing sold may have should they
render unfit for use for which it is
intended or should diminish its fitness
for such use to such an extent that
had the vendee been aware thereof,
he would not have acquired it or would
have given a lower price for it. But the
said vendor shall not be answerable
for patent defects or those which may
be visible or those which may not be
visible if the vendee is an expert who
by reason of his trade and profession
should have known them.
SUBSECTION 2. - Warranty Against
Hidden Defects
of orEncumbrances Upon the
Thing Sold
Art. 1561. The vendor shall be
responsible for warranty against
the hidden defects which the
thing sold may have, should they
render it unfit for the use for
which it is intended, or should
they diminish its fitness for such
use to such an extent that, had

the vendee been aware thereof,
he would not have acquired it or
would have given a lower price for
it; but said vendor shall not be
answerable for patent defects or
those which may be visible, or for
those which are not visible if the
vendee is an expert who, by
reason of his trade or profession,
should have known them.
1566- liable even if he was not aware
thereof
Art.
1566.
The
vendor
is
responsible to the vendee for any
hidden faults or defects in the
thing sold, even though he was
not aware thereof.
Remedy: Rescission and demanding a
proportionate reduction of the price, with
damages in either case (these are exclusive
of each other
5. As to fitness or quality
What is a Redhibitory defect?
Art. 1576. If the hidden defect of
animals, even in case a professional
inspection has been made, should be of
such a nature that expert knowledge is
not sufficient to discover it, the defect
shall be considered as redhibitory.
But
if
the
veterinarian,
through
ignorance or bad faith should fail to
discover or disclose it, he shall be liable
for damages.
The term redhibitory does not refer to the
type of defect but it refers to the remedy
given to a person for that type of defect. The
presence of the defect which renders the
thing unfit for use for which it is intended
allows the seller to file a redhibitory action.
What is a redhibitory action? The sale is
avoided or rescinded.
OBLIGATIONS OF THE BUYER

1. To pay the price of the thing sold (a
price certain in money or its
equivalent
2. To accept delivery of the thing sold
(1582-85)
3. Pay expenses of delivery
Smith Bell and Co. vs Matee March 9,
1922
The period is so uncertain that it is
already considered a condition.
Period- not guarantee
Reason for delay: govt
Term which the parties attempted to fix is so
uncertain that one cannot tell just when
those articles will be brought to Manila or not
. in such a case, the assumed obligations
must be regarded as conditional Obligations
for the performance of which a date certain
has been fixed shall demandable only when
they arise. A date certain shall be
understood to be one which must necessarily
arrive even though its date be unknown. If
the uncertainty should consist of the arrival
or non-arrival of the date, the obligation is
conditional and shall be governed by the
rules on the next preceding section relating
to conditional obligations.
As the export of the machines were
contingent upon the sellers obtaining
permission of the govt subject to regulations
as railroad embargoes, the delivery was
subject to condition not only of the parties
but also of third persons.
The obligation is deemed sufficiently met. He
has done all in his power even if the
obligation has not been fulfilled.
So, best efforts.
January 31, 2015

With double sales, walay problema kaayo
because we always emphasize.sale of land
by land owner and by one with voidable title,
dili kaayo focused. This is where you
encounter the cases of Azner vs, Yuvienco vs
Dacuycuy, Edca publishing vs Santos. If you
know those cases, you wont have a problem
with sale by land owner and by one with
voidable title.
DOUBLE SALE
Particular SM of sale, whether movable or
immovable is sold by one vendor to two or
more vendees who do not represent the
same interests
Art. 1544. If the same thing should have
been sold to different vendees, the
ownership shall be transferred to the
person who may have first taken
possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the
ownership shall belong to the person
acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the
ownership shall pertain to the person
who in good faith was first in the
possession; and, in the absence thereof,
to the person who presents the oldest
title, provided there is good faith.
Theres a need for you to memorize this.
Any double sales questions that might come
up, it will come up here.
The first in time, priority in right.
Immovable property- ownership shall belong
to the person acquiring it who in good faith
who first recorded it in the registry of
property. So its no longer first in time, first in
right. Its first in registration. Because we are

operating under the Torrens system. One of
the hallmarks of the Torrens system is it
gives your priority. Registration gives you
priority and it is evidence of the fact that
you have ownership of the land . although it
does not of itself tell you that you own the
land. Should there be no inscription, meaning
theres no recording in the registry of
property, ownership shall pertain to the
person who in good faith was first in
possession. So you revert back to prius in
tempore. And in the absence of proof relating
to who was first in possession to the person
who presents the oldest title provided there
is good faith. Good faith is very important in
these types of situations.
2001 BQ XI
On June 15, 1995, Jesus sold a parcel of
registered land to Jaime. On June 30, 1995,
he sold the same land to Jose. Who has a
better right if:
1. The first sale is registered ahead of
the second sale, with knowledge of the
latter. Why?
Answer: The first buyer has the better
right if his sale was first registered,
even though the first buyer knew of
the second sale. The fact that he knew
of the second sale at the time of his
registration does not make him as
acting in bad faith because the sale to
him was ahead in time, hence, has
priority in right. What creates bad faith
in the case of double sale of land is
knowledge of a previous sale.
2. The second sale is registered ahead of
the first sale with knowledge of the
latter?
Ans: the first buyer is still to be
preferred, where the second sale is
registered ahead of the first sale but
with knowledge of the first sale. This is
because the second buyer, who at the
time he registered his sale knew that
the property had already been sold to

someone else, acted in bad faith.
1. Remember,
both
conveyances
must be a sale. If one is a sale and
the other is a mortgage, you dont
apply 1544. Ex. A sold the land to B.
After a week, A mortgaged the land to
C with knowledge of the sale
registered the mortgage. Who is
preferred? B is preferred even if C
registered his mortgage. First, it is not
a double sale so 1544 will not give him
any preference. Second, when A
mortgaged the property, he was no
longer the owner. Cs knowledge of the
prior sale makes his mortgage in bad
faith.
In credtrans, its very important to remember
that if youre a mortgagor or pledger, you
need to be the absolute owner of the thing.
Otherwise, that mortgage or pledge is void.
In sale, it doesnt really matter, because you
still have the ability to get it prior to delivery.
You can still become owner prior to delivery.
It becomes a negative resolutory condition if
you dont obtain ownership of the property
prior to delivery.
2. Both contracts must purport to
convey the same subject matter
to different vendees. Delivery to
one of them is deemed impossible.
On Jan 14, A sold his car a retro,
meaning with right of repurchase, to
B. They stipulated that the right to
repurchase can be exercised at any
time within 1 year from the date of
sale. On August 15, A sold the same
car to C stipulating that delivery of the
car can be made within 1 month.
Theres a period of delivery. Is there a
double sale? Will 1544 apply?
NO. because there is a right of
repurchase. It is still possible for A to
repurchase the car from B. delivery

therefore the C is not impossible. So it
is not yet a double sales situation. Pag
naglapse na ang time for delivery,
wala pa niya narepurchase, thats a
double sale situation.
3. Both contracts must be valid sales
were it not for the fact that it was sold
twice.
There is no double sale when at least
one of the contracts conveying the
property is not a valid sale.
BQ 2010 XV
In sale of unregistered lands, there
should always be recording in the
ROD. ( Sirs answer is different from
the suggested answer)
What if the seller is not the owner?
This is another problematic sale in Art.
1505
The situation in Art. 1505 is to the
effect that goods are sold by a nonowner or seller who does not sell
under the authority or with the
consent of the owner. Nagbuot buot.
Effect: buyer acquires no better title to
the goods. The buyer steps in the
shoes of the seller. If the right given to
the seller is up to this level lang, up to
that level lang pud ang buyer.
Status of the contract:
DBP vs CA
Because the putative seller does not
have any authority to sell, he is not
the owner, no ownership can also be
passed. The sale is void.
Aznar vs
Concept of Unlawful Deprivation
A takes Bs car without consent. A sells
it to C who does not know about the
theft. Does C acquire the title? No. B
was unlawfully deprived of his car
under Art. 559. C is not an innocent
purchaser for value since it is essential
that the transferee must at least have

voidable title.
Does C have any title whatsoever? No.
because he is a thief. A thief does not
obtain any title.
Exceptions:
1. When the owner by his conduct is
precluded the sellers authority
(estoppel) Art 1434
The situation here is a non-owner sells
the thing and delivers it to the buyer.
Later on, the seller becomes the
owner. Title passes to the buyer or
grantee by operation of law. While the
sale at first is not valid, it is in effect
validated.
2. When the contrary is provided for in
the recording
3. When sale is made under statutory
power of sale or under the order of a
court
of
competent
jurisdiction
(auction sale)
Sale where seller has voidable title (Art.
1506)
The seller has voidable title but title has not
been avoided at the time of sale. The buyer
acquires good title to the goods if he buys
them in good faith for value and without
notice of the sellers defect of title.
at the time of sale means at the time of
delivery of the SM since it is delivery which
transfers ownership. Not at the time of
perfection
A and B already had deed of sale. A has
voidable title, b does not know about it. As
title is annulled after perfection but before
delivery. What is the effect? B does not
obtain good title over the thing because it
has already been annulled.
Remember the basic postulate in obligations
and contracts that voidable contracts are
valid until annulled.
A and B agreed to the sale. A has voidable

title, B does not know. Annulment takes
place after perfection and delivery. What is
the effect? B obtains good title over the thing
as long as he is an innocent purchaser for
value.
Who is an innocent purchaser for value?
One who buys property of another without
notice that some other person has a right to
or interest in such property. He pays a full
and fair price for the sale at the time of
such purchase or before he has notice of the
claim or interest of some other person on the
property.
Tagatac vs Jimenez (1957)
A sold his car to B. B issued a check as
payment, the check bounced. C bought the
car from B in good faith and for value.
C acquires good title to the car. A can only
rescind but the sale must be set aside by a
court first before A can recover title. But A
must reimburse C for the price paid.
Why is there good title here? Because we
have an innocent purchaser for value in good
faith.
*BQ 1998 IV
Delivery of fruits
Naa na tay sabot, Ill buy your property.
When will we execute the deed of sale? A
month from now. What happens if the quality
of the land or car deteriorates? When the
delivery is suspended.
A thing is lost when it perishes or goes out of
commerce or disappears in such a way that
its existence is unknown and it cannot be
recovered. (1159)
Owner bears the risk of loss in these cases
and enjoys the benefits, and bear any
deterioration subject to certain exceptions.
Before perfection, what happens? Any loss or

deterioration as well as fruits and other
benefits shall be for the account of the owner
(seller). A contract of sale can never arise if
the thing is lost at this time.
What happens if the thing is lost at the time
of perfection?
At the time the buyer and seller enter into
the contract of sale. At the time of the
meeting of the minds, either the seller or
buyer or both are not aware that the SM is
already lost. Possible ba? If the SM is specific
or determinate and the loss is total, the
contract shall be without any effect. The
seller cannot demand payment and he
shoulders the loss.
If SM is generic, its loss will not extinguish
the sale pursuant to the rule the genus never
ends.
But if the thing should have been lost in part
only, the vendee may choose between
withdrawing
from
the
contract
and
demanding the remaining part, paying its
price in proportion to the total sum. There is
a proportionate reduction of the price if
agreed upon by the buyer
What about if there are several goods?
1494.
Art. 1494. Where the parties purport a
sale of specific goods, and the goods
without the knowledge of the seller
have perished in part or have wholly or
in a material part so deteriorated in
quality as to be substantially changed
in character, the buyer may at his
option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods
or in so much thereof as have not
deteriorated, and as binding the buyer
to pay the agreed price for the goods in
which the ownership will pass, if the

sale was divisible.
After perfection but prior to delivery:
Delivery transfers ownership over the SM. So
after perfection of the contract but prior to
delivery, the seller shall still bear the risk of
loss.
Has ownership already passed? If ownership
has not yet passed by the act of delivery, its
still the seller being the owner, who bears
the risk of loss in whatever situation. But
there are exceptions.
What are the cases where even if ownership
remains with the seller, the buyer bears the
loss?
1. Loss is caused through fault of buyer,
the buyer shall bear the loss.
2. Where goods are delivered to buyer or
to bailiff for buyer but under the
contract, the ownership over the
goods has been retained by the seller
merely to secure performance of the
buyers obliations under the contract,
the goods are at the buyers risk from
the time of such delivery.
Remember the purpose why there is
reservation of ownership. So the risk
of loss here is on the buyer.
Should the buyer still be made to pay if the
thing is lost after perfection but before
delivery without the fault of the seller? It was
caused by a fortuitous event.
According to Paras, the buyer still has to pay
the price because pursuant to Art 1189, only
the sellers obligation is extinguished. If the
thing is lost without the fault of the debtor,
the obligations should be extinguished.
Tolentino: buyers obligation to pay the price
is extinguished because a contract of sale
involves
reciprocal
obligations.
Extinguishment of obligation due to loss of
the thing affects both the debtor and the
creditor so that if the creditor has himself an

obligation, this is likewise extinguished. He
who gives nothing has no reason to demand.
(Sir subscribes to this but you should present
both views if asked in the Bar. Then choose
the view you agree with. )
DETERIORATION
After perfection, before delivery: the rule is
the buyer shall bear it. (1538)
Art. 1538. In case of loss, deterioration
or improvement of the thing before its
delivery, the rules in Article 1189 shall
be
observed,
the
vendor
being
considered the debtor.
Lets translate Art. 1189 to Sales terms:
Art. 1189.xxx
(3) When the thing deteriorates without
the fault of the seller, the impairment is
to be borne by the buyer;
(4) If it deteriorates through the fault of
the seller, the buyer may choose
between the rescission of the obligation
and its fulfillment, with indemnity for
damages in either case;xxx
Were still going back to basic 1189 rules.
What about fruits? They pertain to the buyer
after perfection regardless of whether there
is delivery or not. Basis: Art 1537
Art. 1537. The vendor is bound to
deliver the thing sold and its accessions
and accessories in the condition in
which they were upon the perfection of
the contract.
All the fruits shall pertain to the vendee
from the day on which the contract was
perfected.
After delivery, following res perit domino, its
the buyer who bears the loss.
What if there is there was transfer of

ownership but the thing was not delivered to
the buyer? The buyer still bears the loss.
1504
Art. 1504. Unless otherwise agreed, the
goods remain at the seller's risk until
the ownership therein is transferred to
the buyer, but when the ownership
therein is transferred to the buyer the
goods are at the buyer's risk whether
actual delivery has been made or not,
except that:
(1) Where delivery of the goods has
been made to the buyer or to a bailee
for the buyer, in pursuance of the
contract and the ownership in the
goods has been retained by the seller
merely to secure performance by the
buyer of his obligations under the
contract, the goods are at the buyer's
risk from the time of such delivery;
(2) Where actual delivery has been
delayed through the fault of either the
buyer or seller the goods are at the risk
of the party in fault.
It may be unfair. Its not even with me, why
do I bear the loss? So it gives the buyer the
motivation to obtain the goods. Thats his
remedy. Kung mahadlok siya na mawala,
obtain possession of the goods.
To summarize, for loss, deterioration, and
fruits:
During preparatory stage- seller
After delivery- buyer
After perfection, Before delivery- except for
deterioration, seller lang tanan.
February 14, 2015
Remedies in Case of Breach of Contract

of Sale
The contract can be breached either by the
seller or buyer. In case of breach of the
seller, take note of the following:
Refuses delivery
Failure
price
to
pay
Several breaches committed:

BREACH
Failure/refusal
deliver object
Breach
warranty
Disturbed
possession
to
of
in
Breaches by Buyer
REMEDY
Action for specific
performance/
rescission
w/
damages
(Art.
1891)
1. Can accept
goods
despite
breach
of
warranty,
reduction of
price
2. Or accept
goods and
ask
for
damages
3. Refuse
to
accept
goods and
ask
for
damages
4. Rescind,
refuse
to
accept/retu
rn goods
Suspend payment
of price until end
of
disturbance
upon possession
(mere trespassing
over property is
not considered a
disturbance
in
law; dapat akin to
eviction)
Repudiation
of
sale
before
delivery
Inability to pay
before delivery
Rescission
by
seller
Rescission/
specific
performance plus
damages
Unpaid seller:
Possessory lien
Stoppage
in
transit
Special right to
resale
Rescission
with
damages
Rescission
damages
with
Who is an unpaid seller?

A seller whom the whole of price has not
been paid or tendered or in certain instances
where the negotiable document of title was
received as conditional payment and the
condition was fulfilled. The breach is nonpayment. So you have the remedy of
possessory lien, stoppage in transit, special
right to resale, and special right to rescind.
Take note that the special right of resale and
the special right to rescind can only be used
when either possessory lien or stoppage in
transit have previously failed.
1. Possessory lien (Art. 1526)
Ownership has been transferred to the
buyer but the seller is still unpaid. But
the seller may choose to retain the
goods for a price while he is still in
possession of the goods. Which means
that he can no longer have a
possessory lien if he has already
turned over possession of the goods to
the buyer.
Take note that possessory lien can
only be exercised when the goods are
sold without any stipulation as to
credit or the goods were sold on credit
but the term of the credit has expired

or the buyer becomes insolvent.
This may be an obscure topic but it
might be asked in the Bar.
2. Stoppage in transit
The seller no longer has possession
over the thing and the buyer becomes
insolvent. The seller can stop the
goods in transit or while it is being
delivered to the buyer or resume
possession of the goods at any time
while the goods are still in transit. The
seller enjoys the same rights as if he
never parted possession with the
thing.
Goods are deemed in transit in the
period between delivery to the carrier
for transmission to the buyer until the
buyer claims them from the carrier. If
the goods are rejected by the buyer
and the carrier continues to have
possession even if the seller refuses to
take the goods back.
What is the status of the sale
made by the buyer while in
transit? Meaning in transit pa lang
ang goods, he already sold it to a
third person.
If the buyer sells the thing without the
consent of the seller while the thing is
in transit, the sellers stoppage in
transitu is not affected.
However, remember that the right of
stoppage in transitu does not defeat
the title of an innocent purchaser for
value who is issued a negotiable
document of title.
Ex. If something is delivered or
coursed through a carrier, your
evidence of ownership is the bill of
lading. That document is your
negotiable instrument of title.
So you can sell it and whoever is in
possession of the bill of lading can
claim the goods.
3. Special Right of Resale
Available after the exercise of either
possessory lien or stoppage in
transitu; can be exercised when the
goods are perishable in nature, the

seller expressly reserves the right to
resell in case of buyers default; the
buyer has been in default for an
unreasonable period of time.
Either you exercise possessory lien
when you are still in possession of the
goods, your lien is to the effect that
you will be paid the price, you will
retain possession of the goods until
you are paid the price or stoppage in
transitu when they are no longer in
your possession. You have the right to
resell precisely because they are
perishable, where it is reserved by the
seller and the buyer is in delay foran
unreasonable period of time.
4. Special Right to rescind
After exercise of possessory lien or
stoppage in transitu
Seller may hold buyer liable for
damages
What if the SM are immovable?
Art. 1522. Where the seller
delivers to the buyer a quantity of
goods less than he contracted to
sell, the buyer may reject them,
but if the buyer accepts or retains
the goods so delivered, knowing
that the seller is not going to
perform the contract in full, he
must pay for them at the contract
rate. If, however, the buyer has
used or disposed of the goods
delivered before he knows that
the seller is not going to perform
his contract in full, the buyer shall
not be liable for more than the
fair value to him of the goods so
received.
Where the seller delivers to the
buyer a quantity of goods larger
than he contracted to sell, the
buyer may accept the goods
included in the contract and reject
the rest. If the buyer accepts the
whole of the goods so delivered
he must pay for them at the

contract rate.
payments. It also applies

condominium or apartments.
BQ 2003
Automatic rescission? Art. 1522
What will happen?
What about sales on instalments?

It depends on what is being sold. If it is
movable or immovable.
Movable- 1484 (Recto Law)
What you are talking about here are
sales of goods on instalments.
What are the remedies if the buyer
discontinues payment of instalments?
1. Exact fulfilment of obligation
2. Cancel sale if buyer fails to pay 2
or more instalments
3. Foreclose the chattel mortgage if
the buyer fails to pay 2 or more
instalments. Take note if you
foreclose on the chattel mortgage,
you are already getting everything
from the value of the security for
the purchase so you no longer have
the right to get the balance of the
price.
Buyer paid <2y

instalments
(whether just 1mo
or
24mo,
it
doesnt matter)
These remedies are ALTERNATIVE not

cumulative meaning you cannot
exercise one after failing to get any
relief from the other. So if you choose
to exact fulfilment of the obligation,
you waive all the other remedies, etc.
availing of one means foreclosure of
the others (unjust enrichment)
When the unpaid seller has already
enforced the contract by collecting the
amount due, he can no longer rescind
or foreclose.
Replevin- he can still avail of alias writ
of execution for unsatisfied balance
RA 6552- MACEDA LAW
What sales apply to the Maceda law? It
would apply if we are talking of residential or
real estate and its a sale of instalment. Or
its a financing of real estate on instalment
Installment
includes
option
money
or
any
downpayment
that
has
been
paid to the seller
Buyer paid 2y or
more
of
instalments
to
residential
Grace period of
60d (to be current
with
your
account)
If you fail w/in
grace
period,
seller
given
chance to cancel
within 30d from
receipt
of
the
notice
of
cancellation.
Pwede marescind
ang
instalment
sale
of
the
residential lots
Grace
period
increases by 1
mo/
year
of
instalments paidpay
without
interest ( to make
you current)
In both, you can
only avail of grace
period once. If
you
already
availed of it, you
can
no
longer
avail
subsequently.
Cash Surrender Value- if the buyer can no

longer pay, does all his paid instalments go
to the seller?
Prior to the Maceda law, if youre a
subdivision developer you sell to people who
cannot conceivably pay because their means
do not allow it and whatever you received,
you can keep because its stated in your

contract. Thats the injustice that the law
seeks to prevent.
This cash surrender value is usually pegged
at 50% of the instalments paid.
Kung dili na gyud ka kabayad, I will just
cancel the contract, give me back 50% of
what I paid.
Your cash surrender value increases by 5%
for every year in excess of 5 years. So
nakabayad kag 6years, plus 5% na ang CSV
but there is a limit.
If 20-25 year (long-term) instalments, theres
a limit of 90% only of the CSV entitled to the
seller.
Who has jurisdiction over a case
between a subdivision buyer and
subdivision developer?
The situation under PD 957 is that the buyer
desists from paying further instalments
because the owner or developer fails to
develop the subdivision or condominium
according to the approved plans within the
time limit.
If it is a total failure to develop, the buyer is
entitled to reimbursement of all the
instalments paid. Its akin to a substantial/
fundamental breach.
BQ 2005
Under PD 957, a buyer of a subdivision lot
may desist from payment if the developer
fails to develop the subdivision according to
the approved plans in the period. The buyer
may get all instalments he paid and these
are not deemed forfeited.
Assuming the developer develops but A
refuses to pay after 48 months instalments,
under the Maceda Law, he shall be entitled
to pay without interest his instalments in
arrears within a grace period of 4 months or
1 month for every annual instalment (4

years).
If he fails to pay within the grace period, he
is entitled to be reimbursed 50% of his
payments since he has made at least 4 years
of instalments.
EXTINGUISHMENT OF SALE
Same modes of extinguishment as other
contracts:
Payment of the price
Loss of SM
Condonation or remission of debt
Confusion/ merger on rights of creditor and
debtor
Compensation
Novation
Annulment
Rescission
Conventional/ legal
Pay particular attention
redemption in sales.
to
right
of
It can be conventional redemption or

redemption based on contract. It is exercised
by the seller and must be reserved in the
contract of sale.
In this situations, the SOF applies. The period
for redemption should not exceed 10 years
if the contract is silent as to the exercise of
the period of redemption, 4 years.
LEGAL REDEMPTION
The type of redemption which the law itself
allows. For co-owners, adjoinding co-owners,
and co-heirs.
1. Co-heirs (1088)
Heir sells his hereditary rights to a stranger

before it is physically partitioned. The coheirs may be subrogated to the buyers
rights by reimbursing him the price. (the
hereditary rights here have already accrued).
The co-heirs must redeem within one month
from the time they were notified in writing of
the sale.
BQ 2001/ 2002
When can
property?
co-owner
legally
redeem
Art. 1620. A co-owner of a thing may

exercise the right of redemption in case
the shares of all the other co-owners or
of any of them, are sold to a third
person. If the price of the alienation is
grossly excessive, the redemptioner
shall pay only a reasonable one.
Should two or more co-owners desire to
exercise the right of redemption, they
may only do so in proportion to the
share they may respectively have in the
thing owned in common.
What is the rule in case of redemption by 2
or more co-owners?
Redemption shall be in proportion to the
share they may have in the thing owned in
common.
Dimagila vs Montero GR No. 201011
Jan. 27, 2014
FACTS: The property was partitioned
between 2 heirs, A and X. A got the southern
half, X got the northern half. A has heirs
B,C,D. X also has heirs Y and Z.
A and X died so their respective halves of
the property were inherited by their heirs. B
sold the entire southern half. Y and Z
question it.
HELD: The petitioners, heirs of X who

inherited the northern half of the property do
not possess the necessary personality to
assail the sale of the southern half. They are
not the real parties in interest to be
benefited or injured by the sale of the
southern half over which they have
absolutely no right. Only fellow co-owners
have personality to assail the sale and to
redeem the property when redemption is
allowed.
2. Adjoining Co-owners.
Lot A and B are adjoining. You own lot
A, lot B is sold. The law favors you to
redeem the property para matibuok
imong land.
For rural land, the area should not
exceed 1 hectare unless the grantee
does not own rural land.
Small urban land- situated by a major
portion cannot be used for any
practical purpose within a reasonable
period.
3. Credit sold
Debtor may reimburse assignee. He
may redeem from the time assignee
demands payment from him.
Period of redemption: 30d from notice
of prospective seller/s. the deed of
sale shall not be recorded in the
register of property unless sellers
affidavit that he sent written notices
to all possible redemptioners or those
who have the right to redemption.
Metrobank vs Lei Construction GR No.
185590 Dec. 3, 2014
What is a nature of a letter of credit?
A letter of credit situation has three
components:
1. Contract of sale between buyer
and seller
2. Contract between buyer and bank
and
3. Letter of credit itself.
If you dont pay the seller, he can go
after you unconditionally. It will now
be the bank who will seek payment

from the person who opens the letter
of credit.
Sps Suntay vs Easer Mercantile GR No.

208462 Dec. 10, 2014
Refers to applicability of Art. 1544 to a levy
on attachment. Does it have preference over
registered sales/ prior unregistered sales?
1544 applies to double sales situations. The

rule is for movable property:
Immovable property: first to register
Levy on attachment for purposes of
execution retroacts. That retroactivity, will
that have preference over registered sales
during litigation or prior unregistered sales?
-
END -

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January 10, 2015

Article 1458. By the contract of sale one

In reciprocal obligations, neither party

Art. 1191. The power to rescind

Art. 1350. In onerous contracts the

Sale is onerous because it imposes valuable

interests. If there is a doubt, resolve the

Title, not a mode

Title, on the is the juridical justification,

does not affect dominion or ownership.

Article 1318. There is no contract unless

3. price certain in money or its equivalent

Quiroga vs Parsons G.R No. L-11491

1. The contract is what the law

contract altogether is susceptible

Article 1409. The following contracts are

(5) Those which contemplate an impossible

the money or its equivalent; otherwise,

with a right to damages, or he may only

Sale- one of the contracting parties obligates

OBJECT: DETERMINATE THING

We are talking here about the Institute of

This is a pronouncement that interests me

If you go to somebody, magpabuhat kag

HELD: Its just a contract of sale.

ENGINEERING AND MACHINERY CORP VS

If youre a client of Arnoldus Carpentry, you

WON the thing has been manufactured

DMPI vs ARAGONES G.R. NO. 153033

(1) Payments made by the owner to the

determine it yourself. Ex. It may ask you,

Article 1715. The contract shall execute

In dacion en pago, the debtor delivers and

SSS vs AG & P GR NO. 175952 APRIL 30,

There is valid and

there is valid and

Pledge: nangutang ka. Whatever you bring

Why is there a need to compare this to

Article 1484. In a contract of sale of

Where necessaries are those sold and

Article 1327. The following cannot give

If you are not capacitated to enter into

Art. 1328. Contracts entered into during

Capacity to Buy or Sell

Period for annulment - 4 years

Article 1489. All persons who are

Article 1391. The action for annulment

In cases of intimidation, violence or

Sustenance, dwelling and clothing and

In case of mistake or fraud, from the

If a minor eats at a canteen, he must pay a

And when the action refers to contracts

Why does the law consider this valid?

Mercado et al vs Espiritu GR no. L11871 Dec. 1, 1973- estoppel, minors not

RULE WHEN BOTH PARTIES INCAPACITATED

You cannot enter into contract of sale if you

Ex. Minor selling to a minor; a hyptonized

ABSOLUTELY INCAPACITATED PARTIES

The contract is Uneforceable under Art.

Art. 1327. The following cannot give

Art. 290 CC, Art 194 Family Code

Persons incapacitated to bind themselves but

untainted but Gimenas consent was tainted.

UNICA PERSONA QUIA TARO UNA ET