sales notes (uribe)

7/26/2019 Sales Notes (Uribe)

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I. In General

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: What is the nature of a sale?

A: 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 immovableproperty. (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 thingwhich 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?


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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 acondominium, ownership is not transferred yet

(Uribe)

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

Contract to sell

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 theproperty 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.

1. Upon fulfillment of

the suspensive

condition, which is the

full payment of the

purchase price,

ownership will notautomaticallytransfe

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: Is sale on installments a conditional sale?

A: Not necessarily. Because it pertains only to

manner of payment and has nothing to do with the

transfer of ownership.

Q: Example of real contracts?

A: 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

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)

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


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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)

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 Contract to Sell.

Taken from the case of Torcuator vs. BernabeContract of Sale Contract to Sell

Title passes to the

buyer upon delivery

of the thing sold.

Ownership is

reserved in the seller

and is not to pass

until the full payment

of the purchase price

is made.

Non-payment of the

price is a negative

resolutory condition

Full payment is a

positive suspensive

condition

The vendor has lost

and cannot recover

the ownership of the

land sold until and

unless the contract

of sale is itself

resolved and set

aside.

The title remains in

the vendor if the

vendee does not

comply with the

condition precedent

of making payment at

the time specified in

the contract.

Q: Distinguish Contract of Sale from Dacion en Pago.

Table taken from Paras

Contract of

Sale

Dacion en Pago

1. there is no

pre-existing

credit

1. there is a pre-

existing credit

2. gives rise to

obligation

2. extinguishes

obligation

3. the cause or

consideration

here is theprice from the

viewpoint of

the seller; or

the obtaining

of the object

from the

viewpoint of

the buyer.

3. the cause or

consideration

here from theviewpoint of the

person offering

the dation in

payment is the

extinguishment

of his debt form

the viewpoint of

the creditor, it is

the acquisition of

the object

offered in lieu of

the original

credit.

4. There is

greater

freedom in

determining

the price

4. There is

lesser freedom

in determining

the price.

5. the giving ofthe price may

generally end

the obligation

of the buyer.

5. the giving ofthe 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.

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 naturefirst---

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: Distinguish Absolute sale from Conditional Sale

A: 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.


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

if skill is more valuable, WORK.

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 salethe 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 theprice.

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 hisagent; 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 andreceive 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 aninterest 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


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

conditional.

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 takenpossession 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 anotherperson 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;(b) A special promise to answer for

the debt, default, or miscarriage of

another;







pesos, unless the buyer accept and

receive part of such goods and







at the time of the sale, of the amount

and kind of property sold, terms of




memorandum;



the sale of real property or of an

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 thepurchase 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 ifone 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 financingtransactions 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


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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.

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 theobject 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. As to validity or defect of the transaction

a. valid sale

b. rescissible

c. voidabled. unenforceable

e. void

4. As to the presence or absence of

condition

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 repurchasethe 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 non-

payment 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 publicinstrument, 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 paidto 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


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fulfillment of the condition agreed upon, that is, full

payment of the purchase price. (Id.)

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 fulfillmentof 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 pendensis 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 previousdelivery of the property subject of the sale to the buyer,

ownership thereto automaticallytransfers 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 automaticallytransfer 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 thecustomer 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. 1485Art. 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.


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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 togive 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.

Q: A obliged himself to deliver maong pants to Bwhich 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.

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)

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 begiven 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 succeedin 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

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.


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These contracts are binding, unless they are annulled

by a proper action in court. They are susceptible of

ratification.

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 hasacted 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;

(b) A special promise to answer for

the debt, default, or miscarriage ofanother;







pesos, unless the buyer accept and

receive part of such goods and







at the time of the sale, of the amountand kind of property sold, terms of




memorandum;



the sale of real property or of an

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 deaf-

mutes 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 administrationof 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


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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.

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 theauctioneer 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 anyperson 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 incapacitatedor 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: May service be an object of a contract of sale?

A: NO. Service cannot be the subject of ownership.

Q: What may transpire if the parties did not give

consent?

A: Relative or Absolute contract. Both parties did not

intend to be bound. These are called fictitious

contracts. And this is usually committed byFORGERY.

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


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through hereditary succession

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 beenopined 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

1stcontract eastern portionthis is donationno

problem here because spouses Mapalo actually

gave consent.

2nd

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 causerenders the contract voidable, unless it is supported by

another real and licitconsideration. 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 andother 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

Sale of a right to bind 3rdpersons, 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?


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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.

Q: Sale of a dog?

A: VOID. Not determinate.

Q: Sale of a car when would be valid?

A: Honda Civic, 2006 model, red color for 1M.

Q: Emptio rei sperati, meaning?

A: 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 existenceand 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 inMindanao. 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

C. However, on the 9th 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 didnot 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.


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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.

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 andappropriated 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 ofthe 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 Philippinecurrency 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. 8183Approved: 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 orbelow 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?


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A: 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 thingswhich 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 atransaction 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. Natural Elements

1. warranties

2. subrogation

C. Accidental Elements

III. 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 ofcontracts.

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 otherwiseprovided 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


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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)

IV. Rights and Obligations of the Vendor Art.

1495Art. 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.

A. To transfer ownership

Who can transfer ownership

General Rule Arts. 1505-

1506, 1547

Cuison vs. Remoto Where

the 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.

Exceptions: Art. 15051. 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. Mapile-

Ownership 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.

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 acourt 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:

(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 orequitable 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 paisor 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, onewho 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.


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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 bythe 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.

Art. 1523. Where, in pursuance of a contract of sale, the

seller is authorized or required to send the goods to thebuyer, 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.

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.

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

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

order of the seller or of his agent, the seller thereby

reserves the ownership in the goods. But, if except forthe 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

sales notes (uribe)

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