I.

INTRODUCTION

A. DEFINITION OF SALE

Concept: The contract of sale is an agreement whereby one of the parties (called the seller/vendor)
obligates himself to deliver something to the other (called the buyer/purchaser/vendee) who, on
his part, binds himself to pay therefor a sum of money or its equivalent (known as the price).

Article 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership and to deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

B. NATURE OF THE OBLIGATIONS

● The seller/vendor is obligated to transfer the ownership and deliver a

determinate thing

● The buyer/vendee is obligated to pay a price certain in money or its equivalent

FROM VILLANUEVA Pages 1-2

The definition of the contract of sale under Article 1458 provides that its perfection brings about
the creation of two sets of obligations:
(a) Two OBLIGATIONS of the SELLER to:
(i) Transfer the Ownership, and
(ii) Deliver the Possession, of the SUBJECT MATTER;
(b) An OBLIGATION for the BUYER to:
(i) Pay the PRICE.

Both sets of obligations, are real obligations or obligations “to give,” as contrasted
from personal obligations “to do” and “not to do,” and can be the proper subject of actions
for specific performance. In contrast, obligations to do or not to do, cannot be enforced through
actions for specific performance because of the public policy against involuntary servitude;
although the creditor can have the same executed by another at the cost of the obligor, and the
obligor’s refusal to comply can be the basis for claims for damages.

To illustrate, Article 1480 of the Civil Code, which cross-refers to Article 1165 thereof,
provides that when what is to be delivered is a determinate thing, the buyer, in addition to the right
to recover damages, may compel the seller to make the delivery. In other words, a defaulting
party in a sale cannot insist on just paying damages when the non-defaulting party
demands performance.

C. ESSENTIAL REQUISITES OF A CONTRACT OF SALE

1. Consent of the contracting parties

(a) Being a consensual contract, the contract of sale is perfected at the moment there is a
“meeting of the minds” upon the thing which is the object of the contract and upon the
price. [Art. 1475]
(b) Requisites:
(1) Capacity
(2) Offer and acceptance, and
(3) No vitiation of consent (Violence, intimidation, fraud, mistake)
2. Subject matter which should be a determinate thing
 3. Price certain in money or its equivalent

Dizon v. CA 302 SCRA 288 (1999)

respondent: Overland Express Lines, Inc. (lessee)

petitioners: Dizon et al (lessors)

FACTS:
Petitioners and respondent entered into a Contract of Lease of a parcel of land in
QC for a period of one (1) year (May 16, 1974 to May 15, 1975) during which the
private respondent was given an option to purchase said property at P3,000.00
square meter.

For failure to pay the increased monthly rental of 8K from the previous 3K rental,
pet. filed for an action for ejectment. The City Court rendered judgment ordering
respondent to vacate the leased premises and to pay rentals in arrears and/or as
damages.

CA said that there was a perfected contract of sale because of the acceptance of
the 300k and SC dismissed the petition. Contention: There is a perfected contract
of sale due to their payment to Alice Dizon (agent of the payee)

ISSUE: WON there was a perfected contract of sale between petitioners and
private respondent

Held: No.

There was no perfected contract of sale between petitioners and private

respondent.

Under Article 1475 of the New Civil Code, "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." Thus, the elements of a contract of sale are consent, object,
and price in money or its equivalent. It bears stressing that the absence of
any of these essential elements negates the existence of a perfected contract of
sale. Sale is a consensual contract and he who alleges it must show its existence
by competent proof.

In an attempt to resurrect the lapsed option, private respondent gave

P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption
that the said amount tendered would constitute a perfected contract of sale
pursuant to the contract of lease with option to buy. There was no valid consent
by the petitioners (as co-owners of the leased premises) on the supposed sale
entered into by Alice A. Dizon, as petitioners' alleged agent, and private
respondent. There was no showing that petitioners consented to the act of Alice
A. Dizon nor authorized her to act on their behalf with regard to her transaction
with private respondent.

D. STAGES OF CONTRACT OF SALE

1. Negotiation
Covers the period from the time the prospective contracting parties indicate interest in the
contract to the time the contract is perfected.

2. Perfection
 Takes place upon the concurrence of the essential elements of the sale which are the
meeting of the minds of the parties as to the object of the contract and upon the price; and

3. Consummation
The actual delivery of goods

Begins when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment thereof.

*Next meeting:
● From: Introduction
● To: Parties to a contract of sale
● Additional: De Leon, illustrative cases

E. CHARACTERISTICS OF A CONTRACT OF SALE

1. Nominate and Principal

Nominate, because it is given a special name or designation in the Civil Code, namely, “sale”

Principal, because it does not depend for its existence and validity upon other contract

2. Consensual
The contract of sale is consensual: it 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. In consensual contracts, the
perfection of the contract gives rise to the obligation to deliver the thing.

(PERFECTION) 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.

3. Bilateral and Reciprocal

Bilateral, because both the contracting parties are bound to fulfil correlative obligations towards
each other – the seller, to deliver and transfer ownership of the thing sold and the buyer, to pay the
price.

(WHEN IS DELAY INCURRED) Art. 1169. Those obliged to deliver or to do

something incur in delay from the time the obligee judicially or extrajudicially demands
from them the fulfillment of their obligation.

(RESCISSION) 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. (1124)

4. Onerous
Onerous, because the thing sold is conveyed in consideration of the price and vise versa.
 5. Commutative-Arts. 1355 and 1470
Commutative, because the thing sold is considered the equivalent of the price paid and vice versa.

(LESION OR INADEQUACY OF CAUSE) Art. 1355. Except in cases specified by law,

lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud,
mistake or undue influence. (n)

(GROSS INADEQUACY OF PRICE) Art. 1470. Gross inadequacy of price does not affect
a contract of sale, except as it may indicate a defect in the consent, or that the parties really
intended a donation or some other act or contract. (n)

F. SALE IS TITLE AND NOT MODE

FROM LAW ON SALES VILLLANUEVA pages 14-16

The perfection of a sale gives rise to the obligation on the part of the seller to transfer
ownership and deliver possession of the subject matter; nevertheless, it would be delivery or
tradition that is the mode to transfer ownership and possession to the buyer. Although in one case
the Court defined a “sale” as a “contract transferring dominion and other real rights in the thing
sold, sale is merely title that creates the obligation on the part of the seller to transfer
ownership and deliver possession, but on its own sale is not a mode that transfers
ownership. Thus, Alcantara-Daus v. de Leon, 68 held that while a sale is perfected by mere
consent, ownership of the thing sold is acquired only upon its delivery to the buyer. Upon the
perfection of the sale, the seller assumes the obligation to transfer ownership and to deliver the
thing sold, but the real right of ownership is transferred only “by tradition” or delivery
thereof to the buyer.

In Acap v. Court of Appeals, the Court held that an asserted right or claim to ownership, or
a real right over a thing arising from a juridical act, is not per se sufficient to give rise to ownership
over the thing; that right or title must be completed by fulfilling certain conditions imposed by law:
“Hence, ownership and real rights are acquired only pursuant to a legal mode or process. While
title (such as sale) is the juridical (like delivery) is the actual process of acquisition or transfer of
ownership over a thing.”

Acap held that the “Declaration of Heirship and Waiver of Rights” executed by the heirs
waiving their inheritance rights in favor of a non-heir cannot be deemed a proper mode to affect
title to the land involved because waiver of inheritance right can only be done in favor of another
heir; whereas, it could not also be considered a sale contract because the document did not provide
for the element of price, which is required for a valid sale under Article 1458 of the Civil Code.

Manongsong v. Estimo, emphasized that once a sale has been duly perfected, its validity
“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.”
Consequently, the proper remedy was not annulment, but rescission.

Mode is the legal means by which dominion or ownership is created,

transferred or destroyed (e.g., succession, donation, discovery, intellectual creation, etc.);71
title only constitutes the legal basis by which to affect dominion or ownership. Therefore, sale by
itself does not transfer or affect ownership; the most that sale does is to create the
obligation to transfer ownership; it is tradition or delivery, as a consequence of sale,
that actually transfers ownership.
G. SALE DISTINGUISHED FROM OTHER CONTRACTS

1. Donation - Arts. 725 and 1471

(DONATION)
Art. 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing
or right in favor of another, who accepts it. (618a)

(SIMULATION OF PRICE)
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)

2. Options
Dela Cavada vs Diaz, 37 Phil 982 (1918)

FACTS: +
Plaintiff Antonio dela Cavada and defendant Antonio Diaz entered into a
Contract of Option where the latter promised to sell to the former his Hacienda
de Pitogo located in Tayabas together with its coconut and nipa palm trees for 30
and 70 thousand pesos respectively.

The contract provides that Dela Cavada has the right to purchase the land until
after Diaz acquires its Torrens title.

Diaz applied two land titles for the hacienda dividing it in two parts. After the
titles have been issued, Diaz offers to sell to Dela Cavada only a portion of the
entire hacienda.

ISSUE: WON the contract is a “contract of option”

HELD: No. The contract was not a "contract of option." It differs very
essentially from a contract of option. Reading the said contract from its four
corners it is clearly as absolute promise to sell a definite parcel of
land for a fixed price upon definite conditions. The defendant
promised to convey to the plaintiff the land in question as soon as the same
was registered under the Torrens system, and the plaintiff promised to pay
to the defendant the sum of P70,000, under the conditions named, upon the
happening of that event.

An optional contract is a privilege existing in one person, for which he had paid
a consideration, which gives him the right to buy, for example, certain
merchandise of certain specified property, from another person, if he chooses, at
any time within the agreed period, at a fixed price.

The contract of option is a separate and distinct contract from the contract which
the parties may enter into upon the consummation of the option. A consideration
for an optional contract is as important as the consideration for any other kind
of contract. If there was no consideration for the contract of option then it cannot
be entered any more than any other contract where no consideration exists.

While it is true that the conditions upon which A promises to buy the property at
the end of the period mentioned are usually fixed in the option, the consideration
for the option is an entirely different consideration from the consideration of the
contract with reference to which the option exists.

3. Barter - Arts. 1468, 1638 to 1641

Fule v. CA 286 SCRA 698 (1998) - fake earrings
 FACTS:

Gregorio Fule, a banker and jeweler, acquired a 10 hectare of property in Rizal.

In 1984, Gregorio asked Remilia and Oliva to look for a buyer (property), they
found Dr. Cruz, and it just so happens that Gregorio wants the 2.5 carat
EMERALD CUT EARRINGS of Dr. Ninevetch Cruz (MD), Gregorio offered to
buy the jewelry but was refused. They agreed, however, on the land of Fule for
the jewelry.

Dr. Cruz asked her counsel, Atty. Belarmino to check the land for any
impediments. There was. Gregorio then executed to a DEED OF
REDEMPTION to cut through the legal impediment.

Dr. Cruz went to the bank with Gregorio to show the jewelry and instructed him
to check and examine it. Gregorio did so and, with the counsel, executed a DEED
OF ABSOLUTE SALE. The Property was for P200,000 and the Jewelry for
P160,000, both agreed that Dr. Cruz will pay the remaining P40,000 by cash.

Gregorio went straight to an appraiser named DIMAYUGA who stated that the
jewelry is fake. Gregorio then filed a complaint before the RTC, praying for the
CONTRACT OF SALE be deemed null and void.

RTC ruled in favor of Cruz stating that Gregorio was in bad faith. CA affirmed.

Issue: (1) WON the contract of barter or sale had in fact been consummated
(2) WON the same elements of a valid contract are appreciated in a barter
contract?

Held: (1) Yes. The NCC provides that the Contract of Sale is consensual, and
is perfected when the minds met. Contract may be rendered void if (1) Party has
no capacity to give consent, and (2) if consent was gained because of VIMFU
(Violence, Intimidation, Mistake, Fraud, and Undue Influence). Dr. Cruz was
not Fraudulent. SC said that Gregorio was also a jeweler, he was given
time to inspect the jewel before perfecting the contract. There was a
delivery of jewelry to the buyer who accepted it after examination.
Ownership passed the buyer, applying Art. 1584.
(2) Yes. All the elements of a valid contract under Article 1458 of the Civil Code
were present, namely: (a) consent or meeting of the minds; (b) determinate
subject matter, and (c) price certain in money or its equivalent. The same
elements, were present despite the fact that the agreement between
petitioner and Dr. Cruz was principally a barter contract.
Contract of Sale Barter
The cause of consideration is money. The cause of consideration is another
thing.
Commented [1]: Both the trial and appellate courts,
therefore, correctly ruled that there were no legal bases
for the nullification of the contract of sale. Ownership
over the parcel of land and the pair of emerald-cut
diamond earrings had been transferred to Dr. Cruz and
petitioner, respectively, upon the actual and
constructive delivery thereof. Said contract of sale
being absolute in nature, title passed to the vendee
upon delivery of the thing sold since there was no
stipulation in the contract that title to the property sold
has been reserved in the seller until full payment of the
price or that the vendor has the right to unilaterally
resolve the contract the moment the buyer fails to pay
within a fixed period. Such stipulations are not manifest
in the contract of sale.
The value of the thing is more than or The value of the thing exceeds the amount
equal to the monetary consideration or its of the monetary consideration or its
equivalent equivalent

Where the consideration is partly money and partly in another thing, the ff. Rules shall
be observed to determine whether the contract is a sale or barter.

1. Intention of the parties

2. If the intention is not clear:
a. Barter, if the value of the thing given as part of the consideration exceeds
the monetary consideration
b. Sale, if the monetary consideration is more than or equal to the value of
the thing given as part of the consideration.
c.
(CONTRACT OF PART -MONEY-PART-THING)
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. (1446a)

(BARTER)
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. (1538a)

Art. 1641. As to all matters not specifically provided for in this Title, barter shall be
governed by the provisions of the preceding Title relating to sales. (1541a)

4. Contract for Piece of Work - Arts. 1467, 1713 to 1715

Celestino v. Collector 99 Phil 841 (1956)

Facts:
Celestino Co doing business under the name of “Oriental Sash Factory”. From 1946-1951
it paid percentage tax of 7% (National Revenue Code sec. 186) on the gross receipts of
its sash, door, and window factory. However on 1952 it began to claim liability only to
contractor’s 3% tax (Instead of 7%) under sec. 191.

Celestino claims that they do not manufacture ready made doors, sash, and windows for
the public. He claims that they only do Special Orders for customers, thus, contending
they are not manufacturers. This did not convince the BIR and the Court of Tax Appeals.

CTA said that their trade name gives the impression they do engage in manufacturing
and their records suggest that their huge earnings (P188, 754.69) cannot be from
special orders from their few customers, but because it was from ready made products.
They also offered themselves as a “factory” to the public.

Issue: W/N Petitioner is in engaged in manufacturing or for contract piece of work

Held: Yes, manufacturing. The important thing to remember is that Celestino Co &
Company habitually makes sash, windows and doors, as it has represented in its
stationery and advertisements to the public. The fact that the windows and doors
are made only when customers place their orders does not alter the nature
of the establishment, for it is obvious that it only accepted such orders as called for the
employment of such material-moulding, frames, panels-as it ordinarily manufactured or
was in a position habitually to manufacture. The factory does nothing more than sell the
goods that it mass produces or habitually makes. If it accepts a job that requires the use
of extraordinary or additional equipment, or involves services not generally performed
by it, it thereby contracts for a piece of work.

Appellant invokes Article 1467 of the New Civil Code to bolster its contention that
in filing orders for windows and doors according to specifications, it did not sell,
but merely contracted for particular pieces of work or “merely sold its services”.
In our opinion when this Factory accepts a job that requires the use of
extraordinary or additional equipment, or involves services not generally
performed by it-it thereby contracts for a piece of work — filing special orders
within the meaning of Article 1467. The orders herein exhibited were not shown
to be special. They were merely orders for work — nothing is shown to call them
special requiring extraordinary service of the factory. The thought occurs to us
that if, as alleged-all the work of appellant is only to fill orders previously made,
such orders should not be called special work, but regular work. The Supreme
Court affirms the assailed decision by the CTA.

FROM BAVIERA BOOK:

Contract for a piece of work, defined: in a contract for a piece of work, the contractor
binds himself to execute a piece of work for the employer, in consideration of a
certain price or compensation.

Massachusetts Rule: The rule is that 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.

Commissioner v. Engineering Equipment 65 SCRA 590 (1975)

FACTS: Engineering Equipment and Supply Co. (Engineering for short), a domestic
corporation, is an engineering and machinery firm. As operator of an integrated
engineering shop, it is engaged, among others, in the design and installation of central
type air conditioning system, pumping plants and steel fabrications.

On July 27, 1956, one Juan de la Cruz, wrote the then Collector, now Commissioner of
Internal Revenue, denouncing Engineering for tax evasion by misdeclaring its
imported articles and failing to pay the correct percentage taxes due thereon in
connivance with its foreign suppliers. Engineering was likewise denounced to the
Central Bank (CB) for alleged fraud in obtaining its dollar allocations. Acting on these
denunciations, a raid and search was conducted by a joint team of Central Bank (CB),
National Bureau of Investigation (NBI) and the Bureau of Internal Revenue
(BIR) agents on September 27, 1956, on which occasion voluminous records of the firm
were seized and confiscated

On September 30, 1957, revenue examiners Quesada and Catudan reported and
recommended to the then Collector, now Commissioner of Internal Revenue that
 Engineering be assessed for P480,912.01 as deficiency advance sales tax on the theory
that it misdeclared its importation of air conditioning units and parts and accessories
thereof which are subject to tax under Section 185(m) of the Tax Code.

On March 3, 1959. the Commissioner assessed against, and demanded upon, Engineering
payment of the increased amount and suggested that P10,000 be paid as compromise in
extrajudicial settlement of Engineering's penal liability for violation of the Tax Code.

The firm, however, contested the tax assessment and requested that it be furnished with
the details and particulars of the Commissioner's assessment.

Engineering appealed to the Court of Tax Appeals. CTA rendered a decision in favor of
Engineering, declared exempt from the deficiency manufacturers sales tax covering the
period from June 1, 1948. to September 2, 1956. However, petitioner is ordered to pay
respondent, or his duly authorized collection agent, the sum of P174,141.62 as
compensating tax and 25% surcharge for the period from 1953 to September 1956. With
costs against petitioner.

Issue: W/N Engineering is a manufacturer or a contractor

Held: Contractor. The word "contractor" has come to be used with special reference
to a person who, in the pursuit of the independent business, undertakes to do a
specific job or piece of work for other persons, using his own means and methods
without submitting himself to control as to the petty details. The true test of a
contractor, would seem to be that he renders service in the course of an independent
occupation, representing the will of his employer only as to the result of his work,
and not as to the means by which it is accomplished.

Engineering, in a nutshell, fabricates, assembles, supplies and

installs in the buildings of its various customers the central type air
conditioning system; prepares the plans and specifications therefore which
are distinct and different from each other; the air conditioning units and
spare parts or accessories thereof used by petitioner are not the window type
air conditioner s which are manufactured, assembled and produced
locally for sale to the general market; and the imported air conditioning units and
spare parts or accessories thereof are supplied and installed by petitioner upon previous
orders of its customers conformably with their needs and requirements.

Contract of Sale Contract for a Piece of Work

A contract for the delivery at a certain If the goods are to be manufactured

price of an article which the vendor in the
ordinary course of business manufactures
or procures for the general market,
whether the same is on hand or not, is a
contract of sale.
specially for the customer and upon
his special order, and not for the
general market, it is a contract for a piece
of work. (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.

Art. 1713. By the contract for a piece of work the contractor binds himself to execute a
piece of work for the employer, in consideration of a certain price or compensation.
The contractor may either employ only his labor or skill, or also furnish the material.
(1588a)

Art. 1715. The contract shall execute the work in such a manner that it has the qualities
agreed upon and has no defects which destroy or lessen its value or fitness for its
ordinary or stipulated use. Should the work be not of such quality, the employer may
require that the contractor remove the defect or execute another work. If the
contract fails or refuses to comply with this obligation, the employer may have the
defect removed or another work executed, at the contractor's cost. (n)

5. Agency to Buy or Sell - Art. 1466, 1868

Quiroga v. Parsons 38 Phil 501 (1918)

Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the
latter an “agent” of the former. The contract stipulates that Don Andres Quiroga, here in petitioner,
grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only
stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds.

Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell
the beds at higher prices than those of the invoices; to have an open establishment in
Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay
for the advertisement expenses for the same; and to order the beds by the dozen and
in no other manner. With the exception of the obligation on the part of the defendant
to order the beds by the dozen and in no other manner, none of the obligations
imputed to the defendant in the two causes of action are expressly set forth in the
contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo,
and that said obligations are implied in a contract of commercial agency. The whole question,
therefore, reduced itself to a determination as to whether the defendant, by reason of the contract
hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds.

Issue: Whether the contract is a contract of agency or of sale.

Held: That this contract is one of purchase and sale, and not of commercial agency.

In order to classify a contract, due attention 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. Payment was to be made at the end of
sixty days, or before, at the plaintiff’s request, or in cash, if the defendant so preferred, and in these
last two cases an additional discount was to be allowed for prompt payment. 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.

In respect to the defendant’s obligation to order by the dozen, the only one expressly imposed by
the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which
the defendant might place under other conditions; but if the plaintiff consents to fill them, he
waives his right and cannot complain for having acted thus at his own free will.

For the foregoing reasons, we are of the opinion that the contract by and between the
plaintiff and the defendant was one of purchase and sale, and that the obligations the
breach of which is alleged as a cause of action are not imposed upon the defendant, either by
agreement or by law.

Puyat v. Arco 72 Phil 402 (1941)

Facts: Arco Amusement Company is a business engaged in operating cinematographs. Gonzalo
Puyat & Sons, Inc, was acting as an exclusive agent of Starr Piano Company in the USA which
supplies sound reproducing equipment

Arco Amusement approached Gonzalo Puyat & Sons and entered into an agreement wherein the
latter will, on behalf of Arco Amusement, order sound reproducing equipment from Starr Piano
Company in exchange of payment of the price of equipment, 10% commission, plus all expenses.
Starr Piano quoted the list price of equipment as $1700 without discount to Gonzalo Puyat, which
then told Arco Amusement about it. Arco Amusement agreed and paid $1700 to Gonzalo Puyat.

Subsequently, Arco made another order for the equipment on the same terms as the first order.
Arco Amusement duly paid $1600 plus 10% commission plus $160 for the expenses.

Arco Amusement subsequently discovered that the price quoted to them with regard to their
previous orders were not the net price but rather the list price, and that the Gonzalo Puyat had
obtained a discount from the Starr Piano Company. Moreover, by reading reviews and literature
on prices of machinery and cinematograph equipment, Arco Amusement was convinced that the
prices charged them were much too high. For these reasons, they sought to obtain a reduction
from Gonzalo Puyat rather than a reimbursement, and failing in this they filed the complaint.

RTC: Contract between Arco Amusement and Gonzalo Puyat was one of outright purchase and
sale.

CA: Reversed RTC’s ruling; the relation between the two was that of agent and principal, Gonzalo
Puyat acting as agent of Arco Amusement, and sentenced Gonzalo Puyat to pay the alleged
overpayments.

Issue: Whether or not the contract between Arco Amusement and Gonzalo Puyat was one of
purchase and sale, and not agency.

Held: Yes. There was a contract of sale between the two.

In the first place, the contract is the law between the parties and should include all the things they
are supposed to have been agreed upon. What does not appear on the face of the contract should
be regarded merely as “dealer’s” or “trader’s talk”, which can not bind either party. The letters
 showing that Arco Amusement accepted the prices of $1700 and $1600 for the sound reproducing
equipment subject of its contract with the petitioner, are clear in their terms and admit no other
interpretation that the respondent in question at the prices indicated which are fixed and
determinate.

Whatever unforeseen events might have taken place unfavorable to Arco Amusement, such as
change in prices, mistake in their quotation, loss of the goods not covered by insurance or failure
of the Starr Piano Company to properly fill the orders as per specifications, Gonzalo Puyat might
still legally hold Arco Amusement to the prices fixed. This is incompatible with the pretended
relation of agency between the petitioner and the respondent, because in agency, the agent is
exempted from all liability in the discharge of his commission provided he acts in
accordance with the instructions received from his principal (section 254, Code of
Commerce), and the principal must indemnify the agent for all damages which the
latter may incur in carrying out the agency without fault or imprudence on his part
(article 1729, Civil Code).

The orders which state that the petitioner was to receive ten per cent (10%) commission does not
necessarily make Gonzalo Puyat an agent of Arco Amusement as this provision is only an
additional price which Arco Amusement bound itself to pay, and which stipulation is not
incompatible with the contract of purchase and sale.

In the second place, to hold the petitioner an agent of the respondent in the purchase of equipment
and machinery from the Starr Piano Company of Richmond, Indiana, is incompatible with the
admitted fact that the petitioner is the exclusive agent of the same company in the Philippines. It
is out of the ordinary for one to be the agent of both the vendor and the purchaser. The facts and
circumstances indicated do not point to anything but plain ordinary transaction where the
respondent enters into a contract of purchase and sale with the petitioner, the latter as exclusive
agent of the Starr Piano Company in the United States.

The petitioner as vendor is not bound to reimburse the respondent as vendee for any
difference between the cost price and the sales price which represents the profit
realized by the vendor out of the transaction. This is the very essence of commerce without
which merchants or middleman would not exist.

Contract of Sale Agency to Sell

Title to the goods is transferred to the Title to the goods is retained by the owner
buyer upon delivery of the thing sold. despite the delivery of the goods to the
agent.

The buyer is required to pay the price The agent is required to turn over to the
principal the price of the goods which he
received from the buyer.

The recipient (buyer) of the property may The principal retains control of the
do with the property as he pleases. property
The owner of the goods at the time of the
loss bears the loss. The ownership of the
thing sold does not pass to the vendee until
its delivery, whether actual or constructive
The agent is exempted from all liability in the
discharge of his commission, provided he acts
in accordance with the instructions received
from his principal

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. (n)

Art. 1868. By the contract of agency a person binds himself to render some service or to
do something in representation or on behalf of another, with the consent or authority of
the latter. (1709a)

6. Dacion en Pago - Art. 1245

Dao Heng Bank v. Sps. Lilia & Reynaldo Laigo 571 SCRA 4343 (2008)

Facts: Spouses Laigo obtained a loan from Dao Heng Bank Inc. in the total amount of P11
million. As a security 3real estate mortgages were executed covering 2 parcels of land. As of 2000,
the Laigos failed to pay on time so as a remedy, they verbally agreed to cede one of the mortgaged
property to Dao Heng by way of dacion en pago (dation in payment). In August 2000, Dao Heng,
thru a letter informed the Laigos that there total obligation amounts to P10.8 million. The Laigos
took no action so their property was foreclosed and sold at public auction. The spouses filed for a
complaint praying for the annulment of the foreclosure of the properties subject of the real estate
mortgages and for them to be allowed "to deliver by way of ‘dacion en pago' one of the mortgaged
properties as full payment of their mortgaged obligation". They now contend that the foreclosure
was illegal since there was a verbal agreement for dacion en pago. Dao Heng, however, contends
that the dacion en pago falls under the statute of fraud therefore it is not enforceable. The Laigo’s
counter this by stating that the dacion is an exception since it is no longer executory but had
undergone partial performance when the titles to the property were delivered to Dao Heng.

Issues: Whether the obligation of the spouses has been extinguished through dacion en pago

No. There is no showing that the dacion en pago has been accepted by both parties. Since there is
no mutual consent, there is no dacion. Dacion en pago as a mode of extinguishing an
existing obligation partakes of the nature of sale whereby property is alienated to
the creditor in satisfaction of a debt in money. It is an objective novation of the
obligation, hence, common consent of the parties is required in order to extinguish
the obligation. Being likened to that of a contract of sale, dacion en pago is governed by the law
on sales. The partial execution of a contract of sale takes the transaction out of the provisions of
the Statute of Frauds so long as the essential requisites of consent of the contracting parties, object
and cause of the obligation concur and are clearly established to be present. In the case at bar, the
titles to the property were delivered as a security for the mortgage.

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. (n)

Contract of Sale Dacion En Pago

 No pre-existing credit There is a pre-existing credit

Creates obligations Extinguishes obligations

The cause of the consideration is the price,
from the seller’s POV; and the delivery of
the object, from the buyer’s POV.
The cause or consideration is the
extinguishment of the obligation, from the
debtor’s POV; and the delivery of the object
given in place of credit, from the creditor’s
POV.

There is greater freedom in fixing the price There is less freedom in fixing the price
because of the amount of the pre-existing
credit which the parties seek to extinguish.

7. Lease - Arts. 1484 and 1485

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. (1454-A-a)

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. (1454-A-a)

H. CONTRACT OF SALE/CONTRACT TO SELL

Luzon Brokerage v. Maritime Building 43 SCRA 93 (1972)

FACTS:

Defendant Myers Building Co. entered into a Deed of Conditional Sale with Maritime
Building Co. over 3 parcels of land in Manila with improvements at P1M. Maritime paid
P50, 000.00 upon execution. The balance was to be paid in monthly instalments of P10,
000.00 at 5% interest per annum (later lowered to P5, 000.00 at 5.5% interest per
annum).
The parties further agreed that: a. If Maritime defaults, the contract would be annulled
at Myers’ option; b. All payments already made shall be forfeited; and c. Myers shall
have the right to re-enter the property and take possession. Moreover, if Maritime
refuses to peacefully deliver the possession of the properties subject of this contract to
the Myers in case of rescission, a suit should be brought in court by the Myers to seek
judicial declaration of rescission.

Unfortunately, Maritime failed to pay the installment for March 1961, for which the Vice-
President, George Schedler,of the Maritime Building Co., Inc., wrote a letter to the
President of Myers, Mr. C. Parsons, requesting for a moratorium on the monthly
payment of the installments until the end of the year 1961, for the reason that the said
company was encountering difficulties in connection with the operation of the
warehouse business. The request was refused. Consequently, on May 1961, Myers made
a demand upon Maritime for the unpaid installments; also, Myers advised Maritime of
the cancellation of the Deed of Conditional Sale and demanded the return of the property,
holding Maritime liable for rentals at P10, 000.00 monthly. Myers thereafter demanded
from its Maritime’s lessee, Luzon Brokerage, to avoid paying to the wrong party and
surrender the property, - which then filed an action for interpleader. After the filing of
this action, the Myers Building Co., Inc. in its answer filed a cross-claim against the
Maritime Building Co., Inc. praying for the confirmation of its right to cancel the said
contract.

Trial Court ruled in favor of Myers and entitled it to the termination of the agreement.

ISSUE:

Whether or not Myers Company is entitled to extra-judicially rescind the Deed of

Conditional Sale.

RULING:

YES. The Court held in Lopez v. Commissioner of Customs that 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. As further explained in UP v.
de los Angeles, the party who deems the contract violated may consider it
resolved or rescinded without previous court action, but it proceeds at its
own risk. For it is only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or was not correct in law.
But the law definitely does not require that the contracting party who
believes itself injured must first file suit and wait for a judgment before
taking extrajudicial steps to protect its interest.

Neither can Maritime invoke Civil Code Art. 1592 (where vendee in default can continue
to make payments as long as no judicial/notarial demand for rescission has been made)
because the cross-claim filed by Myers constitutes a judicial demand for rescission that
satisfies the said article.

Dignos v. CA 158 SCRA 375 (1988)

FACTS:

Spouses Dignos sold their parcel of land in Opon, Lapu-Lapu to private respondent
Antonio Jabil for the sum of P28,000.00 payable for 2 installments, with an assumption
of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00 as was
acknowledged by vendors in the Deed of Absolute Sale (Exh. C), and the next installment
 to be paid 3 months after. But the same land was also sold by Spouses Dignos (Exh. J)
which was registered in the Registry of Deeds. This prompted Jabil to file a civil suit
against Spouses Dignos for the 2nd sale to Spouses Cabigas, who were then US citizens.
CFI of Cebu rendered the 2nd sale to Spouses Cabigas null and void, directing Spouses
Dignos to return the P35,000.00 to Spouses Cabigas and ordered Jabil to pay the
remaining balance. Spouses Dignos contend that Exh. C is a contract to sell and as such,
anchored their contention on the very terms of the contract as mentioned in ¶4, that said
spouses have agreed to sell the herein mentioned property to Alilano B. Jabil and
condition in ¶5, in which the spouses agreed to sign a final deed of absolute sale upon
payment of the remaining balance of P4,000.00.

ISSUE:

Is the contract between the parties a contract of sale or a contract to sell?

HELD:

The contract between the parties is a contract of sale. It has been held that a deed of sale
is absolute in nature although dominated as a “Deed of Conditional Sale” where nowhere
in the contract in question is a proviso or stipulation to the effect that title to the property
sold is reserved in the vendor until full payment of the purchase price, nor is there a
stipulation giving the vendor the right to unilaterally rescind the contract the moment the
vendee fails to pay within a fixed period. All the elements of a valid contract of sale are
present in the document and that Spouses Dignos never notified Jabil by notarial act that
they were rescinding the contract, and neither did they file a suit in court to rescind the
sale. There is no showing that Jabil properly authorized a certain Cipriano Amistad to tell
petitioners that he was already waiving his rights to the land in question.

Il. PARTIES TO A CONTRACT OF SALE

A. CAPACITY OF PARTIES - Arts. 1489-1492

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

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. (1457a)

Article 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 of property under article 191. (1458a)

Article 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 intrusted 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. (1459a) Article 1492. The prohibitions in the two preceding
articles are applicable to sales in legal redemption, compromises and renunciations. (n)

B. ABSOLUTE INCAPACITY - Arts. 1327, 1397, 1399

Necessaries - Art. 1489, 290

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

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. (1457a)
Article 290. Support is everything that is indispensable for sustenance, dwelling, clothing and medical
attendance, according to the social position of the family.

Support also includes the education of the person entitled to be supported until he completes his education
or training for some profession, trade or vocation, even beyond the age of majority. (142a)

C. RELATIVE INCAPACITY: Married Persons

1. Contracts with Third Parties -Arts. 73, 96 and Family Code

Article 73. The original of the affidavit required in the last preceding article, together with a copy of the
marriage contract, shall be sent by the person solemnizing the marriage to the local civil registrar of the
municipality where it was performed within the period of thirty days, after the performance of the marriage.
The local civil registrar shall, however, before filing the papers, require the payment into the municipal
treasury of the legal fees required in article 65.

Article 96. The existing laws which punish acts or omissions concerning the marriage license, solemnization
of marriage, authority to solemnize marriages, and other acts or omissions relative to the celebration of
marriage shall remain and continue to be in force. (n)

2. Between Spouses-Arts. 133, 1490 and 1492

Article 133. Every donation between the spouses during the marriage shall be void. This prohibition does
not apply when the donation takes effect after the death of the donor.

Neither does this prohibition apply to moderate gifts which the spouses may give each other on the occasion
of any family rejoicing.

Article 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 of property under article 191. (1458a)

Article 1492. The prohibitions in the two preceding articles are applicable to sales in legal redemption,
compromises and renunciations. (n)

Medina v. Collector 1 SCRA 302 (1961)

Antonio Medina v. CIR and CTA

Facts:
Subsequent to marriage, petitioners engaged in concessions with the government, while his wife started to
engage in business as a lumber dealer. From 1949 to 1952, petitioner sold logs to his wife. On the thesis that
the sales are null and void, CIR considered the sales by Mrs. Medina as the petitioner’s original sales taxable
under the NIRC. Petitioner filed a petition for reconsideration, revealing for the first time the alleged
premarital agreement of complete separation of property.

Issue:
Whether or not the sales made by the petitioner to his wife could be considered as his original taxable sales

Held:
It appears that at the time of the marriage between petitioner and his wife, they neither had any property
nor business of their own, as to have really urged them to enter into the supposed property agreement.
Secondly, the testimony that the separation of property agreement was recorded in the Registry of Property
three months before the marriage, is patently absurd, since such a prenuptial agreement could not be
effective before marriage is celebrated, and would automatically be cancelled if the union was called off. In
the third place, despite their insistence on the existence of the ante nuptial contract, the couple, strangely
enough, did not act in accordance with its alleged covenants. It was not until July of 1954 that he alleged,
for the first time, the existence of the supposed property separation agreement. Finally, the Day Book of the
Register of Deeds on which the agreement would have been entered, had it really been registered as
petitioner insists, and which book was among those saved from the ravages of the war, did not show that
the document in question was among those recorded therein.

The wife is authorized to engage in business and for the incidents that flow therefrom when she so engages
therein. But the transactions permitted are those entered into with strangers, and do not constitute
exceptions to the prohibitory provisions of Article 1490 against sales between spouses.

Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. Being void
transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in his
tax assessments that considered as the taxable sales those made by the wife through the spouses' common
agent, Mariano Osorio. In upholding that stand, the Court below committed no error.

3. Applicability to Common-Law Spouses - Art. 133

Article 133. Every donation between the spouses during the marriage shall be void. This prohibition does
not apply when the donation takes effect after the death of the donor.

Neither does this prohibition apply to moderate gifts which the spouses may give each other on the occasion
of any family rejoicing.

Matabuena v. Cervantes 38 Phil 284 (1971)

CORNELIA MATABUENA v. PETRONILA CERVANTES, (D)

G.R. No. L-28771, March 31, 1971

FACTS:
The plaintiff, now appellant Cornelia Matabuena, a sister to the deceased Felix Matabuena, maintains that
a donation made while he was living maritally without benefit of marriage to defendant, now appellee
Petronila Cervantes, was void. Defendant would uphold its validity. The lower court, after noting that it was
made at a time before defendant was married to the donor, sustained the latter’s stand.
November 23, 1965, the lower court, after stating that in plaintiff’s complaint alleging absolute ownership
of the parcel of land in question, she specifically raised the question that the donation made by Felix
Matabuena to defendant Petronila Cervantes was null and void under the aforesaid article of the Civil Code
and that defendant on the other hand did assert ownership precisely because such a donation was made in
1956 and her marriage to the deceased did not take place until 1962, noted that when the case was called
for trial on November 19, 1965.
The lower court on the above facts was adverse to plaintiff. It reasoned out thus: "A donation under the
terms of Article 133 of the Civil Code is void if made between the spouses during the marriage. When the
donation was made by Felix Matabuena in favor of the defendant on February 20, 1956, Petronila Cervantes
and Felix Matabuena were not yet married. At that time they were not spouses. They became spouses only
when they married on March 28, 1962, six years after the deed of donation had been executed."

ISSUE:
Whether or not the donation is declared void, with the rights of plaintiff and defendant as pro indiviso heirs
to the property

HELD:
Yes, the lack of validity of the donation made by the deceased to defendant Petronila Cervantes does not
necessarily result in plaintiff having exclusive right to the disputed property. Prior to the death of Felix
Matabuena, the relationship between him and the defendant was legitimated by their marriage on March
28, 1962. She is therefore his widow. As provided for in the Civil Code, she is entitled to one-half of the
inheritance and the plaintiff, as the surviving sister, to the other half.
It is hardly necessary to add that even in the absence of the above pronouncement, any other conclusion
cannot stand the test of scrutiny. It would be to indict the framers of the Civil Code for a failure to apply a
laudable rule to a situation which in its essentials cannot be distinguished. Moreover, if it is at all to be
differentiated, the policy of the law which embodies a deeply-rooted notion of what is just and what is right
would be nullified if such irregular relationship instead of being visited with disabilities would be attended
with benefits. Certainly a legal norm should not be susceptible to such a reproach. If there is ever any
occasion where the principle of statutory construction that what is within the spirit of the law is as much a
part of it as what is written, this is it. Otherwise the basic purpose discernible in such codal provision would
not be attained. Whatever omission may be apparent in an interpretation purely literal of the language used
must be remedied by an adherence to its avowed objective.

Cruz v. CA 281 SCRA 491 (1997)

Facts:
Petitioner Gloria Cruz and respondent Romeo Suzara lived together as husband and wife without
the benefit of marriage. Cruz executed a deed of absolute sale over her lot in QC in favor of Suzara without
any monetary consideration and solely out of love and affection. Suzara registered the document in his favor
and used the property as collateral for a bank loan P350,000.00; he however failed to pay the loan so that
after four (4) years the mortgage was foreclosed. She paid the bank P40,638.88 to restructure the loan
resulting in the extension of the redemption period to two (2) years. However, without her knowledge and
before the expiration of the extended period, Suzara redeemed the property. She tried to talk to him but he
avoided her. Finally, to protect her interest, she executed an Affidavit of Adverse Claim which she filed with
the Register the Deeds of Quezon City asserting that her sale in favor of Suzara was null and void for lack of
consideration and being contrary to law and public policy.
Suzara claimed that he was already the registered owner of the property as evidenced by the land
title, having acquired the same from petitioner through a notarized deed of absolute sale; the sale was for a
valuable consideration and not tainted with fraud nor executed under duress; and, petitioner was estopped
from impugning the validity of the sale and questioning his title over the property. Suzara sold the property
to his co-defendant herein Manuel Vizconde, who claimed that he was a purchaser for value in good faith.
The trial court ruled that the sale between petitioner and respondent Suzara was valid with "love, affection
and accommodation" being the consideration for the sale. It also found Vizconde an innocent purchaser for
value.
Petitioner insists that she and respondent were common-law husband and wife, and that the sale
between them as void and inexistent, citing Art. 1490 of the Civil Code. She argues that the consideration
of "love, affection and accommodation" for the sale was not a valid cause for the conveyance of the property
as there was no price paid in money or its equivalent, and since her sale to Suzara was null and void the
issue of its illegality cannot be waived or ratified; resultantly, the sale by Suzara to his co-respondent
Vizconde must also be declared null and void the latter being a purchaser in bad faith.
Issue:
W/N the sale between petitioner Gloria and respondent Romeo was void and inexistent, being
common-law husband and wife, pursuant to Art. 1490 of the NCC.

Ruling:
NO. Although under Art. 1490 the husband and wife cannot sell property to one another as a rule
which, for policy consideration and the dictates of morality require that the prohibition apply to common-
law relationships, petitioner can no longer seek reconveyance of the property to her as it has already been
acquired by respondent Vizconde in good faith and for value from her own transferee.
Where innocent third persons, relying on the correctness of the certificate of title thus issued,
acquire rights over the property, the court cannot disregard such rights and order the total cancellation of
the certificate. The effect of such an outright cancellation would be to impair public confidence in the
certificate of title, for everyone dealing with property registered under the Torrens system would have to
inquire in every instance whether the title has been regularly or irregularly issued.

D. SPECIAL DISQUALIFICATIONS - Arts. 1491-1492

Article 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 intrusted 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. (1459a)

Article 1492. The prohibitions in the two preceding articles are applicable to sales in legal redemption,
compromises and renunciations. (n)

1. Guardians, Agents and Administrators

Philippine Trust Co. v. Roldan 99 Phil 392 (1956)

FACTS: Mariano L Bernardo, a minor, inherited from his father, Marcelo Bernardo 17 parcels of
land located in Guiguinto, Bulacan. In view of his minority, guardianship proceedings were
instituted on July 27, 1947, where Socorro Roland, surviving spouse of Marcelo and step-mother
of Mariano, was appointed as guardian of the latter. Also, Socorro filed a motion asking authority
to sell as guardian the 17 parcels for the sum of P14,700 to his brother-in-law, Dr. Fidel C. Ramos,
the purpose of the sale being allegedly to invest money in a residential house, which the minor
desired to have on Tindalo St., Manila. The motion was granted. On August 5, 1947 Socorro, as
guardian, then executed the proper deed of sale in favor of Fidel Ramos and on August 12, 1947,
she asked for and obtained judicial confirmation of the sale. However, on August 13, 1947, Fidel
Ramos executed in favor of Socorro personally, a deed of conveyance covering the same 17 parcels
for the sum of P15,000. And on October 21, 1947 Socorro sold 4 out of the 17 parcels to Emilio Cruz
for P3,000, reserving herself the right to repurchase. On August 10, 1948, petitioner Phil. Trust
Co. replaced Socorro as guardian. Petitioner filed a complaint to annul two contracts regarding
the 17 parcels of land: a) the sale thereof by Socorro, as guardian, to Fidel Ramos; and b) sale
thereof by Fidel Ramos to Socorro personally. Petitioner contends that the step-mother in effect,
sold to herself, the properties of her ward thus should be annulled as it violates Art. 1459 of the
Civil Code prohibiting the guardian from purchasing “either in person or through the mediation
of another” the property of her ward. As to the third conveyance, that Socorro had acquired no
valid title to convey to Cruz. The trial court held that Art 1459 was not controlling as there was no
proof that Ramos was a mere intermediary or that the latter agreed with Socorro to but the
parcels of land for her benefit. The Court of Appeals affirmed the judgment, adding that the minor
new the particulars of, and approved the transactions, and that ‘only clear and positive evidence
of fraud and bad faith, and not mere insinuations and interferences will overcome the
presumptions that a sale was concluded in all good faith for value. Hence, this petition.

ISSUE: Whether the two contracts of sale made by Socorro was valid.

HELD: No. The court held that even without proof that Socorro had connived with Fidel Ramos.
Remembering the general doctrine that guardianship is a trust of the highest order, and the
trustee cannot be allowed to have any inducement to neglect his ward's interest and in line with
the court's suspicion whenever the guardian acquires the ward's property we have no hesitation
to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward's
parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies. The temptation which
naturally besets a guardian so circumstanced, necessitates the annulment of the transaction, even
if no actual collusion is proved (so hard to prove) between such guardian and the intermediate
purchaser. This would uphold a sound principle of equity and justice. From both the legal and
equitable standpoints these three sales should not be sustained: the first two for violation of article
1459 of the Civil Code; and the third because Socorro Roldan

could pass no title to Emilio Cruz. The annulment carries with it (Article 1303 Civil Code) the
obligation of Socorro Roldan to return the 17 parcels together with their fruits and the duty of the
minor, through his guardian to repay P14,700 with legal interest.

2. Lawyers
Rubias v. Batiller 51 SCRA 120 (1973)

FACTS:
On August 31, 1964, Domingo Rubias, a lawyer, filed a suit to recover the ownership and
possession of certain portions of a lot located in Barrio General Luna, Barotac Viejo, Iloilo, which
he bought from his father-in-law, Francisco Militante in 1956. The lot was occupied by Isaias
Batiller, who illegally entered said portions of the lot on two occasions—in 1945 and 1959. Rubias
also prayed for damages and attorney’s fee. Meanwhile, in his answer, Batiller claims that he and
his predecessors-in-interest have always been in actual, open, and continuous possession since
time immemorial under claim and ownership of the portions of the lot in question. Batiller claims
that due to the allegations, he has suffered moral damages in the amount of P2,000 and a sum of
P500 for attorney’s fees.

ISSUE:
What is the status of the sale?

RULING:
The stipulated facts and exhibits of record indisputably established plaintiff’ s lack of cause of
action and justified the outright dismissal of the complaint. Plaintiff’s claim of ownership to the
land in question was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in-
 law, Francisco Militante, in his favor, at a time when Militante’s application for registration
thereofhad already been dismissed by the Iloilo land registration court and was pending appeal
in the Court of Appeals. Hence, there was no right or title to the land that could be transferred or
sold by Militante’s purported sale in 1956 in favor of plaintiff. Manifestly, then plaintiff’s
complaint against defendant, to be declared absolute owner of the land and to be restored to
possession thereof with damages was bereft of any factual or legal basis. Article 1491 of our Civil
Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons,
by reason of the relation of trust or their peculiar control over the property, from acquiring such
property in their trust or control either directly or indirectly and "even at a public or judicial
auction," as follows: (1) guardians; (2) agents; (3) administrators; (4)public officers and
employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others
especially disqualified by law.

3. Judges
Macariola v. Asuncion 114 SCRA 77 (1982)

FACTS:

Spouses Silvestre Dignos and Isabela Lumungsod de Dignos sold their parcel of land
in Opon, Lapu-Lapu to private respondent Antonio Jabil for the sum of P28,000.00
payable for 2 installments, with an assumption of indebtedness with the First Insular
Bank of Cebu in the sum of P12,000.00 as was acknowledged by vendors in the Deed
of Absolute Sale (Exh. C), and the next installment to be paid 3 months after. But the
same land was also sold by Spouses Dignos (Exh. J) which was registered in the
Registry of Deeds. This prompted Jabil to file a civil suit against Spouses Dignos for
the 2nd sale to Spouses Luciano Cabigas and Jovita de Cabigas, who were then US
citizens. CFI of Cebu rendered the 2nd sale to Spouses Cabigas null and void, directing
Spouses Dignos to return the P35,000.00 to Spouses Cabigas and ordered Jabil to pay
the remaining balance. Spouses Dignos contend that Exh. C is a contract to sell and as
such, anchored their contention on the very terms of the contract as mentioned in ¶4,
that said spouses have agreed to sell the herein mentioned property to Alilano B. Jabil
and condition in ¶5, in which the spouses agreed to sign a final deed of absolute sale
upon payment of the remaining balance of P4,000.00.

ISSUE:

Is the contract between the parties a contract of sale or a contract to sell?

HELD:

The contract between the parties is a contract of sale. It has been held that a deed of
sale is absolute in nature although dominated as a “Deed of Conditional Sale” where
nowhere in the contract in question is a proviso or stipulation to the effect that title to
the property sold is reserved in the vendor until full payment of the purchase price,
nor is there a stipulation giving the vendor the right to unilaterally rescind the contract
the moment the vendee fails to pay within a fixed period. All the elements of a valid
contract of sale are present in the document and that Spouses Dignos never notified
Jabil by notarial act that they were rescinding the contract, and neither did they file a
suit in court to rescind the sale. There is no showing that Jabil properly authorized a
certain Cipriano Amistad to tell petitioners that he was already waiving his rights to
the land in question.

III. SUBJECT MATTER

A. REQUISITES OF A VALID SUBJECT MATTER - Arts. 1459 to 1465

1. Must be licit - Arts. 1347, 1459, 1575, 1409

Martinez v. CA 56 SCRA 647 (1974)
2. Must be determinate or determinable-Art. 1460
Melliza v. City of Iloilo 23 SCRA 477 (1968)
Atilano v. Atilano 28 SCRA 231 (1969)
3. Must be existing, future or contingent - Arts. 1347, 1348 and 1462
4. Emption rei speratae Arts. 1461 and 1347
Pichel v. Alonzo 111 SCRA 34 (1981)
5. Emptio spei - Art. 1461
6. Subject to resolutory condition - Art. 1465
7. Quantity of subject matter not essential for perfection - Art. 1349

B. PARTICULAR KINDS

1. Generic things -Arts. 1246 and 1409 (6)

Yu Tek v. Gonzales 29 Phil 384 (1915)
2. Future goods - Art. 1461
3. Sale of undivided interest or share - Arts. 1463-1464
4. Sale of things in litigation- Arts. 1381 (4), 1358 (2)

IV. OBLIGATION OF THE SELLER TO TRANSFER OWNERSHIP

A. SALE BY A PERSON NOT THE OWNER AT TIME OF DELIVERY - Arts. 1462, 1505, 1459
EXCEPTIONS: When ownership transfers by non-owner

1. Estoppel -Arts. 1434

Hernaez v. Hernaez 32 Phil 214 (1915)
Siy Cong Bien V. HSBC 56 Phil 598 (1932)
Jalbuena v. Lizarraga 33 Phil 77 (1915)
2. Recording Laws; Torrens System - PD 1529
3. Statutory Sale - Order of Courts
4. Sale in Merchant's Store, Market or Fair
Sun Bros. V. Velasco 54 OG 5143 Aug 1958
Masiclat v. Centeno GR No 8420, May 21, 1956

B. SALE BY A PERSON HAVING A VOIDABLE TITLE -Arts. 1506, 559

Tagatac v. Jimenez 53 OG 3792 No. 12 June 1957

De Garcia v. CA 37 SCRA 129 (1971)
EDCA Publishing v.Santos 184 SCRA 614 (1990)
Aznar v. Yapdiangco 13 SCRA 486 (1965)

V. PRICE

A. MEANING OF PRICE- Arts. 1469-1474

B. REQUISITES FOR A VALID PRICE

1. Must be real- Arts. 1471

a. When price simulated
b. Effects when price simulated
c. False consideration - Art. 1353 and 1354, 1355
Mapalo v. Mapalo 17 SCRA 114 (1966)
Ong v. Ong 139 SCRA 133 (1985)
Bagnas v. CA 176 SCRA 159 (1989)
 Morales v. CA 27 SCRA 484 (1969)
d. Non-payment of price-
2. Must be in money or its equivalent- Arts. 1458, 1468
Republic v. Phil. Resources 102 Phil 960 (1958)
3. Must be certain or ascertainable at time of perfection - Arts. 1469
Toyota Shaw v. CA 244 SCRA 320 (1995)

C. HOW PRICE IS DETERMINED

1. By third person - Art. 1469

2. By the courts-Art. 1469
3. By reference to a definite day- Art. 1472
4. By reference to another thing certain
5. Never by one party - Arts. 1473, 1182

D. INADEQUACY OF PRICE -Arts. 1355, 1470

E. WHEN NO PRICE AGREED-Art. 1474

F. MANNER OF PAYMENT MUST BE AGREED UPON

Velasco v. CA 51 SCRA 439 (1973)

G. EARNEST MONEY V. OPTION MONEY-Art. 1482

Limson v. CA 357 SCRA 209 (2001)

San Miguel Properties v. Huang 336 SCRA 737 (2000)

VI. FORMATION OF CONTRACT OF SALE

A. PREPARATORY- Art. 1479

1. Offer - Art. 1475

Villonco v. Bormaheco 65 SCRA 352 (1975)
a. Forms of offer-Arts. 1319, 1325, 1326
Zayco v. Serra 44 Phil 326 (1923)
b. Forms of acceptance - Arts. 1319
c. Vices vitiating consent - Arts. 1330, 1338, 1331
2. Option Contract-Arts. 1479,1324
De la Cavada v.Diaz 37 Phil 962 (1918)
Carcellar v. CA 302 SCRA 718 (1999)
a. Meaning of Consideration:
Villamor v. CA 202 SCRA 607 (1991)
Soriano v. Bautista 6 SCRA 946 (1962)
b. An option to buy is not a contract of purchase and sale
Adelfa Properties v. CA 310 Phil 623 (1995)
c. Without consideration void as option but valid as offer
Sanchez v. Rigos 45 SCRA 368 (1972)
d. Proper exercise of option
Nietes v. CA 46 SCRA 654 (1972)
e. There must be acceptance of option
Vasquez v. CA 199 SCRA 102 (1991)
3. Right of First Refusal
Equitorial Realty v. Mayfair 264 SCRA 483 (1996)
Paranaque Kings v. CA 268 SCRA 727 (1997)
Ang Yu v. CA 238 SCRA 602 (1994)
Rosencor v. Inquing 354 SCRA 119 (2001)
 4. Mutual Promise to Buy and Sell - Art. 1479
De la Cavada v. Diaz 37 Phil 982 (1918)

B. PERFECTION - Arts. 1475, 1319, 1325, 1326

1. When deviation allowed

Villonco v. Bormaheco 65 SCRA 352 (1975)
2. Sale by Auction-Arts. 1476, 1403 (d), 1326
3. Perfection-Art. 1475
4. National Grains Authority v. IAC 171 SCRA 131 (1989)
5. Peoples Homesite and Housing v. CA 133 SCRA 777 (1984)
6. Place of Perfection- Art. 1391
7. Expenses of Execution and Registration-Art. 1487, 1521

C. FORMALITIES OF THE CONTRACT

1. Form not important- Arts. 1483, 1356, 1357, 1358

Dalion v. CA 182 SCRA 872 (1990)
Secuya v. vda de Selma 326 SCRA 244 (2000)
2. Exceptions: When form important
a. Enforceability -Statute of Frauds - Arts. 1403, 1405
Paredes v. Espino 22 SCRA 1000 (1968)
Baretto v. Manila 46 Phil 964 (1924)
Inigo v. Estate of Maloto 21 SCRA 246 (1967)
b. Form important for validity
i. Sale of realty through an agent - Art. 1874
City Lite v. CA 325 SCRA 385 (2000)
ii. Sale of large cattle -Art. 1581, sec. 529 Revised Adm. Code
iii. Electronic Commerce Act- RA 8792 sec. 7,8,11

VII. TRANSFER OF OWNERSHIP

A. MANNER OF TRANSFER-Arts. 1477, 1496

Kuenzle v. Macke 14 Phil 610 (1909)

B. WHEN DELIVERY DOES NOT TRANSFER TITLE

1. Sale on return
2. Sale on approval, trial or satisfaction - Art. 1502
3. Express Reservation - Art. 1478
Luzon Brokerage v. Maritime Bldg. 43 SCRA 93 (1972)
4. Implied Reservation-Art. 1503
5. When sale not valid
6. When seller is not the owner

C. KINDS OF DELIVERY

1. Real delivery - Art. 1497

Bean v. Cadwallader 10 Phil 606 (1908)
Ocejo v. International Bank 37 SCRA 631 (1918)
Cebu Winland Dev.Corp. v. Ong Siao Hua 588 SCRA 120 (2009)
2. Constructive Delivery
a. Symbolic Delivery-Art. 1498
Aviles v. Arcega 44 Phil 924 (1922)
Phil. Suburban v. Auditor General 63 SCRA 397 (1975)
Sarmiento v. Lesaca 108 Phil 900 (1960)
 Florendo v. Foz 21 Phil 388 (1991)
Masallo v. Cesar 39 Phil 134 (1918)
Asset Privatization Trust v. T.J. Enterprises 587 SCRA 481 (2009)
3. Traditio Longa Manu - Arts. 1498, 1499, 1513, 1514
Board of Liquidator v. Floro 110 Phil 482 (1960)
4. Tradition Brevi Manu- Art. 1499
Abuan v. Garcia 14 SCRA 759 (1965)
5. Traditio Constitutom Possessorium - Art. 1500
Bautista v. Sioson 39 Phil 615 (1919)
6. Delivery to a Common Carrier-Arts. 1523
FOB Sales"
Behn Meyer v. Yangco 38 Phil 602 (1918)
"CIF Sales"
General Food v. Nacoco 100 Phil 637 (1956)
"FAS"
7. Effect of form of bill of lading - Art. 1503

D. DOUBLE SALES-Art. 1544

1. General Rule Prior tempore, prior jure

Carbonell v. CA 69 SCRA 99 (1976)
2. Requisites for Double Sale
Cheng v. Genato 300 SCRA 722 (1998)
3. Who is purchaser in good faith
Agricultural and Home Extension v. CA 213 SCRA 536 (1992)
4. Priority of registration over possession
5. Sale of Movables -Arts. 1544,1497 to 1501
Rivera v. Ong 37 Phil 355 (1917)
6. Sale of Immovables - Art.1 1544 par. 2
Carbonell v. CA 69 SCRA 99 (1976)
7. Sale by virtue of execution and attachment - Art. 1544
Carumba v. CA 31 SCRA 558 (1970)
8. Meaning of "Better Right"
Hanopol v. Pilapil 7 SCRA 452 (1963)
9. Unregistered land PD 1529 sec. 113
Dagupan v. Macam 14 SCRA 179 (1965)
10. When one sale is forgery
Espiritu v. Valerio 9 SCRA 761 (1963)
11. First in possession in good faith
Quimson v. Rosete 87 Phil 159 (1950)
Sanchez v. Ramos 40 Phil 614 (1919)
12. Oldest title- Art. 1544 pars. 3

VIII. RISK OF LOSS

A. GENERAL RULE-Art. 1263, 1189

B. WHEN LOSS OCCURRED BEFORE PERFECTION

Roman v. Grimalt 6 Phil 96 (1906)

C. WHEN LOSS OCCURRED AT TIME OF PERFECTION -Arts. 1493 and 1494

Norkis v. CA 193 SCRA 694 (1991)

D. WHEN LOSS OCCURRED AFTER PERFECTION BUT BEFORE DELIVERY –

Arts. 1164, 1262

General Rule: Res perit domino

1. Loss by fault of a party-Arts. 1480, 1504. 1538, 1636

2. Loss by fortuitous events-Arts. 1480, 1163, 1165, 1504, 1538, 1189
3. Fruits or improvements-Arts. 1537

E. WHEN OWNERSHIP IS TRANSFERRED - Arts. 1504

Sun Bros. V. Perez 7 SCRA 977 (1963)

Lawyer's Coop v. Tabora 13 SCRA 762 (1965)
Song Fo v. Oria 33 Phil 3 (1915)

IX. DOCUMENTS OF TITLE

A. DEFINITION-Art. 1636

B. PURPOSE OF DOCUMENTS OF TITLE

Siy Cong Bieng v. HSBC 56 Phil 598 (1932)

C. NEGOTIABLE DOCUMENTS OF TITLE

1. How negotiated - Arts. 1508, 1509

2. Who can negotiate - Art. 1512
3. Rights acquired by negotiation - Art. 1505
4. Effects of Negotiation - Art. 1513
5. Unauthorized Negotiation -Art. 1518

D. NON-NEGOTIABLE DOCUMENTS OF TITLE

1. How transferred or assigned - Art. 1514

2. Effects of Transfer-Art. 1514

E. WARRANTIES OF SELLER OF DOCUMENTS OF TITLE -Art. 1516

F. RULES ON LEVY/GARNISHMENT OF GOODS- Arts. 1514, 1519, 1520

X. REMEDIES OF AN UNPAID SELLER

A. DEFINITION OF UNPAID SELLER-Art. 1525

B. REMEDIES OF UNPAID SELLER

1. Possessory Lien -Arts. 1526-1529, 1503, 1535

a. Partial delivery
b. Loss of lien
c. Revival of lien
2. Stoppage in transitu - Arts. 1530 -1535, 1632 (2)
a. Requisites
b. When considered in transit
c. Sale of goods in transit
3. Right of Resale - Art. 1533
a. Time to resell
b. Right to sue buyer for damages
4. Right to Rescind -Art. 1534
XI. PERFORMANCE OF CONTRACT

A. DELIVERY OF THING SOLD

1. Place, time and manner of delivery-Arts. 1521, 1169, 1524

Smith Bell v. Matti 44 Phil 874 (1922)
2. When time is of essence
Soler c. Chesky 43 Phil 52 (1922)
Republic v. Litton 94 Phil 52 (1953)
3. Effects of delivery-Art. 1477, 1478
4. When not bound to deliver -Arts. 1524, 1536,1198
5. Sale of Movables -Arts. 1522, 1537, 1480
a. Delivery by installment - Art. 1583
b. Delivery of wrong quantity-Art. 1522
6. Sale of Immovables-Arts. 1539, 1540
Azarraga v. Gay 52 Phil 599 (1928)
a. Where price is at certain rate per unit - Art. 1539, 1540
Cebu Windiand Dev. Corp.v. Ong Siao Hua 588 SCRA 120 (2009)
b. Sale for a lump sum -Art. 1542
7. Inspections and Acceptance
a. Right of inspection-Art. 1584
b. Manifestation of acceptance-Art. 1585

c. Breach of warranty-Art. 1586

d. Refusal to accept-Art. 1587-1589
La Fuerza v. CA 23 SCRA 1217 (1968)

B. PAYMENT OF PRICE

1. Liability for interest- Arts. 1582

2. Suspension of payments - Arts. 1590, 1560, 1664
De la Cruz v. Legaspi 98 Phil 43 (1955)
Bareng v. CA 107 Phil 641 (1960)
3. Sale of real property-Arts. 1592, 1560
a. Effect of non payment-Art. 1191
Laforteza v. Machuca 333 SCRA 643 (1992)
Luzon Brokerage v. Maritime Bldg. 43 SCRA 93 (1972)
b. Maceda Law: Sales of Residential Realty on Installment (RA 6552)
Valarao v. CA 394 SCRA 155 (1999)
Active Realty v. Daroya 382 SCRA 152 (2002)

XII. WARRANTIES

A. EXPRESS WARRANTIES

1. Distinguish from condition - Arts. 1545

2. Distinguish from opinion, dealer's talk- Art. 1546, 1340, 1341
Songco v. Sellner 37 Phil 254 (1917)
3. Distinguish from false representation - Art. 1342
Gochangco v. Dean 47 Phil 687 (1925)
PMC v. Gojuco 48 Phil 621 (1926)

B. IMPLIED WARRANTIES-Art. 1547

1. Seller has right to sell

2. Warranty against eviction - Arts. 1548-1560
 3. Warranty against non-apparent servitudes -Art. 1560
4. Warranty against hidden encumbrance or defects-Arts. 1561-1580
5. Additional warranties for consumer products-RA 7394, Art. 68
6. Warranty in sale of animals-Art. 1568
7. Implied Warranty of Quality-Art. 1562 (1), 1564
8. Sale by sample or description - Art. 1574, 1562 (2), 1481

C. EFFECTS OF WARRANTIES

D. EFFECTS OF WAIVERS

E. BUYERS OPTIONS IN CASE OF BREACH OF WARRANTY-Art. 1599

Ong v. CA 567 SCRA 53 (2008)

XIII. BREACH OF CONTRACTS

A. REMEDIES OF THE SELLER -Art. 1636, 1594-1599

1. Sale of Movables
a. Action for the price- Art. 1595
b. Action for damages- Art. 1596
c. Rescission- Art. 1597, 1534, 1593
d. RECTO LAW: Sale of Movables on Installment - Arts. 1484-1486
i. Meaning of "Installment Sale"
Levy Hermanos v. Gervacio 69 Phil 52 (1939)
ii. Remedies available to the unpaid seller
Delta Motor Sales v. Niu Kim Duan 213 SCRA 259 (1992)
iii. Remedy of specific performance
Tajanlangit v. Southern Motors 101 Phil 606 (1967)
iv. Nature of the remedy of rescission
Nonato v. IAC 140 SCRA 255 (1985)
v. Meaning of "action"
Cruz v. Filipinas Investment and Finance Corp. 23 Corp 791 (1968)
vi. What constitutes "foreclosure"
vii. Third party mortgage
Ridad v. Filipinas Investment 120 SCRA 246 (1983)
viii. The "barring" effect of foreclosure
Northern Motors v. Sapinoso 33 SCRA 356 (1970)

2. Sale of Immovables
a. Anticipatory Breach - Art. 1591
Legarda v. Saldana 55 SCRA 324 (1974)
b. PD 957 sec. 23, 24
Casa Filipina v. OP 241 SCRA 165 (1995)
Relucio v. Brillante Garfin 187 SCRA 405 (1990)
c. Maceda Law: RA 6552 -Sale of Immovables on Installment
Mclaughlin v. CA 144 SCRA 693 (1986)
Luzon Brokerage v. Maritime 86 SCRA 305 (1978)

B. REMEDIES OF THE BUYER

1. In case of movables-Arts. 1598-1599

2. In case of immovables -Art. 1911' PD 957 Sec. 23, 24
3. Suspension of Payment- Art. 1590

XIV. EXTINGUISHMENT OF THE SALE

A. CAUSES -Arts. 1600, 1231

B. CONVENTIONAL REDEMPTION -Art. 1601

Villarica v. CA 26 SCRA 189 (1968)

Bautista v. Unangst 557 SCRA (2008)

C. EQUITABLE MORTGAGE-Arts. 1602- 1604

1. Definition of Equitable Mortgage

Tan v. Valdehueza 66 SCRA 61 (1976)
2. Rationale of Equitable Mortgage
3. Badges of Equitable Mortgage
4. Pactum Commissorium-Art. 2088

D. DISTINGUISH FROM OPTION TO BUY-Art. 1602

Adiarte v. Tumaneng 88 Phil 333 (1951)

E. PERIOD OF REDEMPTION

1. When no period agree upon-Art. 1606

2. When period agreed upon
Anchuel v. IAC 147 SCRA 4343 (1987)
3. When there is a period of non-redemption
Tayao v. Dulay 13 SCRA 758 (1965)

F. EXERCISE OF THE RIGHT TO REDEEM-Art. 1616

Gargollo v. Duero 1 SCRA 1311 (1961)

1. By whom exercised -Arts. 1610-1613

2. From whom to redeem-Art. 1615
3. Effect of redemption - Arts. 1617, 1618
4. Effect of non-redemption- Art. 1607

G. LEGAL REDEMPTION-Art. 1619

1. Period to redeem - Art. 1623

Conejero v. CA 16 SCRA 775 (1966)
Butte v. Manuel Uy-4 SCRA 526 (1962)
Castillo v. Samonte 106 Phil 1023 (1960)
Doromal v. CA 66 SCRA 575 (1975)
2. Instances of legal redemption
a. Co-owners-Art. 1620
b. Co-heirs- Art. 1088
c. Adjoining landowners of rural land - Art. 1621
d. Adjoining landowners of urban land -Art. 1622
Ortega v. Orcine 38 Phil 276 (1971)
e. Under Public Land Act- CA 141 sec. 118 [check new laws removing right of redemption]
f. Under Extrajudicial Foreclosure-Act 3175 sec. 6
g. Under Agrarian Land Reform Code- RA 6389 sec. 12

XV. BULK SALES LAW

A. Scope
B. Coverage of Bulk Sales

C. Compliance requirements under the law

D. Effects of non-compliance Sec. 4,7,11

People v. Mapoy 73 Phil 678 (1942)

XVI. RETAIL TRADE LIBERALIZATION ACT OF 2000

A. Constitutionality

Inchong v. Hernandes 101 Phil 1155 (1957)

B. Scope and definition

King v. Hernandez 4 SCRA 792 (1962)

C. Elements

D. Application of Grandfather Rule on 100% Filipino ownership of corporate entity

E. Anti-Dummy Act-CA No. 108 as amended by PD 715