Sales Notes (Uribe)

A. Definition Art.
1458 (1)
Art. 1458. By the contract of sale one of the
contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and
the other to pay therefor a price certain in money or
its equivalent.
Q:
A:
What is the nature of a sale?

It is a contract, a source of obligation.
B. History
Governing Law RA No. 386 (August 30, 1950);

Arts. 1488, 1637
Commercial and Civil Sales
Art. 1488. The expropriation of property for public
use is governed by special laws. (1456)
Art. 1637. The provisions of this Title are subject to
the rules laid down by the Mortgage Law and the
Land Registration Law with regard to immovable
property.
(1537a)
Q: A and B entered into a contract. What law shall
govern?
A: If contracts are entered today, the Civil Code of
the Philippines will apply. The CCP took effect on
August 30, 1950. Civil sale is covered by the CCP;
commercial sale, by the Code of Commerce.
C. Characteristics
1. consensual (Art. 1475) as distinguished from
real, because a contract of sale is perfected by mere
consent.
Art. 1475. The contract of sale is perfected at the
moment there is a meeting of minds upon the thing
which is the object of the contract and upon the
price.
From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contracts.
2. bilateral (Art. 1458) because both parties are
bound by obligations dependent upon each other.
its equivalent.
A contract of sale may be absolute or conditional.
3. onerous (Art. 1350) because to acquire rights,
valuable consideration must be given.
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.
4. commutative (Art. 2010) as a rule, because

the values exchanged are almost equivalent to each
other.
Art. 2010. By an aleatory contract, one of the
parties or both reciprocally bind themselves to give
or to do something in consideration of what the
other shall give or do upon the happening of an
event which is uncertain, or which is to occur at an
indeterminate time.
5. principal as distinguished from an accessory
contract, because for the contract of sale to validly
exist, there is no necessity for it to depend upon the
existence of another valid contract.
6. nominate (Art. 1458) as distinguished from an
innominate contract, because the Code refers to it by a
special designation or name, i.e. the contract of sale.
its equivalent.
Q: A obliged himself to deliver a certain thing to B.

Upon delivery, B would pay a sum of money to A.
What kind of contract?
A: It may be a contract of lease (no transfer of
ownership); it may be a contract of carriage. It cannot
be a contract of agency because in that contract,
the agent (B) does not pay for the price.
Q: A COS is essentially onerous and commutative?
A: Essentially onerous, but not always commutative -- it may be aleatory, that is, what one receives
may in time be greater or smaller than that what
he has given.
Example: the sale of a genuine sweepstakes ticket
(Paras)
Q: Sale is perfected by delivery?
A: No. Perfected upon meeting of the minds as to the
thing which is the object of the contract and upon the
price. There can
be no transfer of ownership
without delivery but delivery need not be
actual.(Baviera)
There can be no valid contract without meeting of
the minds because all kinds of contracts would require
such. (Uribe)
Sale of a right may also be perfected by mere
consent.
Ownership does not necessarily pass upon
delivery because a COS may be absolute or
conditional. If it is absolute,
ownership passes
upon delivery, absolute nga eh (no reservation of
ownership, so kahit wala pang bayad pwede). For
example, sobrang bait ng kaibigan mo diniliver na
sayo yung object pero sabi sige bayaran mo na lang
ako within the year
(Uribe).
Q: Is Contract to Sell same as Conditional Contract of
sale?
SALES REVIEWER by SABA
I. In General
A: No. CTS is a kind of conditional sale, but not all

conditional sale is a CTS.
Q: In conditional sale, is ownership transferred upon
full payment of the price?
A: No. Because full payment of the price may not be
the condition, or may not be the only condition.
Kahit bayad ka na in full, pero kung may iba pang
conditions na hindi nafufulfill, as in sale of a
condominium, ownership is not transferred yet
(Uribe)
Example of real contracts?

Both mutuum and commodatum; pledge, deposit
Q: Other characteristics of COS?

A: Bilateral --- which results in reciprocal obligations.
It cannot be unilateral because both parties have
obligations. Example of unilateral contract --commodatum
Contract to sell
Q: Is a Contract of Sale gratuitous?
A: No. It is onerous otherwise the transfer of
ownership could be a donation. Note, donation is not a
contract, it is an act. (Uribe)
1. Upon fulfillment of
the
suspensive
condition, which is the
full payment of the
purchase
price,
ownership
will not
automatically transfe
r
to
the
buyer
although the property
may
have
been
previously delivered
to
him.
The
prospective seller still
has to convey title to
the prospective buyer
by entering into a
contract of absolute
sale.
The obligation of the
seller to sell becomes
demandable
only
upon the happening
of the suspensive
condition, that is, the
full payment of the
purchase price by the
buyer. It is only upon
the existence of the
contract of sale that
the seller becomes
obligated to transfer
the ownership of the
thing sold to the
buyer. Prior to the
existence
of
the
contract of sale, the
seller is not obligated
to
transfer
the
ownership
to
the
buyer, even if there is
a contract to sell
between them.
Q:
Q:
A:
Is sale on installments a conditional sale?
Q: Is a Contract of Sale commutative?

A: Yes. Because the values exchanged are almost
equivalent to each other. Ordinarily, the values
should be equal. Why, dahil ganyan ang Pinoy.
Canvass muna dito, canvass doon bago bumili ng
isang bagay (Uribe)
Q: Can a Contract of Sale be aleatory?
A: Yes, by way of exception. Example is the sale of a
sweepstakes ticket (sale of hope).
Uribe: Sa ngayon around 340million ang jackpot.
The jackpot is napakalayo sa halaga ng
20pesos
na pinambili mo ng lotto ticket.
Q: Why is there no equivalent of values in aleatory
contracts?
A: Because the obligation of the other party is not
certain to arise. In other words, because of the
risk of fulfillment. (Uribe)
Q: Is there a sale formal in character?
A: Yes. Sale of a large cattle as you have learned in
your Oblicon (Uribe)
Q: Whether the thing is determinate or not, when
would this be relevant?
A: Under the concept of loss (Art. 1189) / obligation
to preserve the thing (Art. 1163)
Art. 1189. When the conditions have been imposed
with the intention of suspending the efficacy of an
obligation to give, the following rules shall be
observed in case of the improvement, loss or
deterioration of the thing during the pendency of
the condition:
(1) If the thing is lost without the fault of the
debtor, the obligation shall be extinguished.
(2) If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages; it
is understood that the thing is lost when it
perishes, or goes out of commerce, or
disappears in such a way that its existence is
unknown or it cannot be recovered;
(3) When the thing deteriorates without the
fault of the debtor, the impairment is to be
borne by the creditor;
(4) If it deteriorates through the fault of the
debtor, the creditor may choose between the
Q:
Where does the
distinction
lie
between
conditional contract of sale
and contract to sell (See
Carrascoso, Jr. vs.
CA; Ursal vs. CA) Conditional
contract of sale
1. The fulfillment of the
suspensive condition renders
the sale absolute and affects
the sellers title thereto such
that if there had already been
previous delivery of the
property subject of the sale to
the
buyer,
ownership
thereto automatically transfer
s to the buyer by operation of
law without any further act
having to be performed by the
seller.
A: Not necessarily. Because it pertains only to

manner of payment and has nothing to do with the
transfer of ownership.
rescission of the obligation and its fulfillment,

with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by
time, the improvement shall inure to the
benefit of the creditor;
(6) If it is improved at the expense of the
debtor, he shall have no other right than that
granted to the usufructuary. (1122)
4. There is
greater
freedom
in
determining
the price
5. the giving of
the price may
generally end
the obligation
of the buyer.
5. the giving of
the object in lieu
of the credit may
extinguish
completely
or
partially
the
credit
(depending upon
the agreement)
NOTE: If the pre-existing obligation is not in
money, it will not be covered by the law on
sales but the law on novation. Dacion may
also be covered by the law on sales whether
the pre-existing obligation is a debt in money.
Art. 1163. Every person obliged to give something

is also obliged to take care of it with the proper
diligence of a good father of a family, unless the
law or the stipulation of the parties requires
another standard of care. (1094a)
Q: Sale of real property or personal property, under
what concept of rules would this be relevant?
A: Statute of Frauds (Art. 1403)/ Remedies/ Double
Sale (Article 1544)/ Prescription/ as to what law
should apple, that is, whether Maceda Law (for
Personal Property) or the Recto Law (for Real
Property)
Q: Distinguish Contract of Sale from Dacion en Pago.

Table taken from Paras
Contract
of
Dacion en Pago
Sale
1. there is no
1. there is a prepre-existing
existing credit
credit
2. gives rise to
2. extinguishes
obligation
obligation
3. the cause or
3. the cause or
consideration
consideration
here is the
here from the
price from the
viewpoint of the
viewpoint
of
person offering
the seller; or
the dation in
the obtaining
payment is the
of the object
extinguishment
from
the
of his debt form
viewpoint
of
the viewpoint of
the buyer.
the creditor, it is
the acquisition of
the
object
Q: Why is there a need to distinguish Contract of sale

from dacion en pago?
A: To avoid confusion, because there are similarities
between these two concepts.
Q: What are these similarities?
A: Both transactions may be governed by the law on
sales.
Both transactions involve transfer of ownership.
Both involve delivery. In sale, actual delivery; in
dacion en pago, promise to deliver.
Q: What about the distinctions?
A: It is most important to distinguish the nature first--Contract of sale is a contract, a source of
obligation; dacion en pago is a mode of
extinguishment of obligation. (Refer to the table above)
Q:
A:
Distinguish Absolute sale from Conditional Sale

Absolute sale no condition
Conditional sale there is a condition, as when
there is a sale with a pacto de retro, a right to
repurchase or redeem;
or when there are
suspensive conditions, or when the things sold merely
possess a potential existence.
Q: A issued a receipt in the following tenor: Received
from B the amount of 50T as partial payment for the car
and the balance to be paid at the end of the month.
Signed by A. September 30.
Contract to sell?
A: No. For it to be a contract to sell, there must be
reservation of ownership. It cannot also be a contract
of sale because Contract of sale is of two kinds--absolute and conditional.
Massachussetts Rule--- whether the contract is a
Contract of sale or contract for a piece of work.
Used in the Philippines. If specially done at the
order of another, this a contract for a piece of work.
New York Rule --- If the thing already exists, it is a
SALE; if not, WORK.
Q: Distinguish Contract of Sale from Contract to Sell.

Taken from the case of Torcuator vs. Bernabe
Contract of Sale
Contract to Sell
Title passes to the Ownership
is
buyer upon delivery reserved in the seller
of the thing sold.
and is not to pass
until the full payment
of the purchase price
is made.
Non-payment of the Full payment is a
price is a negative positive suspensive
resolutory condition
condition
The vendor has lost The title remains in
and cannot recover the vendor if the
the ownership of the vendee does not
land sold until and comply
with
the
unless the contract condition precedent
of sale is itself of making payment at
resolved and set the time specified in
aside.
the contract.
offered in lieu of
the
original
credit.
4.
There
is
lesser freedom
in
determining
the price.
A contract of sale is normally commutative and

onerous: not only does each one of the parties assume
a correlative obligation (the seller to deliver and
transfer ownership of the thing sold and the buyer to
pay the price),but each party anticipates performance
by the other from the very start. While
in a sale
the obligation of one party can be lawfully subordinated
to an uncertain event, so that the other understands
that he assumes the risk of
receiving nothing for
what he gives (as in the case of a sale of hopes or
expectations, emptio spei), it is not in the usual course
of business to do so;
hence,
the
contingent
character of the obligation must clearly appear. (Gaite
vs. Fonacier)
Sale is essentially onerous, and if there is doubt as
to whether the parties intended a suspensive condition
or a suspensive period for the payment of
the
agreed price, the doubt shall be settled in favor of the
greatest reciprocity of interests, which will obtain if the
buyers obligation is is deemed to be
actually
existing, with only its maturity postponed or deferred.
(Id.)
D. Stages
1. Negotiation/ Preparation
2. Perfection Arts. 1315, 1475
Art. 1315. Contracts are perfected by mere consent,
and from that moment the parties are bound not
only to the fulfillment of what has been expressly
stipulated but also to all the consequences which,
according to their nature, may be in keeping with
good faith, usage and law.
Art. 1475. The contract of sale is perfected at the
moment there is a meeting of minds upon the thing
which is the object of the contract and upon the
price.
From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contracts.
3. Performance Arts. 1191, 1403 (2)
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.
The court shall decree the rescission claimed,
unless there be just cause authorizing the fixing of
a period.
This is understood to be without prejudice to the
rights of third persons who have acquired the
thing, in accordance with Articles 1385 and 1388
and the Mortgage Law.
Art.
1403.
The
following
contracts
are
unenforceable, unless they are ratified:
x x x (2) Those that do not comply with the
Statute of Frauds as set forth in this number. In the
following cases an agreement hereafter made shall
be unenforceable by action, unless the same, or
some note or memorandum, thereof, be in writing,
and subscribed by the party charged, or by his
agent; evidence, therefore, of the agreement
cannot be received without the writing, or a
secondary evidence of its contents:
(a) An agreement that by its terms is
not to be performed within a year
from the making thereof;
(b) A special promise to answer for
the debt, default, or miscarriage of
another;
(c)
An
agreement
made
in
consideration of marriage, other than
a mutual promise to marry;
(d) An agreement for the sale of
goods, chattels or things in action, at
a price not less than five hundred
pesos, unless the buyer accept and
receive part of such goods and
chattels, or the evidences, or some
of them, of such things in action or
pay at the time some part of the
purchase money; but when a sale is
made by auction and entry is made
by the auctioneer in his sales book,
at the time of the sale, of the amount
and kind of property sold, terms of
sale, price, names of the purchasers
and person on whose account the
sale is made, it is a sufficient
memorandum;
(e) An agreement of the leasing for a
longer period than one year, or for
the sale of real property or of an
interest therein;
(f) A representation as to the credit of
a third person.
Q: What are the Stages of a contract?

A: Negotiation,
perfection,
performance,
consummation. Negotiation is initiated by an offer.
Perfection is initiated by the offerer.
Q: When is a contract of sale perfected?
A: Upon meeting of the minds upon the thing which is
the object of the contract and upon the price. Object
can be a thing or a right, but not a service because
service cannot be a subject of transfer
of
ownership.
Q: What are the examples of a perfected contract but
unenforceable?
A: Unenforceable contracts such as those covered by
the Statute of Frauds.
E. Kinds of Sale Arts. 1458 (2), 1488, 1544,
1403, Maceda Law, Recto Law, 1477, 1501
English Rule --- If material is more valuable, SALE;

if skill is more valuable, WORK.
Art. 1488. The expropriation of property for public

use is governed by special laws.
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.
Art.
1403.
The
following
contracts
are
unenforceable, unless they are ratified:
(1) Those entered into in the name of another
person by one who has been given no
authority or legal representation, or who has
acted beyond his powers;
(2) Those that do not comply with the Statute
of Frauds as set forth in this number. In the
following cases an agreement hereafter made
shall be unenforceable by action, unless the
same, or some note or memorandum, thereof,
be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore,
of the agreement cannot be received without
the writing, or a secondary evidence of its
contents:
not to be performed within a year
from the making thereof;
another;
(c)
An
agreement
made
in
memorandum;

interest therein;
a third person.
(3) Those where both parties are incapable of
giving consent to a contract.
Maceda Law in the Phillippines applies to the purchaser
of real property by installment payments when the
purchase becomes cancelled by a delinquency in
payment. It provides the buyer with a right to a refund
as a requisite for cancellation of contract due to
delinquency when the buyer has paid at least two
years. The refund is 50% of total payments; additional
5%
per
year
after
5th
year.
Article 1484 incorporates Act No. 4122 better known as
"Recto law" or installment sales law, in which the
vendor can exercise the following remedies.
1. Exact fulfillment, should the buyer failed to pay any
installments
2. Cancel the sale, should the buyer's failure to cover
two
or
more
installments
3. Foreclose the chattel mortgage on the thing sold if
one is constituted, should the buyer's failure to cover
two
or
more
installments.
*The remedies are recognized as alternatives and not
cumulative, should the buyer chose to foreclose the
chattel mortgage he/she cannot exercise the other two
remedies
*The rationale of the law is to prevent the abuses in
terms of chattel mortgages where the buyer can buy the
property at a lower price in the foreclosure sale. It also
aims to correct the evil created by desire for luxury by
means of buying personal property without sufficient
means
*The provision is also applicable to financing
transactions derived or arising from sale of movables
on installments.
Art. 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.
Art. 1477. The ownership of the thing sold shall be
transferred to the vendee upon the actual or
constructive delivery thereof.
Art. 1501. With respect to incorporeal property, the
provisions of the first paragraph of article 1498
shall govern. In any other case wherein said
Art. 1458. (2) A contract of sale may be absolute or

conditional.
Art. 1498. (1) When the sale is made through a

public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the
object of the contract, if from the deed the contrary
does not appear or cannot clearly be inferred.
1.
As to the nature of the subject matter

a. Sale of real property
b. Sale of personal property
2.
As to whether the object is tangible or
intangible/ corporeal or incorporeal
a. sale of thing
b. sale of right
3.
4.
condition
As to validity or defect of the transaction

a. valid sale
b. rescissible
c. voidable
d. unenforceable
e. void
As to the presence or absence of
a. absolute sale
b. conditional sale
contract to sell
Where by a a writing in Manila seller guaranteed the

arrival of the tobacco in New York in good condition,
and at the time the tobacco was in transit on the high
seas and by its term the tobacco was to be delivered in
New York, the contract was executor and the title to it
did not pass until the arrival of the tobacco in New York.
The contract was executor and the sale was not
complete until after the arrival of the tobacco in New
York in good condition. (McCullough vs. Berger)
The provisions of paragraph 3, Article 1544 of the Civil
Code, do not apply to a case where the sale in favor of
one party was of the property itself, while the
transaction in favor of another was either a mere
promise to assign or, at most, an actual assignment of
the right to repurchase the same property. (Dichoso vs.
Roxas)
In contracts to sell, where ownership is retained by the
seller and is not to pass until the full payment of the
price, such payment, as we said, is a positive
suspensive condition, the failure of which is not a
breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title
from acquiring binding force, in accordance with Article
1117 of the Old Civil Code. To argue that there was
only a casual breach is to proceed from the assumption
that the contract is one of absolute sale, where nonpayment is a resolutory condition. (Luzon Brokerage vs.
Maritime Building)
A judicial action for the rescission of a contract is not

necessary where the contract provides that it may be
revoked and cancelled for violation of any of its terms
and conditions. (Id.)
While generally the registered owner of a property is
the proper party to bring an action to quiet title, the
remedy may also be availed of by a person other than
the registered owner. (Portic vs. Cristobal)
In a contract to sell ownership is retained by the vendor
and it will not pass to the vendee until full payment of
the purchase price. (Id.)
Registration does not vest, but merely serves as
evidence of title. (Id.)
It is settled that a perfected contract of sale cannot be
challenged on the ground of the non-transfer of
ownership of the property sold at that time of the
perfection of the contract, since it is consummated upon
delivery of the property to the vendee. It is through
tradition or delivery that the buyer acquires ownership
of the property sold. As provided in Article 1458 of the
New Civil Code, when the sale is made through a public
instrument, the execution thereof is equivalent to the
delivery of the thing which is the object of the contract,
unless the contrary appears or can be inferred. The
record of the sale with the Register of Deeds and the
issuance of the certificate of title in the name of the
buyer over the property merely bind third parties to the
sale. (Heirs of Jesus Mascunana vs. CA)
A deed of sale is considered absolute in nature where
there is neither a stipulation in the deed that title to the
property sold is reserved in the seller until full payment
of the price, nor one giving the vendor the right to
unilaterally resolve the contract the moment the buyer
fails to pay within a fixed period. (Id.)
The condition in the deed that the balance shall be paid
to the vendor by the vendee as soon as the property
sold shall have been surveyed in the name of the
vendee and all papers pertinent and necessary to the
issuance of a separate certificate of title in the name of
the vendee shall have been prepared is not a condition
which prevented the efficacy of the contract of sale.(Id.)
Article 1169 of the New Civil Code provides that 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. (Id.)
Banks cannot merely rely on certificates of title in
ascertaining the status of mortgaged properties; as their
business is impressed with public interes, they are
expected to exercise more care and prudence in their
dealings than private individuals. (Ursal vs. CA)
A contract to sell is a bilateral contract whereby the
prospective seller, while expressly reserving the
ownership of the subject property despite delivery
therof to the prospective buyer, binds himself to sell the
said property exclusively to the prospective buyer upon
provisions are not applicable, the placing of the

titles of ownership in the possession of the vendee
or the use by the vendee of his rights, with the
vendor's consent, shall be understood as a
delivery.
Reciprocal obligations are those which arise from the

same cause, and in which each party is a debtor and a
creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are to
be performed simultaneously such that the performance
of one is conditioned upon the simultaneous fulfillment
of the other. A contract of sale is a reciprocal obligation.
The seller obligates itself to transfer the ownership of
and deliver a determinate thing, and the buyer obligates
itself to pay therefor a price certain in money or its
equivalent. (Carrascosos, Jr. vs. CA)
A notice of lis pendens is an announcement to the
whole world that a particular real property is in litigation,
and serves as a warning that one who acquires an
interest over said property does so at his own risk, or
that he gambles on the result of the litigation over said
property. (Id.)
In a conditional contract of sale, if the suspensive
condition is fulfilled, the contract of sale is thereby
perfected, such that if there had already been previous
delivery of the property subject of the sale to the buyer,
ownership thereto automatically transfers to the buyer
by operation of law without any further act having to be
performed by the seller. Whereas in a contract to sell,
upon fulfillment of the suspensive condition, ownership
will not automatically transfer to the buyer although
the property may have been previously delivered to
him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of
absolute sale. (Id.)
Knowledge of facts acquired or possessed by an officer
or agent of a corporation in the course of his
employment, and in relation to matters within the scope
of his authority, is notice to the corporation, whether he
communicates such knowledge or not. (Id.)
A non-existent obligation cannot be a subject of
rescission. (Sacobia Hills Development Corporation vs.
Ty)
A contract of sale is defined as an agreement whereby
one of the contracting parties obligates himself to
transfer the ownership and to deliver a determinate
thing, and the other to pay the price certain in money or
its equivalent. (Edrada vs. Ramos)
The fact that there is a stated total purchase price
should not lead to the conclusion that a contract of sale
had been perfected --- before a valid and binding
contract of sale can exist, the manner of payment of the
purchase price must first be established, as such
stands as essential to the validity of the sale. (Id.)
A requisite for the judicial enforcement of an obligation
is that the same time is due and demandable. The
absence of a stipulated by which the purchase price
should be paid indicates that at the time of filing of the
complaint, the obligation to pay was not yet due and
demandable. (Id.)
F. Distinguished from other transactions
1.
Contract for a piece of work
(Massachusetts rule) Art. 1467
Art. 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.
Q: A and B went to an outlet of shoes. A, not finding
any pair of shoes which fits him, had to order a pair of
shoes, to be delivered after 15months according to
the verbal agreement between A and the store owner.
As shoe size is 23inches. B
found a picture of
shoes in the store normally sold in the market but not
available at that time, to be delivered after
15months, at P5,000 per pair, payment upon
delivery. Contract for a piece of work?
A: As to A, it is a contract for a piece of work. But as
to B, it is contract of sale.
Q: May the contracts entered into by A and B covered
by the Statute of Frauds?
A: Both YES. Article 1403(2a)An agreement that by
its terms is not to be performed within a year (in this
case 15months
pa nga eh) from the making
thereof.
Q: What if the agreement for delivery is 6months,
covered by Statute of Frauds?
A: Yes. Article 1403(2d)an agreement for the sale
of goods, chattels or things in action, at a price not less
than 500 pesos
shall be in writing.
2.
Contract of Lease with option to buy
Art. 1485
Art. 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.
3.
Dacion en Pago Art. 1245
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.
4.
Barter or Exchange Arts. 1468,
1638, 1954
Art. 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.
Art. 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.
fulfillment of the condition agreed upon, that is, full

payment of the purchase price. (Id.)
Art. 1954. A contract whereby one person transfers

the ownership of non-fungible things to another
with the obligation on the part of the latter to give
things of the same kind, quantity, and quality shall
be considered a barter.
Q: Agreement between A and B. A obliged himself to
deliver a watch valued at 800,000. B obliged himself to
give his car plus
350,000.What law?
A:
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 (in this case CAR)
exceeds
the amount of the money or its equivalent; otherwise, it
is a sale.
Thus, if the value of the car exceeds 350,000
BARTER.
If the value of the car is equal or lower than
350,000 --- SALE
The price of watch is irrelevant.
Q: May the Law on Barter be applicable to Law on
Sales?
A: If the agreement is not covered by the provision of
the Law on Barter, it will be covered by the Law on
Sales.
5.
Agency to sell Art. 1466
Art. 1466. In construing a contract containing
provisions characteristic of both the contract of
sale and of the contract of agency to sell, the
essential clauses of the whole instrument shall be
considered.
The fact that the price of the machine was fixed in

the contract makes the latter not a lease but a purchase
and sale because in contracts of lease, as
distinguished from those of purchase and sale, it is
plain redundancy to fix or make any mention of the
price of the thing given in lease. (Heacock Co.
vs. Buntal Manufacturing Co. and Nieva)
In order to classify a contract, due regard must be
given to its essential clauses. In the contract in
question, what was essential, as constituting its
cause and subject matter, is that the plaintiff was
to furnish the defendant with the beds which the
latter might order, at the price stipulated, and that
the defendant was to pay the price in the manner
stipulated. These are precisely the essential
features of a contract of purchase and sale. There
was the obligation on the part of the plaintiff to
supply the beds, and, on the part of the defendant,
to pay their price. These features exclude the legal
conception of an agency or order to sell whereby
the mandatory or agent received the thing to sell it,
and does not pay its price, but delivers to the
principal the price he obtains from the sale of the
thing to a third person, and if he does not succeed
in selling it, he returns it. By virtue of the contract
between the plaintiff and the defendant, the latter,
on receiving the beds, was necessarily obliged to
pay their price within the term fixed, without any
other consideration and regardless as to whether
he had or had not sold the beds. (Quiroga vs.
Parsons Hardware)
II. Essential Elements of a Contract of Sale
A.
Essential Elements
1. Consent of the Contracting Parties
Parties to the Contract
Capacity of the Parties Arts. 1489,
1390, 1403
In the instant case, it is a contract of sale.

Because of the stipulation that B has to pay the maong
pants within 30days
regardless of whether or not B
sold the maong pants. It is contrary to an agency to sell
where the agent has the obligation to deliver the price
upn delivery. With delivery, ownership passes to B.
Apply the principle of res perit domino the buyer
(B) bears the loss. Therefore, he has to pay the
price.
Note: Agency does not always involve a contract.
It may only be an instrumentality. (Uribe)
a.
absolute Arts. 1327, 1328,
Art. 234 Family Code as amended by RA 6809
b.
relative Art. XII, Secs. 7 & 8,
1987 Constitution
Arts. 1490-1492, 1533(5),
1476(4), Art. 124 Family Code
Art. 1489. All persons who are authorized in this Code to
obligate themselves, may enter into a contract of sale,
saving the modifications contained in the following
articles.
Where necessaries are those sold and delivered to a
minor or other person without capacity to act, he must
pay a reasonable price therefor. Necessaries are those
referred to in Article 290.
Art. 1390. The following contracts are voidable or
annullable, even though there may have been no
damage to the contracting parties:
(1) Those where one of the parties is incapable
of giving consent to a contract;
(2) Those where the consent is vitiated by
mistake,
violence,
intimidation,
undue
influence or fraud.
Q: A obliged himself to deliver maong pants to B

which will be sold by B in Isabela. It was stipulated in
the contract that B has to pay the price of maong
within 30days from delivery to B. It was stipulated that B
will receive 20% commission on sale.
The
maong pants were delivered to B. However, before B
could sell the goods, the store was burned. Can B be
compelled to pay the price?
A: YES.(Note: This case is similar to Quiroga vs.
Parsons) Apply Article 1466In construing a contract
characteristic of both
the contract of sale and of the
contract of agency to sell, the ESSENTIAL CLAUSES of
the whole instrument shall be
considered.
Art. 1403. The following contracts are unenforceable,

unless they are ratified:
(1) Those entered into in the name of another
person by one who has been given no
authority or legal representation, or who has
acted beyond his powers;
(2) Those that do not comply with the Statute
of Frauds as set forth in this number. In the
following cases an agreement hereafter made
shall be unenforceable by action, unless the
same, or some note or memorandum, thereof,
be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore,
of the agreement cannot be received without
the writing, or a secondary evidence of its
contents:
not to be performed within a year from the
making thereof;
another;
(c)
An
agreement
made
in
memorandum;
interest therein;
a third person.
(3) Those where both parties are incapable of
giving consent to a contract.
Art. 1327. The following cannot give consent to
a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deafmutes who do not know how to write.
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. 234 Family Code. Emancipation takes

place by attainment of majority. Unless
otherwise provided, majority commences at
the age of eighteen years. (As amended by RA
6809)
1987 Constitution. Article XII. Section 7. Save in
cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations,
or
associations qualified to
acquire or hold
lands of the public domain.
Section 8. Notwithstanding the provisions of
Section 7 of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship
may be a transferee of private lands,
subject to
limitations provided by law.
Art. 1490. The husband and the wife cannot
sell property to each other, except:
(1) When a separation of property was agreed
upon in the marriage settlements; or
(2) When there has been a judicial separation
or property under Article 191. (1458a)
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.
Art. 1492. The prohibitions in the two
preceding articles are applicable to sales in legal
redemption,
compromises
and
renunciations.
Art. 1533. x x x (5) The seller is bound to
exercise reasonable care and judgment in making
These contracts are binding, unless they are annulled

by a proper action in court. They are susceptible of
ratification.
Art. 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction
in lots, each lot is the subject of a separate
contract of sale.
(2) A sale by auction is perfected when the
auctioneer announces its perfection by the fall
of the hammer, or in other customary manner.
Until such announcement is made, any bidder
may retract his bid; and the auctioneer may
withdraw the goods from the sale unless the
auction has been announced to be without
reserve.
(3) A right to bid may be reserved expressly by
or on behalf of the seller, unless otherwise
provided by law or by stipulation.
(4) Where notice has not been given that a sale
by auction is subject to a right to bid on behalf
of the seller, it shall not be lawful for the seller
to bid himself or to employ or induce any
person to bid at such sale on his behalf or for
the auctioneer, to employ or induce any
person to bid at such sale on behalf of the
seller or knowingly to take any bid from the
seller or any person employed by him. Any
sale contravening this rule may be treated as
fraudulent by the buyer.
Art. 124. The administration and enjoyment of
the conjugal partnership shall belong to
both
spouses jointly. In case of disagreement, the
husband's decision shall prevail,
subject
to
recourse to the court by the wife for proper remedy,
which must be availed of
within five years from the
date of the contract implementing such decision.
In the event that one spouse is incapacitated
or
otherwise
unable
to
participate
in
the
administration of the conjugal properties, the
other spouse may assume sole powers of
administration. These powers do not include
disposition or encumbrance without authority of the
court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition
or encumbrance shall be void. However, the
transaction shall be construed as a
continuing offer on the part of the consenting
spouse and the third person, and may be
perfected
as a binding contract upon the
acceptance by the other spouse or
authorization by the court before the offer is
withdrawn by either or both offerors.
Q:
Is delivery an essential element?
A:
NO.
Q: What are the essential elements of a contract of

sale?
A: Consent, Subject matter, Cause--- WRONG!!!
Isang malaking WRONG para kay Uribe. These
are essential elements of a contract, and not a
contract of sale. A contract of sale is a special
contract. Tengena ang arte. The essential

elements of a contract of sale are:
1. Consent of the CONTRACTING PARTIESnot
just one party, but both of them. Otherwise the
contract may be void, voidable, unenforceable.
2. Subject Mattermay be right or thing
3. CauseAs to the buyer, it is the obtaining of
the object. As to the seller, it is the delivery of the
price.
Q: Can there be a Contract of Sale where the parties
did not actually give consent?
A: Yes. Absolutely simulated contracts. Both parties
did not actually intend to bind themselves.
Q: What may be the purpose in entering this
absolutely simulated contract?
A: To defraud creditors (third person); debtor ang
sellermeaning debtor-seller will simulate a sale
para kunwari wala na syang property na pwedeng
habulin ng creditor.
Q: What about the reason for entering a relatively
simulated contract?
A: To lessen taxes.
Q: Consent was given by both parties. Status of the
contract?
A: It depends on whether the parties are capable to
give consent or not. If only one is capacitated--VOIDABLE;
if
both
are
incapacitated
UNENFORCEABLE. Lack of consent--- VOID
Q:
A:
May service be an object of a contract of sale?

NO. Service cannot be the subject of ownership.
Q: What may
consent?
A: Relative or
intend to be
contracts.
FORGERY.
transpire if the parties did not give

Absolute contract. Both parties did not
bound. These are called fictitious
And this is usually committed by
Q: Contract of Sale, one party is a minor. Guardian

wants to annul the contract. What instances in
which annulment is not an option?
A: Contract
of
necessaries
(Article
1489);
Misrepresentation, as when the minor misrepresented
that he is of aged.
Q: In contract of necessaries, is the contract valid and
binding?
A: It depends if the price is reasonable.
Q: Contract of sale, one party is an alien. Status of
sale?
A: It depends on the subject matterkase land lang
ang bawal nila i-acquire. It also depends on whether
the alien is the buyer or the seller. If the alen is the
buyer, void. Because he is prohibited
from
acquiring. If he is the seller, it is valid because he may
dispose.
Requirement for an alien to acquire lands located
in the Phils.:
1. natural-born Filipino citizen (allowed only to
acquire residential lands) Article XII, Sec. 3, 7, 8
a resale, and subject to this requirement may

make a resale either by public or private
sale. He
cannot, however, directly or indirectly buy the goods.
10

Remember the case of Rubias vs. Batiller

The permanent disqualification of public and
judicial officers and lawyers grounded on public
policy differs from the first three cases of
guardians, agents and administrators (Article 1491,
Civil Code), as to whose transactions it had been
opined that they may be "ratified" by means of and in
"the form of a new contract, in which cases its
validity
shall
be
determined
only
by
the
circumstances at the time the execution of such
new contract. The causes of nullity which have
ceased to exist cannot impair the validity of the
new contract. Thus, the object which was illegal at
the time of the first contract, may have already
become lawful at the time of the ratification or
second contract; or the service which was
impossible may have become possible; or the intention
which could not be ascertained may have been
clarified by the parties. The ratification or second
contract would then be valid from its execution;
however, it does not retroact to the date of the
first contract."
Uribe: Contract involving the Guardian, Agent,
Executor are merely voidable because they may
be ratified. Why enclosed in quotation marks?
Because it is not ratification used in the same
sense as in voidable contracts. It does not
retroact to the date of the first contract.
Q: Does the civil code supports this voidable theory?
A: Yes. In 1409 (7) The following contracts are
inexistent and void from the beginning: (7) those
expressly PROHIBITED or declared void by law.
In 1491, it is state the following persons
CANNOT --- meaning di pwede. Ang point ni Uribe,
walang sinabi sa 1491 na VOID, di tulad sa
1409(7) na express yung pagsasabi na VOID.
But De Leon said that if 1490 is violated, it is
VOID. And 1490 has the same reason as in 1491,
that is, on grounds of public policy, therefore there
is n reason to distinguish them. Both articles are void if
violated. Ewan ko na kung alin ang paniniwalaan. But
for me mas maganda yung view
ni De Leon na both
1490 and 1491 are grounded on public policy therefore
VOID if violated. I
dont adhere to jurisprudence,
because it may be reversed at any time lalo na at ang
Supreme
Court ay by division kung magdecide,
buti sana kung laging en banc. (Saba, hahaha)
Case of Mapalo vs. Mapalo
st
1 contract eastern portionthis is donationno
problem here because spouses Mapalo
actually
gave consent.
nd
2 contractthis is the one in controversythis is
the sale. Because Miguel (the donee) sold the
lot (east and west) to Narcisso. The western part
cannot be sold by Miguel, because that
belonged
to the spouses. And since the spouses did not give
consent to the sale, the same is
VOID. Narcisso is
entitled only to the eastern portion. The western portion

must be given to the
spouses. The Narcsissos are
not buyers in good faith. Before the sale is made, they
went to the
spouses to ask if they (spouses) permit
their brother to sell the lot. It only means that Narcissos
are aware that the spouses possessed the lot.
Contracts without a cause or consideration produce no
effect whatsoever. The statement of a false cause
renders the contract voidable, unless it is supported by
another real and licit consideration. Inexistent contract
cannot be the subject of prescription. (Mapalo vs.
Mapalo)
Sale of land by a non-Christian inhabitant without
approval of provincial governor is null and void for lack
of executive approval. (Miguel vs. Catalino)
As a rule, only a Filipino citizen can acquire private
lands in the Philippines and the only instances when a
foreigner can own private lands are by hereditary
succession and if he was formerly a natural-born
Filipino citizen who lost his Philippine citizenship.
(Estate of Salvador Serra Serra vs. Heirs of Primitivo
Hernaez)
A partys alleged possession of TCT and actual
possession of the subject land, although strong proof of
ownership, are not necessarily conclusive where the
assertion of proprietary rights is founded on dubious
claim of ownership. (Id.)
2.
Subject Matter (things and
rights) Arts. 1347, 1311, 1636 (goods)
Requisites
Art.
1458(1),
1459-1462, 1347-1349
Rules on the object of a
contract of sale Arts. 1463-1465
Assignment of Credit and
other incorporeal rights Arts. 1624-1635
Right as an object is not a SALE but ASSIGNMENT. It
may be in the form of donation or dacion en pago. The
SC is consistent that dacion en pago involves not a
thing but a RIGHT.
Requirement as to RIGHT:
It must not be intransmissible

Article 1311
rd
Sale of a right to bind 3 persons, requires: Art. 1625.

An assignment of a credit, right or action shall
produce no effect as against third person, unless it
appears in a public instrument, or the instrument is
recorded in the Registry of Property
in case
the assignment involves real property.
if Personal propertymust be in a public
instrument
if real propertymust be registered
Requirement as to THING:
must not be outside the commerce

of man
Q:
Sale of a generic thing, valid sale?
through hereditary succession
11

Q:
A:
Sale of a dog?
VOID. Not determinate.
Q:
A:
Sale of a car when would be valid?

Honda Civic, 2006 model, red color for 1M.
Q:
A:
Emptio rei sperati, meaning?

Sale of future things.
Q: A obliged himself to deliver to B 100 cavans of

palay that will be harvested from a specific ricefield in
December 2011.
What if by August no palay was harvested? Status
off the sale?
A: There are 2 issues here one is that the object is
not yet in existence and another, that there was
failure to deliver.
Art. 1462 Future goods may the object of sale.
May A be held liable for damages. In answering
this question it is important to know what is the
cause of the failure to harvest. Failure to deliver
goes into the performance, it does not affect the
validity of the sale. If fortuitous event, A is not
liable. If A is guilty of fraud or negligence, he is
liable for damages under Article 1170
Q: Sale of a lotto ticket drawn a week ago?
A: VOID only if sale of VAIN HOPE, meaning kapag
yung ticket TALO. Pero kung nanalo yung
ticket, it is
valid because in that case RIGHT na yung binebenta
hence hindi na SALE OF VAIN
HOPE.
Q: Why sell a winning ticket?
A: To avoid identification, as when the winner lives in
Mindanao. It is not safe to go to Manila to
claim the
prize.
Q: Sale of a parcel of land to B with a right to
repurchase within one year. A delivered the land to B
(by the execution of the document ha, not actual
delivery). On the 5th month, B sold the land to
th
C. However, on the 9 month, A offered to
repurchase the land.
Status of the sale between B and C? Who has a
better right?
A: Sale between B and C is valid. Things subject to
resolutory condition may be the object of a
contract
of sale. Article 1465. Even in sale with right to
repurchase ownership passes to the buyer upon
delivery. However it is subject to resolutory condition.
Ordinarily, A has a better right if he exercised the
redemption within the period stipulated. Except,
if C proves that he is a buyer in good faith and for
valuethat is, that A did not register his right to
repurchase. Registration serves as constructive
notice to C. But even if As right is not registered,
if C is aware of As right to repurchase, C cannot
claim good faith because that is actual notice.
Q: In order for the sale to be valid, seller must have a

right?
A: Ownership has nothing to do with the validity of
the sale. As long as the 3 essential elements are
present, it is valid. It is only required that the seller
must have a right at the time the object is
delivered.
Whether or not the seller has a right to transfer will only
go to the performance of his
obligation. If he did
not comply with his obligation, he may be liable.
Right of State to recover non-registrable land does not
prescribe. (Martinez vs. CA)
3.
Cause- Arts. 1350, 1352-1353

Price Certain in money Arts.
1469, 1471-1474, 1308; RA 529, RA 8183, PD 72
Lesion Arts. 1470, 1355
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.
Art. 1352. Contracts without cause, or with unlawful
cause, produce no effect whatever. The cause is
unlawful if it is contrary to law, morals, good customs,
public order or public policy.
Art. 1353. The statement of a false cause in contracts
shall render them void, if it should not be proved that
they were founded upon another cause which is true
and lawful.
Art. 1469. In order that the price may be considered
certain, it shall be sufficient that it be so with reference
to another thing certain, or that the determination
thereof be left to the judgment of a special person or
persons.
Should such person or persons be unable or unwilling
to fix it, the contract shall be inefficacious, unless the
parties subsequently agree upon the price.
If the third person or persons acted in bad faith or by
mistake, the courts may fix the price.
Where such third person or persons are prevented from
fixing the price or terms by fault of the seller or the
buyer, the party not in fault may have such remedies
against the party in fault as are allowed the seller or the
buyer, as the case may be.
Art. 1471. If the price is simulated, the sale is void, but
the act may be shown to have been in reality a donation,
or some other act or contract. (n)
Art. 1472. The price of securities, grain, liquids, and
other things shall also be considered certain, when the
price fixed is that which the thing sold would have on a
definite day, or in a particular exchange or market, or
when an amount is fixed above or below the price on
such day, or in such exchange or market, provided said
amount be certain.
A: Yes. 1) if capable of being made determinate; 2)

without the need of further new agreement; 3) at
the time the contract is entered into.
12

Art. 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.
Art. 1308. The contract must bind both contracting
parties; its validity or compliance cannot be left to the
will of one of them.
Republic Act No. 529
June 16, 1950
AN ACT TO ASSURE UNIFORM VALUE TO PHILIPPINE
COIN AND CURRENCY
Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled::
WHEREAS, the value of Philippine coin and currency affects
public interest and is subject to regulation by the Congress of
the Philippines; and
WHEREAS, it has been disclosed that the provisions of
certain obligations contracted in the Philippines purport to
give the obligee the right to require payment in gold or in a
particular kind of coin or currency or in an amount in money
of the Philippines measured thereby, thus obstructing the
power of the Congress to regulate the value of the money of
the Philippines and contravening the policy of the Congress,
here declared, to maintain at all times the equal and stable
power of every peso coined or issued by the Philippines, in
the markets and in the payment of debts; Now, therefore.
Section 1. Every provision contained in, or made with
respect to, any obligation which provision purports to give
the obligee the right to require payment in gold or in a
particular kind of coin or currency other than Philippine
currency or in an amount of money of the Philippines
measured thereby, be as it is hereby declared against public
policy, and null, void and of no effect, and no such provision
shall be contained in, or made with respect to, any obligation
hereafter incurred. Every obligation heretofore or hereafter
incurred, whether or not any such provision as to payment is
contained therein or made with respect thereto, shall be
discharged upon payment in any coin or currency which at
the time of payment is legal tender for public and private
debts: Provided, That, if the obligation was incurred prior to
the enactment of this Act and required payment in a
particular kind of coin or currency other than Philippine
currency, it shall be discharged in Philippine currency
measured at the prevailing rates of exchange at the time the
obligation was incurred, except in case of a loan made in a
foreign currency stipulated to be payable in the same
currency in which case the rate of exchange prevailing at the
time of the stipulated date of payment shall prevail. All coin
and currency, including Central Bank notes, heretofore or
hereafter issued and declared by the Government of the
Philippines shall be legal tender for all debts, public and
private.
REPUBLIC ACT NO. 8183 Approved: June 11, 1996
AN ACT REPEALING REPUBLIC ACT NUMBERED FIVE
HUNDRED TWENTY-NINE AS AMENDED, ENTITLED"AN
ACT TO ASSURE THE UNIFORM VALUE OF PHILIPPINE

COIN AND CURRENCY."
Section 1. All monetary obligations shall be settled in the
Philippine currency which is legal tender in the Philippines.
However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time
of
payment.
Sec. 2. Republic Act Numbered Five Hundred Twenty-Nine
(R.A. No. 529), as amended entitled "An Act to Assume the
Uniform Value of Philippine Coin and Currency," is hereby
repealed.
Sec. 3. This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in two (2) national
newspapers of general circulation. The Bangko Sentral ng
Pilipinas and the Department of Finance shall conduct an
intensive information campaign on the effect of this Act.
Q: Contract of sale entered into by A and B. The price

agreed upon was 1M yen. May that be a valid
sale? Can the seller compel the buyer to pay in
yen?
A: YES. By definition of a contract of sale, it is only
required that the price be in money or its
equivalent. Hence, it may be checks, promissory
note, bill of exchange. letter of credit.
Q: Promissory note has to be negotiable?
A: NO, only in money or its equivalent. Kaya yung
letter of credit kahit hindi negotiable, pwede.
As to whether the seller can compel the buyer to
pay in yen, YES. Because that is the agreement.
And RA 8183 allows payment not in Philippine
currency.
Q: Can the buyer compel the seller to accept 1M
coin? NO. Because today legal tender of P1 or
below is up to P100 only. Yung PD 72, wala nay
un nung 2006 pa.
Q: In the Deed of Sale nothing was mentioned about
the price, valid?
A: YES. Article 1354- although the cause is not
stated in the contract, it is presumed to exist and is
lawful, unless the debtor proves the contrary. In
fact, verbal sale may be valid.
Q: Price in shares of stock, valid?
A: NO. There are different classes of shares
Doctrine of Common Knowledge. Also, shares of
stock differ from day to day and time to time
(1472).
Art. 1472. The price of securities, grain, liquids,
and other things shall also be considered certain,
when the price fixed is that
which the thing
sold would have on a definite day, or in a particular
exchange or market, or when an amount is fixed
above or
below the price on such day, or in
such exchange or market, provided said amount be
certain.
Q: Sale of a car in which the price will be equivalent
to tuition fee of a student for two years, valid?
Art. 1473. The fixing of the price can never be left to the
discretion of one of the contracting parties. However, if
the price fixed by one of the parties is accepted by the
other, the sale is perfected.
13

NO Price is not certain.
Q: Sale of a car valued at 300T, for P1. Valid?

A: YES. Gross inadequacy does not affect the sale.
Article 1470.
If the price is simulated, it is void. But the act may
be shown to be a donation or some other act.
(Article 1471)
Price left to the discretion of one party cannot
be, but perfected when accepted by the other.
(Article 1473)
Price left to third personvalid. Void if such third
person is unable or unwilling to fix it. (Article 1469)
Acceptance which contains request for changes in offer
but does not essentially change terms of offer does not
constitute a counter-offer. (Villonco Realty Co. vs.
Borromeo, Inc.)
The right to rescind contracts is not absolute and is
subject to scrutiny and review by the proper court;
Rescission of reciprocal contracts may be extrajudicially
rescinded unless successfully impugned in court;
Rescission creates the obligation to return the things
which were the object of the contrat with their fruits and
interests. (Goldenrod, Inc. vs. CA)
The manner of payment of the purchase price is an
essential element before a valid and binding contract of
sale can exist; The absence of any formal deed of
conveyance is a strong indication that the parties did
not intend immediate transfer of ownership. (Cruz vs.
Fernando)
Consideration of P1.00 in deed of conveyance is not
unusual; Bad faith and inadequacy of monetary
consideration do not render a conveyance inexistent.
(Morales Devt. Co. vs. CA)
While in ordinary sales for reasons of equity a
transaction may be invalidated on the ground of
inadequacy of price, or when such inadequacy shocks
ones conscience as to justify the courts to interfere,
such does not follow when the law gives to the owner
the right to redeem, as when a sale is made at public
auction, upon the theory that the lesser the easier it is
for the owner to effect the redemption. And so it was
aptly said that when there is the right to redeem,
inadequacy of price should not be material, because the
judgment debtor may reacquire the property or also sell
his right to redeem and thus recover the loss he claims
to have suffered by reason of the price obtained at the
auction sale. (De Leon vs. Salvador)
B.
C.
III.
Natural Elements
1. warranties
2. subrogation
Accidental Elements
Perfection of the Contract
A.
When perfected Arts. 1475-1476,
1479(1)
B.
Contract of Option/ Option Clause/Deed
of Option Arts. 1479, 1324
Art. 1475. The contract of sale is perfected at

the moment there is a meeting of minds upon the
thing which is the object of
the
contract
and upon the price.
From that moment, the parties may
reciprocally demand performance, subject to the
provisions of the law governing the form of
contracts.
Art. 1476. In the case of a sale by auction:
(1) Where goods are put up for sale by auction
in lots, each lot is the subject of a separate
contract of sale.
(2) A sale by auction is perfected when the
auctioneer announces its perfection by the fall
of the hammer, or in other customary manner.
Until such announcement is made, any bidder
may retract his bid; and the auctioneer may
withdraw the goods from the sale unless the
auction has been announced to be without
reserve.
(3) A right to bid may be reserved expressly by
or on behalf of the seller, unless otherwise
provided by law or by stipulation.
(4) Where notice has not been given that a sale
by auction is subject to a right to bid on behalf
of the seller, it shall not be lawful for the seller
to bid himself or to employ or induce any
person to bid at such sale on his behalf or for
the auctioneer, to employ or induce any
person to bid at such sale on behalf of the
seller or knowingly to take any bid from the
seller or any person employed by him. Any
sale contravening this rule may be treated as
fraudulent by the buyer.
Art. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to
sell a determinate thing for a price certain is
binding upon the promissor if the promise is
supported by a consideration distinct from the
price.
Art. 1324. When the offerer has allowed the
offeree a certain period to accept, the offer
may be withdrawn at any time before
acceptance
by
communicating
such
withdrawal, except when the option is founded
upon a consideration, as something paid or
promised.
Consideration not presumed in an accepted

unilateral promise to buy or to sell; Promisee in an
accepted unilateral promise to sell must prove the
existence of consideration; Accepted promise
to sell is an offer to sell and when accepted
becomes a contract of sale. (Sanchez vs. Rigos)
The deed of option or the option clause in a
contract in order to be valid and enforceable must
among other things indicate the definite price at
A:
14

An accepted unilateral promise which specifies the

thing to be sold and the price to be paid when
with a valuable consideration distinct and separate
from the price is what may be properly termed
a perfected contract of option.(Id.)
Q: In order for the OFFERER to be bound, is it
required that an option money be given?
A: NO. Option Contract, consideration need not be in
money. May be something paid or promised.
Q: Assuming that a contract of sale is perfected and
an option money is given, does the buyer have
the right to demand that such option money be
deducted from the price? Yes, if there is a
stipulation.
Otherwise
no
because
the
consideration is the consideration for option and not for
the sale.
Q: If the buyer was able to prove that he gave a sum
of money to A, which they agreed to be
considered as part of the price, can B compel A to
sell the thing which is the object of the
contract?
A: Not necessarily. Because it doesnt mean that the
contract was perfected. Earnest money is just
a proof of the perfection of the contract, but does
not establish a perfected sale. In spouses
Doromal
case, the earnest money was not considered proof of
perfection of the contract, but a
guarantee that the
buyer would not back out. There can be earnest money
without a perfected
contract of sale (ito nga yung
case ng spouses Doromal) because earnest money
pertains only to
price and price is not the only
essential element of contract of sale. Parties must also
agree on
the thing.
Q: If parties ageed on the thing, perfected contract of
sale?
A: Not necessarily because they may not have
agreed on the total contract price. EARNEST MONEY
IS ONLY PART OF THE PRICE.
C.
Formalities of Contract of Sale (Statute
of Fraud) Arts. 1483, 1403, 1625, 1356-1358, 1874;
Sec. 22 Act 1147 (Cattle Registration Act)
present. However, when the law requires that a

contract be in some form in order that it may be
valid or enforceable, or that a contract be proved in
a certain way, that requirement is absolute and
indispensable. In such cases, the right of the
parties stated in the following article cannot be
exercised. (1278a)
Art. 1357. If the law requires a document or other
special form, as in the acts and contracts
enumerated in the following article, the contracting
parties may compel each other to observe that
form, once the contract has been perfected. This
right may be exercised simultaneously with the
action upon the contract. (1279a)
Art. 1358. The following must appear in a public
document:
(1) Acts and contracts which have for their
object the creation, transmission, modification
or extinguishment of real rights over
immovable property; sales of real property or
of an interest therein a governed by Articles
1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains;
(3) The power to administer property, or any
other power which has for its object an act
appearing or which should appear in a public
document, or should prejudice a third person;
(4) The cession of actions or rights proceeding
from an act appearing in a public document.
All other contracts where the amount involved
exceeds five hundred pesos must appear in
writing, even a private one. But sales of goods,
chattels or things in action are governed by
Articles, 1403, No. 2 and 1405.
Art. 1874. When a sale of a piece of land or any
interest therein is through an agent, the
authority of the latter shall be in writing;
otherwise, the sale shall be void.
Q:
Sale of a parcel of land not in a public
instrument. Status of the sale?
A:
If oral sale, unenforceable. If private
instrument, valid/ binding only between the parties.
But the third person may be bound if
he has actual knowledge. Actual knowledge ha.
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.
Q:
Sale of a parcel of land for 350, not in
writing. Status?
A:
Unenforceable. Basta real property, it
must be in writing. Otherwise, unenforceable. Price
is
irrelevant.
Art. 1403, supra

Art. 1625. An assignment of a credit, right or action
shall produce no effect as against third person,
unless it appears in a public instrument, or the
instrument is recorded in the Registry of Property
in case the assignment involves real property.
Q:
A bought bag for 3T a week ago. Later
he sold it for 40T. May it be a valid sale?
A:
Yes. What is relevant in Statute of
Frauds is the price, not the value of the thing. May it
be
covered by Statute of Frauds?
Yes, agreement not to be performed within a year.
Art. 1356. Contracts shall be obligatory, in whatever

form they may have been entered into, provided all
the essential requisites for their validity are
Q:
Is there a sale which may be considered
void for failure of the parties to comply with
some form?
which the person granting the option is willing to

sell. (Equatorial Realty Devt., Inc. vs.
MayfairTheater, Inc.)
15

A:
Yes. Sale of large cattle. Sale must be in
a public instrument, registered, and certificate of
title
must be obtained for the sale to be valid.
A written note or memorandum, embodying the
essentials of the contract and signed by the party
charged, or his agent, suffices to make the verbal
agreement enforceable, taking it out of the operation of
the Statute of Frauds. (Paredes vs. Espino)
The Statute of Frauds is applicable only to executor
contracts, not to contracts either partially or totally
performed. (Inigo vs. Estate of Maloto)
The necessity of a public instrument provided for in
Article 1358 is only for convenience, not for validity or
enforceability. (Dalion vs. CA)
A sale of a piece of land appearing in a private deed
cannot be considered binding on third persons if it is not
embodied in a public instrument and recorded in the
Registry of Deeds. (Santos vs. Manalili)
Nothing in this Title, however, shall affect:

(1) The provisions of any factors' act,
recording laws, or any other provision of law
enabling the apparent owner of goods to
dispose of them as if he were the true owner
thereof;
(2) The validity of any contract of sale under
statutory power of sale or under the order of a
court of competent jurisdiction;
(3) Purchases made in a merchant's store, or
in fairs, or markets, in accordance with the
Code of Commerce and special laws.
Art. 1506. Where the seller of goods has a voidable title
thereto, but his title has not been avoided at the time of
the sale, the buyer acquires a good title to the goods,
provided he buys them in good faith, for value, and
without notice of the seller's defect of title.
Art. 1547. In a contract of sale, unless a contrary
intention appears, there is:
A.
To transfer ownership
Who can transfer ownership
General Rule Arts. 1505-
1506, 1547
Cuison vs. Remoto Where
party has a prior existing interest which is
unregistered at the time he acquired interest has
the effect of registration as to him; No one can
give what
he does not have.
the
Exceptions: Art. 1505

1. Estoppel
2. Sale by an apparent owner
3. Purchase at Merchants
Store, Market or Fair Art. 559
When and How transfer is effected?
Arts. 1477, 1459, 1496, 1547, 1588
General Rule:
Ilao-Quianay
vs.
MapileOwnership of the thing sold is acquired only from the
delivery thereof,either actual or constructive.
Exceptions:
1. Sale or return Art. 1502
(1)
2. Sale on approval or trial
Art. 1502 (2)
3. Conditional sales Arts.
1478, 1503 (1), 1458 (2)
Art. 1505. Subject to the provisions of this Title, where
goods are sold by a person who is not the owner
thereof, and who does not sell them under authority or
with the consent of the owner, the buyer acquires no
better title to the goods than the seller had, unless the
owner of the goods is by his conduct precluded from
denying the seller's authority to sell.
(1) An implied warranty on the part of the

seller that he has a right to sell the thing at the
time when the ownership is to pass, and that
the buyer shall from that time have and enjoy
the legal and peaceful possession of the thing;
(2) An implied warranty that the thing shall be
free from any hidden faults or defects, or any
charge or encumbrance not declared or known
to the buyer.
This Article shall not, however, be held to render liable a
sheriff, auctioneer, mortgagee, pledgee, or other person
professing to sell by virtue of authority in fact or law, for
the sale of a thing in which a third person has a legal or
equitable interest.
Art. 1431. Through estoppel an admission or
representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against
the person relying thereon.
Art. 1433. Estoppel may be in pais or by deed.
Art. 1434. When a person who is not the owner of a
thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes
by operation of law to the buyer or grantee.
Art. 559. The possession of movable property acquired
in good faith is equivalent to a title. Nevertheless, one
who has lost any movable or has been unlawfully
deprived thereof may recover it from the person in
possession of the same.
If the possessor of a movable lost or which the owner
has been unlawfully deprived, has acquired it in good
faith at a public sale, the owner cannot obtain its return
without reimbursing the price paid therefor.
IV.
Rights and Obligations of the Vendor Art.
1495
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.
16

Art. 1477. The ownership of the thing sold shall be

transferred to the vendee upon the actual or
constructive delivery thereof.
Art. 1459. The thing must be licit and the vendor must
have a right to transfer the ownership thereof at the
time it is delivered.
Art. 1496. The ownership of the thing sold is acquired by
the vendee from the moment it is delivered to him in any
of the ways specified in Articles 1497 to 1501, or in any
other manner signifying an agreement that the
possession is transferred from the vendor to the
vendee.
Art. 1588. If there is no stipulation as specified in the
first paragraph of article 1523, when the buyer's refusal
to accept the goods is without just cause, the title
thereto passes to him from the moment they are placed
at his disposal.
time has been fixed for the return of the

goods, on the expiration of such time, and, if
no time has been fixed, on the expiration of a
reasonable time. What is a reasonable time is
a question of fact.
Art. 1478. The parties may stipulate that ownership in
the thing shall not pass to the purchaser until he has
fully paid the price.
Art. 1503. When there is a contract of sale of specific
goods, the seller may, by the terms of the contract,
reserve the right of possession or ownership in the
goods until certain conditions have been fulfilled. The
right of possession or ownership may be thus reserved
notwithstanding the delivery of the goods to the buyer
or to a carrier or other bailee for the purpose of
transmission to the buyer.
Where goods are shipped, and by the bill of lading the
goods are deliverable to the seller or his agent, or to the
Art. 1523. Where, in pursuance of a contract of sale, the

seller is authorized or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named
by the buyer or not, for the purpose of transmission to
the buyer is deemed to be a delivery of the goods to the
buyer, except in the case provided for in Article 1503,
first, second and third paragraphs, or unless a contrary
intent appears.
Unless otherwise authorized by the buyer, the seller
must make such contract with the carrier on behalf of
the buyer as may be reasonable, having regard to the
nature of the goods and the other circumstances of the
case. If the seller omit so to do, and the goods are lost
or damaged in course of transit, the buyer may decline
to treat the delivery to the carrier as a delivery to
himself, or may hold the seller responsible in damages.
Unless otherwise agreed, where goods are sent by the
seller to the buyer under circumstances in which the
seller knows or ought to know that it is usual to insure,
the seller must give such notice to the buyer as may
enable him to insure them during their transit, and, if the
seller fails to do so, the goods shall be deemed to be at
his risk during such transit.
order of the seller or of his agent, the seller thereby

reserves the ownership in the goods. But, if except for
the form of the bill of lading, the ownership would have
passed to the buyer on shipment of the goods, the
seller's property in the goods shall be deemed to be
only for the purpose of securing performance by the
buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the
goods are deliverable to order of the buyer or of his
agent, but possession of the bill of lading is retained by
the seller or his agent, the seller thereby reserves a
right to the possession of the goods as against the
buyer.
Where the seller of goods draws on the buyer for the
price and transmits the bill of exchange and bill of
lading together to the buyer to secure acceptance or
payment of the bill of exchange, the buyer is bound to
return the bill of lading if he does not honor the bill of
exchange, and if he wrongfully retains the bill of lading
he acquires no added right thereby. If, however, the bill
Art. 1502. When goods are delivered to the buyer "on

sale or return" to give the buyer an option to return the
goods instead of paying the price, the ownership
passes to the buyer of delivery, but he may revest the
ownership in the seller by returning or tendering the
goods within the time fixed in the contract, or, if no time
has been fixed, within a reasonable time.
of lading provides that the goods are deliverable to the
When goods are delivered to the buyer on approval or

on trial or on satisfaction, or other similar terms, the
ownership therein passes to the buyer:
(1) When he signifies his approval or
acceptance to the seller or does any other act
adopting the transaction;
(2) If he does not signify his approval or
acceptance to the seller, but retains the goods
without giving notice of rejection, then if a
has not been honored, provided that such purchaser
buyer or to the order of the buyer, or is indorsed in

one who purchases in good faith, for value, the bill of
lading, or goods from the buyer will obtain the
ownership in the goods, although the bill of exchange
has received delivery of the bill of lading indorsed by
the consignee named therein, or of the goods, without
notice of the facts making the transfer wrongful.
Q:
A:
The seller may have how many obligations?

It depends upon the stipulation of the parties.
blank, or to the buyer by the consignee named therein,
17

Ex. It may be stipulated in the COS that it will be

the seller who will have the
obligation to cause the
transfer of registration.
Q:
Why would the person in possession of the thing
buy the thing?
A:
To improve his title.
Ex. Lessee/depositary/ Borrower/bailee
Q:
May the seller be held liable for deterioration even
if he has exercised the
diligence of a good father of a
family?
A:
Yes. The parties may agree on different degree of
diligence.
Q:
A sold a mango plantation to B but they
stipulated that delivery will be made
after the signing of
the DOS. After the expiration of the 6month period, B
demanded for the delivery. The vendor (A) was
able to deliver one month after
the date when was
supposed to deliver the mango plantation. During this period,
A harvested mango fruits and sold them to X. A
was able to deliver only after other fruits were harvested
and sold to Y.
Can B recover the mango fruits from Y during the
6month period?
A:
NO. Article 1537 should be interpreted to mean
that the obligations of the parties
already
due and demandable during the perfection of the contract if
there was no
agreement as to when the obligation
was to be performed without prejudice to
the
provision of Article 1164 if there was stipulation as to the
period of delivery, in
which case the buyer will only
be entitled from the time the obligation to deliver it arises.
A seller may not have a right to sell if he is a thief.

Q:
If the seller has no right to sell, what is the effect
on the buyer?
A:
The buyer will acquire no right because the seller
has no right to sell. Article 1505
Q:
If the seller has no right to sell, is it possible for the
buyer to acquire ownership in the thing?
A:
YES. If the owner is in estoppel. Article 1505
Sale by an apparent owner.
Purchase at merchants store
ESTOPPEL
1.
2.
In pais equitable (Rule 131, Sec. 2a)

By deed technical
By deed party may stipulate in the DOS
that the seller is the owner of thing being sold
when in fact he is not the true owner.
In estoppel, ownership passes to the buyer
even if at the time of the sale the seller does
not have the right to sell.
Q:
A lost his ring in a hold-up. It was found in a
pawnshop. Can the robber redeem
the ring?
A:
NO.
Q:
A noticed the ring from B and Asked for the return
of the ring. Can B be
compelled to return the ring to
A?
A:
YES. The owner can recover the ring as long as
he reimburses B for the amount
if B acquired the
ring in good faith (Article 559) because the owner of the
thing
was unlawfully deprived of the thing.
No inconsistency between Article 1537 and 1164.
Q:
May a person sell something which does not
belong to him?
A:
YES. Because the law does not require oqnership.
As long as the essential
requisites are present. Ex.
Agency
Seller may be able to transfer ownership as long
as he has the right to sell.
Article 1547
Q:
If the seller has no authority from the owner, may
he have the authority to sell?
A:
YES. a) owner-agent
b) judicial-sheriff
c)
lawexecutors/administrators/guardians/notary public
Q:
When should the seller have the right to sell in
order for the buyer to acquire ownership?
A:
Generally, Art. 1459-right to transfer ownership at
the time the thing is delivered.
Specifically, Art. 1547-at the time when ownership
is to pass.
Q:
A painting was stolen from R. Three years
thereafter, she noticed the painting on the wall of M. It was
the painting stole from R. R asked M how he acquired the
painting and he said that it was by gallery auction.
Can M be compelled to return the painting to R?
A:
YES. R can demand the return of the painting.
Only those who would buy from a
public sale in good
faith that are protected in the sense that the can retain the
thing bought until they are reimbursed. If they did
not buy the thing from public sale, they are not protected by
law, therefore they are compelled to deliver
without
reimbursement because it was not acquired in a public
auction
Gallery auction is not a public sale. It is by
invitation. Si Uribe daw naimbitahan
na
minsan
sa
Makati sa isang Gallery auction. Sosyal!
Merchants store is a public sale.
By way of exception, the buyer may acquire
ownership because the buyer acquire no better title than
what the seller had.
Merchant store has no right to sell.
If A bought the item from a merchant store but the
owner was not unlawfully
deprived of the thing nor was
the thing lost, the buyer becomes the absolute
owner of
the thing.
Q:
Can B recover from Y the fruits sold to Y?
A:
YES. During the one month period B is already
entitled to the fruits but he may
not
recover
because e may not have real rights until the fruits are
delivered.
Article 1164
18

Forged title can be a root of a valid title. But a

forger acquires no title.
Even if the real owner is willing to reimburse the
purchase price, the buyer is not
obliged to return the
thing.
Sale by an apparent owner (registered owner) will
only result in acquisition by the buyer if there is a law
(Property Registration Decree) enabling such person to
deposit the thing as if he is a true owner. To be valid,
purchaser must acquire from an apparent owner in good
faith and for value.
Q:
A, the owner of a parcel of land, entrusted to his
clerk the TCT of the parcel of land for safekeeping. This
clerk instead forged the signature in the DOS with him
as the buyer. Thereafter, he was able to have the
property registered in his
name. Then he sold the land
to a third person.
Did the clerk acquire title over the land? Can the
owner of the land have the
property registered in his
name?
A:
If the buyer is in good faith, the owner cannot
recover. This means that the buyer
had no knowledge
of the defect of the sellers title at the time of signing the
DOS
(Buyer is in good faith and for value)
Q:
May there be transfer of ownership without
delivery?
A:
YES. Delivery must not always be actual.
Q:
If there is actual delivery, ownership passes upon
such actual delivery?
A:
Not necessarily. There are instances where the
sale has no transfer of ownership notwithstanding actual
delivery sale on trial/sale on satisfaction/contract to sell
Q:
A:
Sale on installment is a conditional sale?

Not necessarily. Only if ownership is retained
For the presumption in Article 1602 of the New Civil Code to

arise, two requirements must concur: (a) that the parties
entered into a contract denominated as a contract of sale;
and
(b)
that
their
intention
was
to
secure
an existing debt by way of a mortgage. The existence of any
of the circumstances defined in Article 1602 of the New Civil
Code, not the concurrence nor an overwhelming number of
such circumstances is sufficient for a contract of sale to be
presumed an equitable mortgage. (Salonga vs. Concepcion)
When in doubt, courts are generally inclined to construe a
transaction purporting to be a sale as an equitable mortgage,
which involves a lesser transmission of rights and interests
over the property in controversy. (Id.)
The notarization of the document does not guarantee its
validity because it is not the function of the notary public to
validate an instrument that was never intended by the parties
to have any binding legal effect on him. Neither is the
notarization of a document conclusive of the nature of the
transaction conferred by the said document, nor is it
conclusive of the true agreement of the parties thereto.(Id.)
The defense of having purchased the property in good faith

may be availed of only where registered land is involved and
the buyer had relied in good faith on the clean title of the
registered owner. (Id.)
The law on double sales as provided in Art. 1544 of the Civil
Code contemplates a situation where a single vendor sold
one and the same immovable property to two or more
buyers. For the rule to apply, it is necessary that the
conveyance must have been made by a party who has an
existing right in the thing and the power to dispose it. The
rule cannot be invoked where the two different contracts of
sale are made by two different persons, one of them not
being the owner of the property sold. (Sigaya vs. Mayuga)
A piece of land cannot plausibly be covered at the same
time, under the same concept of ownership, by two (2)
outstanding certificates of title, each having the same
validity, force and effect. (Premiere Devt Bank vs. CA)
The payment by a person of land taxes does not also
necessary detract from the spurious nature of his title. After
all, any one can pay real estate taxes on a given property
without being quizzed by the local treasury whether or not
the payor owns the real property in question.(Id.)
Where the certificate of title is in the name of the seller or
mortgagor, the innocent purchaser or mortgagee for value
has the right to rely on what appears on the certificate
without inquiring further in the absence of anything to excite
or arouse suspicion, or except when the party concerned
had actual knowledge of facts or circumstances that should
impel a reasonably cautious person to make such further
inquiry. (Id.)
A purchaser of a property cannot be in good faith where the
title thereof shows that it was reconstituted. (Id.)
Properly, then, the transaction entered into by Cruz and
Vallarta was not a "sale on return." Rather, it was a "sale on
approval " (also called " sale on acceptance, " "sale on trial."
or "sale on satisfaction" [CIVIL CODE, Art. 1502]). In a "sale
or return," the ownership passes to the buyer on delivery
(CIVIL CODE, art. 1502). (The subsequent return of the
goods reverts ownership in the seller [CIVIL CODE, art.
1502]). Delivery, or tradition. as a mode of acquiring
ownership must be in consequence of a contract (CIVIL
CODE, art. 712), e.g. sale. (Vallarta vs. CA)
If there was no meeting of the minds on November 20, 1968,
then, as of that date, there was yet no contract of sale which
could be the basis of delivery or tradition. Thus, the delivery
made on November 20, 1968 was not a delivery for
purposes of transferring ownership the prestation
incumbent on the vendor. If ownership over the jewelry was
not transmitted on that date, then it could have been
transmitted only in December 1968, the date when the check
was issued. In which case, it was a "sale on approval" since
ownership passed to the buyer. Vallarta, only when she
signified her approval or acceptance to the seller, Cruz, and
the price was agreed upon. (Id.)
Risk
of
Loss
or
Deterioration
(Total/Partial Arts. 1504, 1480, 1493-1494, 1538 (1189),
1163, 1174
If the buyer is in good faith, no knowledge of

defect in the sellers title, he would
acquire
absolute
ownership.
19

Double Sales Art. 1544

Rule (Movables/Immovables)
When not applicable?
1. Unregistered lands
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.
Art. 1480. Any injury to or benefit from the thing sold,
after the contract has been perfected, from the moment
of the perfection of the contract to the time of delivery,
shall be governed by Articles 1163 to 1165, and 1262.
This rule shall apply to the sale of fungible things, made
independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the risk shall
not be imputed to the vendee until they have been
weighed, counted, or measured and delivered, unless
the latter has incurred in delay.
Art. 1493. If at the time the contract of sale is perfected,
the thing which is the object of the contract has been
entirely lost, the contract shall be without any effect.
But if the thing should have been lost in part only, the
vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its
price in proportion to the total sum agreed upon. (1460a)
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.
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.
Art. 1189. When the conditions have been imposed with
the intention of suspending the efficacy of an obligation
to give, the following rules shall be observed in case of
the improvement, loss or deterioration of the thing
during the pendency of the condition:
(1) If the thing is lost without the fault of the
debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages; it
is understood that the thing is lost when it
perishes, or goes out of commerce, or
disappears in such a way that its existence is
unknown or it cannot be recovered;
(3) When the thing deteriorates without the
fault of the debtor, the impairment is to be
borne by the creditor;
(4) If it deteriorates through the fault of the
debtor, the creditor may choose between the
rescission of the obligation and its fulfillment,
with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by
time, the improvement shall inure to the
benefit of the creditor;
(6) If it is improved at the expense of the
debtor, he shall have no other right than that
granted to the usufructuary.
Art. 1163. Every person obliged to give something is
also obliged to take care of it with the proper diligence
of a good father of a family, unless the law or the
stipulation of the parties requires another standard of
care.
Art. 1174. Except in cases expressly specified by the
law, or when it is otherwise declared by stipulation, or
when the nature of the obligation requires the
assumption of risk, no person shall be responsible for
those events which could not be foreseen, or which,
though foreseen, were inevitable.
General Rule: Res

perit domino
Exceptions:
1. Stipulation
2. Security title
3. Delay
20

The rule that an obligor should be held exempt from liability

when the loss occurs thru a fortuitous event only holds true
when the obligation consists in the delivery of a determinate
thing and there is no stipulation holding him liable even in
case of fortuitous event. (Id.)
Registration means only entry made in the books of the
Registry which records solemnly and permanently the right
of ownership and other real rights.
A purchaser who has knowledge of facts which should put
him upon inquiry and investigation as to possible defects of
the title of the vendor and fails to make such inquiry and
investigation, cannot claim that he is a purchaser in good
faith and has acquired a valid title thereto. (Paylago vs.
Bernabe)
Article 1544 does not apply to unregistered lands. (Carumba
vs. CA)
The better right" that cannot be prejudiced by the
registration of a second sale of a parcel of land, referred to in
Act No. 3344, is much more than the mere prior deed of sale
in favor of the first vendee. In the Lichauco case just
mentioned, it was the prescriptive right that had supervened.
Or, as also suggested in that case, other facts and
circumstances exist which, in addition to his deed of sale, the
first vendee can be said to have better right than the second
purchaser. (Hanopol vs. Pilapil)
Q:
After delivery who will bear the loss?
A:
General Rule- Owner(buyer) res perit domino
Article 1504
It is important to determine the nature of the thing,
whether generic or specific. Then consider the cause of
the loss. Then consider whether the loss occurred before, at
the time or after the perfection of the contract.
Q:
When there was actual delivery, may the seller
bear the loss under the res perit
domino rule?
A:
YES. When the seller reserves ownership. Article
1504
Q:
There was actual delivery, however, ownership is
still with the seller, may the
buyer bear the loss?
A:
By express stipulation of the parties, buyer will
bear the loss even when the ownership was still with the
seller.
If the reason why the seller

retained ownership is to secure the
fulfilment of the obligation of the buyer, it
will be the buyer who will bear the loss.
Q:
The seller was still the owner of the goods at the
time of the loss due to fortuitous
event,
may
the
buyer bear the loss?
A:
Yes, if by the buyers fault, he delays in obtaining
the goods. (Art. 1504 [2])
Q:
Ownership has already passed to the buyer but
the goods were still with the seller. When would the seller
bear the loss?
A:
If through the sellers fault, he delays in delivering
the goods.
Q:
A sold a parcel of land to B who did not register
the sale. Thereafter, A sold the
very same land to C
who registered and obtained a new TCT in his name. Who
would have a better right?
A:
C, if he registered the sale in good faith. If not, the
first buyer will have a better right.
Q:
Bar exam question.

1. The first buyer registered the sale with
knowledge of the second sale.
2. The second buyer registered the sale with
knowledge of the prior sale.
Who will have a better right?
1. The first buyer until registration.
2. Not in good faith because he has already
knowledge of the prior sale.
A:
Q:
How could a first buyer be in bad faith, eh first
buyer na nga sya?
A:
If he knows a defect in the sellers title.
The law requires registration in good faith. A
person may not have knowledge
at the time of
perfection of sale but he has knowledge after the sale up to
the
time of registration. In that case, he will not be a
registrant in good faith. Normal
yung ngayon ang
bentahan, bukas o makalawa o sa susunod na buwan pa
ang
registration.
Q:
A sold a parcel of land to B. After the sale, they
entered into a contract of lease.
Who would be the
lessor?
A:
The lessor now is the buyer (new owner) B.
Q:
A sold again the parcel of land to C who took
possession of the land without
knowledge of the
prior sale. Who will have a better right?
A:
B. Possession need not be actual. B is already in
legal possession having leased
the property to A.
This a case of constitutum possessorium.
Q:
A sold a parcel of land to B who took physical
possession immediately. A
delivered the land to B.
Thereafter, A sold the land to C who registered the sale
without knowledge of the prior sale. Who has a
better right?
A:
C
Q:
A:
system.
Is it possible for B to have a better right?

YES, if the land is unregistered under the Torrens
Q:
How could C registered the sale if the first sale is
unregistered?
A:
Because there can be a registration of sale
involving unregistered land.
In a contract of sale where the seller agreed that the

ownership of the books shall remain with it until the purchase
price shall have been fully paid, it is held that such stipulation
cannot make the seller liable in case of loss not only
because such was agreed merely to secure the performance
by the buyer of his obligation but in the very contract it was
expressly agreed that the "loss or damage to the books after
delivery to the buyer shall be borne by the buyer." (Lawyers
Cooperative vs. Tabora)
21

Article 1544 can be invoked only if the land is

registered. In 1544, the question is not the validity of the two
sales. Because they are both valid, ownership having been
transferred. The only question is who has a better right.
22

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A. Definition Art.

What is the nature of a sale?

Governing Law RA No. 386 (August 30, 1950);

4. commutative (Art. 2010) as a rule, because

Q: A obliged himself to deliver a certain thing to B.

SALES REVIEWER by SABA

A: No. CTS is a kind of conditional sale, but not all

Example of real contracts?

Q: Other characteristics of COS?

Is sale on installments a conditional sale?

Q: Is a Contract of Sale commutative?

SALES REVIEWER by SABA

A: Not necessarily. Because it pertains only to

rescission of the obligation and its fulfillment,

Art. 1163. Every person obliged to give something

Q: Distinguish Contract of Sale from Dacion en Pago.

Q: Why is there a need to distinguish Contract of sale

Distinguish Absolute sale from Conditional Sale

SALES REVIEWER by SABA

Q: Distinguish Contract of Sale from Contract to Sell.

A contract of sale is normally commutative and

Q: What are the Stages of a contract?

SALES REVIEWER by SABA

English Rule --- If material is more valuable, SALE;

Art. 1488. The expropriation of property for public

the sale of real property or of an

SALES REVIEWER by SABA

Art. 1458. (2) A contract of sale may be absolute or

Art. 1498. (1) When the sale is made through a

As to the nature of the subject matter

As to validity or defect of the transaction

Where by a a writing in Manila seller guaranteed the

A judicial action for the rescission of a contract is not

SALES REVIEWER by SABA

provisions are not applicable, the placing of the

Reciprocal obligations are those which arise from the

SALES REVIEWER by SABA

fulfillment of the condition agreed upon, that is, full

Art. 1954. A contract whereby one person transfers

The fact that the price of the machine was fixed in

In the instant case, it is a contract of sale.

SALES REVIEWER by SABA

Q: A obliged himself to deliver maong pants to B

Art. 1403. The following contracts are unenforceable,

Art. 234 Family Code. Emancipation takes

SALES REVIEWER by SABA

These contracts are binding, unless they are annulled

Art. 1476. In the case of a sale by auction:

Is delivery an essential element?

Q: What are the essential elements of a contract of

contract. Tengena ang arte. The essential

May service be an object of a contract of sale?

transpire if the parties did not give

Q: Contract of Sale, one party is a minor. Guardian

SALES REVIEWER by SABA

a resale, and subject to this requirement may

Remember the case of Rubias vs. Batiller

entitled only to the eastern portion. The western portion

It must not be intransmissible

Sale of a right to bind 3 persons, requires: Art. 1625.

must not be outside the commerce

Sale of a generic thing, valid sale?

SALES REVIEWER by SABA

through hereditary succession