Sales - SY 2010 Atty. Joanne Cañete-Chan

Sales – SY 2010
Atty. Joanne Cañete-Chan
I. Nature and form of a contract of sale

a. Article 1458 and 1318, essential requisites of a contact
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.
A contract of sale may be absolute or conditional. (1445a)
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (1261)
b. Article 1409, contracts that are contrary to law, void contracts

Art. 1409. The following contracts are inexistent and void from the beginning: (1)
Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy; (2) Those which are absolutely simulated or
fictitious; (3) Those whose cause or object did not exist at the time of the
transaction; (4) Those whose object is outside the commerce of men; (5) Those
which contemplate an impossible service; (6) Those where the intention of the
parties relative to the principal object of the contract cannot be ascertained; (7)
Those expressly prohibited or declared void by law. These contracts cannot be
ratified. Neither can the right to set up the defense of illegality be waived
c. Article 1330, 1390 voidable contracts

Art. 1330. A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable. (1265a)
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.
These contracts are binding, unless they are annulled by a proper action in court.
They are susceptible of ratification. (n)
d. Article 1381 (3) and (4) rescissible contract

Art. 1381. The following contracts are rescissible:
(1) Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which
are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into by
the defendant without the knowledge and approval of the litigants or of
competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
(1291a)
e. Article 1403, Statue of Frauds, unenforceable contracts

Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given
no authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be
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unenforceable by action, unless the same, or some note or memorandum, thereof,

be in writing, and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the writing, or a
secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year
from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of
another;
(c) An agreement made in consideration of marriage, other than a mutual
promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a
price not less than five hundred pesos, unless the buyer accept and receive
part of such goods and chattels, or the evidences, or some of them, of such
things in action or pay at the time some part of the purchase money; but
when a sale is made by auction and entry is made by the auctioneer in his
sales book, at the time of the sale, of the amount and kind of property sold,
terms of sale, price, names of the purchasers and person on whose account
the sale is made, it is a sufficient memorandum;
(e) An agreement of the leasing for a longer period than one year, or for
the sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
f. Article 1466 to 1468 – Sale as distinguished from Agency,

Contract for a piece of work, Lease of things and Barter
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. 1467. A contract for the delivery at a certain price of an article which the
vendor in the ordinary course of his business manufactures or procures for the
general market, whether the same is on hand at the time or not, is a contract of
sale, but if the goods are to be manufactured specially for the customer and upon
his special order, and not for the general market, it is a contract for a piece of
work. (n)
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)
g. p.10-16 Baviera
C. Sales and Other Transaction Distinguished
Sec. 12 Distinguished from Contract for a Piece of Work
SALES CONTRACT FOR A PIECE OF WORK
A contract for the delivery at a certain If the goods are manufactured specially
price of manufactures or procures for the for the customer and upon his special
general market, whether on hand at the order, and not for the general market.
time or not
Importance of Distinction
Application of Stature of Frauds
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In Sales
- the test is whether the thing transferred is one not in existence and which never
would have existed but for the order of the party desiring to acquire it, or a thing
w/c would have existed and been the subject of sale to some other person, even if
the order had not been given
- When a person stipulates a future sale of articles which he is habitually making,
and which at the time are not made or finished –CONTRACT OF SALE
- if the article ordered by the purchase is exactly as the plaintiff makes and keeps
on hand for sale to anyone and no change or modification of it is made at
defendant’s request, even made after and in consequence of the defendant’s order
for it.
In Pc. Of Work
-The fact that the windows and doors were made by it only when customers placed
their orders.
- A position habitually to manufacture
-Accepts a job that requires the use of extraordinary or additional equipment, or
involved services not generally performed by it.
- a contractor imported item which were used in executing the contracts for the
desing, supply and installation of aircon units
-Contractor – a person who in 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 petty details
Sec.13 Distinguished from Lease of Things

SALE LEASE
Downpayment, monthly rents and The lessee is given the option to buy the
duration of payments have been fixed by thing leased, for a small consideration at
agreement of the parties, the total rents the end of the term , after crediting to
being equal to the value of the thing the price all the so-called rents already
leased paid, or with the stipulation that if the
rents throughout the term have been
paid, the lessor shall transfer to the
lessee full ownership (lease in name
only)
-to prevent evasion of Art. 1484 of the
NCC, art. 1485 provides that the
provisions of the preceding article shall
be applied also 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 a thing
Sec. 14 Distinguished for Agency to Buy or Sell

SALE AGENCY TO BUY OR SELL
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
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Transfer of title or agreement to transfer The delivery to the agent of the goods as
it for the price paid or promised : not as the latter’s property but of the
essence of sale principal who remains the owner and has
the right to control the sales by the
agent, fix the price and terms, demand
and receive the proceeds of the sales
less than the agent’s commission:
essence of agency
Agent is exempted from all liability in the
discharge of his commission provided he
acts in accordance with the instructions
received from his principal, the latter
must indemnify the former for all
damages which he incur in carrying out
the agency without fault on his part.
Unforeseen events: unfavourable to the

defendant, change of price, mistake in
quotation, loos of good not carried with
insurance, or failure of the manufacturer
to properly fill the order as per
specifications; plaintiff might still legally
hold defendant to the price fixed in their
agreement, or its return
Sec. 15 Distinguished form Barter or Exchange

SALE BARTER or EXCHANGE
Parties bind himself to give one thing in
consideration of the other’s promise to
give another thing
if the value of the thing given as a part If partly money and partly another thing:
of the consideration EXCEED the amount Transaction shall be characterized by the
of the money or its equivalent manifestation of the parties
If not specifically provided in the Title of
Barter. Sales shall govern
-in order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered; manifested by ostensible signs
Sec. 16 Distinguished for Dacion en pago

SALES DACION EN PAGO
Art.1245 whereby property is alienated
to the creditor in satisfaction of a debt in
money, shall be governed by sales.
Obligations are created from the Presupposes pre-existing debt and
perfection of the contract and the fixing extinguishes the debt (Manresa)
of the price is more freely agreed upon
that the value of the thing giving in
dation in payment.(Manresa)
There is novation of contract – when
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creditor acceptsa thing in payment of

the debt
Sec.17 Distinguished from Chattel Mortgage

- a conditional sale of personal property as security for the payment of debt or
performance of some other obligation specified therein, the condition being that the
sale shall be void upon the seller paying to the purchase a sum of money or doing
some other act named.
-personal property is recorded in the chattel mortgage register as a security for the
performance of the obligation
II. Perfection of the contract

a. Article 1475, meeting of the minds
Art. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From
that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. (1450a)
i.p.22-25 Baviera
B.Offer and Acceptance
Sec. 26 In General
Contract of Sale
-perfected at the moment there is meeting of the minds upon the thing which is the
object of the contract and upon the price.
-parties may reciprocally demand performance, subject to the provisions of the law
governing form of contracts.
Example of no meeting of the minds:
*co owner did not give her consent to the sale of property under judicial
administration
* mistake of the broker
*contract of subrogation
*deposit was forfeited
*applicant is found not to possess necessary qualifications –revocable contract to
sell
*if dependent on the offeror obtaining the loan
*land bought for development for mass housing was not suitable and dangerous –
govt is justified to cancel the agreement
Sec.27 Form of Offer

Offer must be certain
“entertain” – has the position to deliberate for deciding to perform or not to perform
Ex. Offer is not certain:
*If offer was a mere invitation
*Offer does not state the amount to paid in instalments
Business Ads – not definite offers, simply invitations
Sec.28 Forms of acceptance

Acceptance must be absolute.
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If acceptance is not in accordance with the terms and condition of the offer, offer
lapsed though the offeree was willing to accept, failure to open a LOC within the
period agreed upon – suffices to prevent a juridical tie from being created.
To bind the offeror, offeree must comply with the condition of the offer.
Acceptance must be plain and unconditional
-it will no be so if it involves a new proposal.
Qualified acceptance –constitutes a counter-offer which must in turn be accepted to
give rise to a binding agreement
May be express or implied
Option to Purchase – the offerree may exercise his right by merely advising the
grantor the option of his decision to buy or his readiness to pay the stipulated price,
without the actual payment of the price, without the actual payment of the price so
long as this is delivered upon the performance of the offeror’s part of the bargain.
ii. Goyena v. Tambunting No. 956 November 18, 1902 –private

document obligatory; even no original agreement as to area or price
per meter; orginal agreement abandoned when new proposition
was made by the vendee was not entirely accepted by the vendor
because there was no meeting of the minds and no perfected
contract.
FACTS: Goyena owned a tract f land and building at Ermita, Manila which contained 152.46
sqm. A broker, representing Goyena stated to Tambunting that the said lot and on its
information measured 23 meters in front and 8 meters in depth. Goyena and Tambunting
had negotiations on the sale. On Mar. 1901, defendant singed a document:”On this date I
have bought from Goyena lot…for P3200, this money to be paid as soon as the bill of sale is
signed. (Sgd.)Tambunting” Goyena signed a similar document. The negotiations between
the parties were prior to signing of these documents does not appear. There is no evidence
on record that they came to any agreement in regard to the sale other than the on
contained in the papers of Mar. 12.
The defendant took form the office of notary employed to make the formal transfer of the
title papers and kept them from several days, and returned them to the notary. On the day
for the execution of the instrument all the parties being in the office of the notary, the
defendant told the latter to insert in the writing the price, P3200, and then refused to sign it
because the lot did not contain the area which plaintiff , through the broker, had
represented that it contained. He expressed willingness to sign if a proportional deduction
was made. The plaintiff refused and brought this action under Art. 1451 of the Civil Code.
ISSUE: Whether the private document is a contract of sale?
HELD: The contract expresses a specific thing as the object of the contract (lot in Ermita).
There is no question that this sum is there specified plainly and specifically, and without
being made subject to any condition.
There is nothing lacking for the existence of a perfect contract of a purchase and sale. Art.
1445 of the civil code states: “by the contract of purchase and sale one of the thing, and the
other to pay therefore a price certain, in money or in some thing represent it.” Art. 1450
states” the sale shall be perfected between vendor and vendee and shall be binding on both
of them, if they have agreed upon the thing which is the object of the contract and upon the
price, even when neither has been delivered”
The private document is not subject to any term or condition. It contains a promise a
promise to buy, not a mere project of sale according to Art. 1451, confers upon the
contracting parties the right to reciprocally demand the performance of the contract. It the
contract were not perfected, no right would accrue in favour of the contracting parties to
reciprocally demand its performance. A thing which has no existence can produce no effect.
Because it is merely a private document which contemplated the subsequent execution of a
public instrument, it does not follow that it is not enforceable as it now stands. “Contracts”
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under art 1278, “shall be obligatory whatever may be the form in which they have been
entered into, provided that the essential elements for their validity are present,” to wit, a
determinate thing, a price certain, and a meeting of the minds with respect to the object of
the contract. The contract in question is obligatory.
Whether evidenced by a public instrument or a private document, the contract is what the
words of the parties indicate. (art.1218 and 1225)
There was considerable evidence regarding the agreement by the plaintiff to reduce the
price. Based on the testimony it was only a conversation at the house of the defendant. The
admission of the defendant is sufficient to prove a contract by measure in the face of the
written document and the entire absence of other evidence. The rather construes that the
willingness on the part of the plaintiff to abate a trifle from the what he was entitled to
demand with the purpose of obltaining an amicable settlement and avoiding litigation
Ruling: the judgment below is right, and it is accordingly affirmed with costs against the
defendant.
iii. Johannes Schuback & Sons Phil. Trading Co. v. CA G.R No. 105387
November 11, 1984
FACTS: The case is a review on certiorari on the trial court’s ruling that a contact of sale had
been perfected between the petitioner and private respondent over spare parts.
Sometimein 1981, private respondent(Phil. SJ Industiral Trading through R.San Jose,Jr.)
contacted the petitioner through Phil. Consulate General in Germany, that he wanted to
purchase MAN bus spareparts fpr Schuback &Sons Co.(Schuback) On Oct. 16,1981,
defendant submitted to petitioner a list of parts he wants to purchase with specific nos. and
description. Petitioner sent to respondent a letter on Nov. enclosing its offer on the items
listed by respondent
On Dec. 17 1981, petitioner submitted its formal offer, containing the item no., quantity,
part no., description, price and total to respondent. By the 24th, respondent informed his
desire to abail of the prices of the part that time and enclosed its purchased order dated
Dec. 14, 1981 and promise to submit the quantity per unit he wanted to order on Dec. 28 or
29. On Dec. 29, respondent, personally submitted the quantities he wanted to Reichert,
General Manager of Schuback. The quantities were written in ink and purchase order was
submitted and at the bottom with note that the P.O will include 3% discount and shall serve
initial P.O.
Petitioner immediately ordered the items need from Schuback to enable respondent to avail
the old prices. Schuback ordered the items to NDK, supplier of MAN spare parts in Germany.
Schuback sent petitioner the proforma invoice to used by the respondent to apply for a
letter of credit. The invoice required that the LOC be opened in favor of Schuback.
Respondent acknowledge the invoice.
An order confirmation was sent by Schuback to petitioner and was forwarded and received
by respondent on Feb. 3,1961.
On Feb.16, the petitioner reminded respondent to open LOC to avoid delay of shipment and
payment of interest. In repy, respondent that there was difficulty in securing the dollar
allocation and applying LOC etc. Schuback received invoices to NDK for partial deliveries and
was paid.
On Oct 1982, petitioner again reminded the respondent and advised that the case will be
endorsed to its lawyers. Respondent replied that he not make any valid P.I and that there
was no definite contract between him and petitioner. Petitioner sent a rejoinder explaining
that there is a valid P.O and suggesting that respondent either to proceed the order and
open LOC or cancel and pay the cancellation fee 30% FOB value or petitioner will endorse
the case with its lawyers.
Schuback enclosed a debit note to the petitioner of 30% for cancellation fee, storage,
interest charges for a total of DM 51,917.81 and was deducted to petitioners account. A
demand letter was sent to respondent on March and June 1983 but was no avail.
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RTC ruled in favour of the petitioner and ordering respondent to pay compensatory
damages. The case was elevated in the CA. the decision was reversed and was dismissed
ruling that there was no meeting of the minds as to the price in the contract.
ISSUE: Whether or not a contracts of sale has been perfected between the parties.
HELD: The court reversed the CA’s ruling. The contract of sale was 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. 1319 of NCC: “Consent is manifested of the offer and acceptance upon the
thing and the cause whice are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitute a counter offer.” The facts in this
case indicate that there was consent both sides.
The offer by petitioner was manifested on Dec. 17, 1981 when petitioner submitted its
proposal containing the item no., quantity, part no., description, unit price and total to
respondent. On Dec. 24, respondent informed petitioner and simulated enclosed it P.O dated
Dec. 14. At this stage, meeting of the minds between vendor and vendee has occurred and
the object of the contract being the spare parts and the consideration, the price stated in
petitioner’s offer dated Dec. 17 and accepted by respondent on Dec. 24.
Although P.O did not contain the quantity he wanted, respondent made good his promise to
communicate the same on Dec. 19. At this point the respondent was already in the process
of executing the agreement previously reached between the parties.
The statement made by the respondent in the Note in P.O was another indication of
acceptance on the part of the vendee, for by requesting 3% discount he implicitly accepted
the price 1st offered. The immediate acceptance by the vendee was impelled by the fact that
there would be a 7% increase effective on Jan. 1982. The concurrence by the vendor with
the discount was manifested when immediately ordered the items from Schuback then
ordered from NDK.
We differ in the trial courts decision as to the exact date when it occurred, for the perfection
took place on Dec. 24. the quantity to be ordered was determinate only on Dec. 29,
quantity is immaterial in the perfection of sales contract. What is of importance is the
meeting of the minds as to the object and cause, which is from the facts disclosed show that
Dec.24, theses essential elements concurred.
The opening of a LOC is a mode of payment and not among the essential requirement of a
contract of sale.. Failure of respondent to open an irrecovable LOC without recourse in
favour of Schuback is not a condition, respondent did not incorporate any provision
declaring their contract of sale without effect until after the fulfilment of the act of opening
the letter.
Wherefore petition is granted and the decision of trial court dated June 13, 1988 is
reinstated with modification
iv. Soriano v. Latono No. L-3408 Dec. 23, 1950

FACTS: The case is an appeal from the decision of CFI Pangasinan regarding the annulment
of a sale of land. The facts are as follows:
Children’s mother was appointed guardian of the estate by the court on Oct.1982. The
parcel of land was registered under the Land Registration Act in the name of the Soriano’s
(Jose,Paciencia, Felicidad, Milagros & Teofilo) who were minor at that time. The court
ordered the guardian to deliver and execute a deed of conveyance to Latiño’s in
consideration for P1,000 and deed of mortgage for the 2nd parcel of land for P500 to be
redeemed within a period of 5 years.
The proceeds of the sale were used to pay off atty’s fees incurred in the registration of the
property. In June 1933, the guardian executed a deed of sale favour to the vendees and they
immediately entered upon the possession of the land and continued such.
On Jan. 1944, the guardianship proceeding were ordered closed and the ward’s properties
were turned over having attained the age of majority.
On Mar. 1994, 12 years after the sale, the petitioner (Soriano’s) brought a suit against the
petitioner to recover the land. They alleged that the sale was null and void because:1) it was
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not approved by the probate court 2) the deed of conveyance were not authorized to act in
Mun. of Bayambang
CFI dismissed the case. It held that subsequent confirmation in unnecessary and document
is not assailable on the ground of the lack of authority of Notary Public. Ordered defendants
to proceed the deed and have a new title issued.
ISSUE: W/N the sale of the property is null and void? No
HELD: The court’s order expressly authorized the guardian “ to execute and deliver” to the
purchasers named in the deed of conveyance to the parcel of land. The order was intended
approval of the sale. We can make as inferences that the movant and the court had in mind
a sale already perfected or agreed upon. A sale by the guardian may be approved before
the deed is executed, depending on the intention of the court and providing faithful
compliance of the conditions imposed has been made. If the DOS, had not been notarized,
the same would be fully effective as between the parties under A. 1261 Old Civil Code in
force at the time of the conveyance. All elements of a valid contract were present: 1)
Subject Matter 2) Capacity of Consent 3) Lawful Consideration. The appealed decision is
affirmed with costs against the plaintiffs and appellants.
NOTE:lis pendens- a written notice of a pending suit involving property usu. Filed in
appropriate office.
b. Article 1330, contracts entered into by mistake, fraud,

violence, etc.
i. p. 25-26 Baviera
Sec.29 Vices Vitiating Consent
-Voidable
Fraud – through insidious words or machinations of one of the contracting parties,
the other is induced to enter into a contract, which without them , he would not
have agreed.
Insidious Machinations – signifies the scheme or plot with an evil design or with
fraudulent purpose.
Deceit – Misrepresentation in words
-failure to disclose facts when there is duty to reveal, as when parties are bound by
confidential relations –FRAUD
Mistake may invalidate consent – refer to substance of the thing which is the object
of the contract.
ii. Pineda v. Santos No. 34845 March 3, 1932 –

misrepresentation, fraud
FACTS: M. Santos, judicial administratrix of the intestate estate of Natalio Santos. On July
14, 1925, she bound herself to sell a calcacerous (of nature containing lime) land in
Montalban, Rizal. The said land belonged to N. Santos, for the sum of P8,000 subject to the
approval of the probate the court. The appellee paid a part payment of P500. July 30,
obtained a judicial approval and executed a deed. Appellant sold the land in fee simple the
price stipulated and received a check of P7500. Appellee , entrusted to Atty. Sunico the
drafting of the DOS and also acted as their Notary Public. In the deed, appellant stated that
the property is “FREE of all charge, lien and liability.” At that time the property was
registered under torrens title in favor of G. Cruz who previously executed a DOS in favor of
N. Santos but it has not been presented for registration, no new transfer certificate was
issued. Atty.Sunico examined the appellants transfer cert., saw no annotations of
encumberance or of lis pendens. Atty. Sunico signed and took the transfer cert. to the Office
of the Registrar of Deeds to record, cancel and issue a new transfer cet. In favor of the
appellee. Atty. Sunico discovered that the lis pendens notice was entered on the TCT as of
April 25, 1925 8:16 am. Atty.Sunico asked J.Tupas (registrar) about the annotation and was
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told that A.A. Adison had filed the lis pendens. Sunico left and informed his client, appellee,
who took steps to have the DOS set aside and later borught action of nullity.[before
discovery of lis pendens notice, appelle had conveyed the same property and price to
Pineda, Ampil Mnfctg & Co., Inc. but found the notice and sought for the recission of the
sale. While in the possession he was engaged in lime business and purchased the property
and spent P2334.30 which the court had amended.
ISSUE: Whether there was fraud in the comment vitiating appellees consent? YES
HELD: The annotation was entered on the TCT after the execution of DOS, and the appellant
stated the deed was absolutely free from all liens and encumberances was untrue and
misled the appellee in giving his consent. The judgment appealed from being in accordance
with the law is hereby affirmed to its entirety with the costs of this instance against the
appellant.
c. Article 1483, Statute of Frauds, Article 1403

Art. 1483. Subject to the provisions of the Statute of Frauds and of any other
applicable statute, a contract of sale may be made in writing, or by word of
mouth, or partly in writing and partly by word of mouth, or may be inferred from
the conduct of the parties. (n)
CHAPTER 8 - UNENFORCEABLE CONTRACTS (n)

Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given
no authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum, thereof,
be in writing, and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the writing, or a
secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year
from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of
another;
(c) An agreement made in consideration of marriage, other than a mutual
promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a
price not less than five hundred pesos, unless the buyer accept and receive
part of such goods and chattels, or the evidences, or some of them, of such
things in action or pay at the time some part of the purchase money; but
when a sale is made by auction and entry is made by the auctioneer in his
sales book, at the time of the sale, of the amount and kind of property sold,
terms of sale, price, names of the purchasers and person on whose account
the sale is made, it is a sufficient memorandum;
(e) An agreement of the leasing for a longer period than one year, or for
the sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract
i.Notes: (Baviera p.26-30)
Formalities of a Contract
Sec. 30 In General
Subject to the provisions of Statute of Frauds and any other applicable
statute
Contract of sale – made in writing, or by word of mouth or partly in writing
and partly by word of mouth, or by conduct of the parties
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Made through telegram or verbally – such order subsequently confirmed, no

need for purchase order.
Made through telephone – sale perfected during telephone conversation
when object and price of the sale is agreed upon
Sec. 31 Statue of Frauds

Agreement for the sale of real property or of an interest is covered by SOF
The Sale of goods, chattels or things in action at a price not less than P500 –
under SOF
Unless buyer accepted and received part of the goods and chattels or
the evidence of the things in action or paid some part of the purchase
price.
Under SOF – agreement shall be unenforceable UNLESS the same, or some
note or memorandum thereof be in writing, and subscribed by the party
charged or by his agent.
Failure to object to the presentation of oral evidence to prove
agreement or acceptance shall render agreement – ENFORCEABLE (see
examples p. 27-28)
SOF apply only to executory contracts, not to contracts either totally of
partially performed
Iñigo v. Estate of Maloto – in accordance to their previous oral contracts the
plaintiff paid the purchase price and exercised acts of dominion on the
property by improving and constructing a retail store. The court ordered the
execution of the DOS of the house and lot.
Combinations of all of the acts are sufficient to take the matter away from the
SOF:
• Possession of the portion of the land
• Relinquishment of her claim to the entire land, building or
improvement on the land
• Tender of payment
• Surveying and segregation of the portion which defendant promised to
sell
*Otherwise it would be fraud upon the plaintiff if the defendant to oppose the
performance on his part after he allowed or induced the former to perform
reliance upon agreement
SOF does not apply where verbal contract of sale is adduced for the purpose
of enforcing performance thereof, but as the basis of lawful possession of the
applicant entitling him to have the land registered in his name.
ii. Sale of Real Property to an agent must be in writing

Art. 1874. When a sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing; otherwise, the sale shall be
void. (n)
Sec. 32 Sale of Realty by an Agent

Written authority to sell a parcel of land for 15 days, any renewal or extension of
the authority must be in writing
Sec. 33 Secondary Evidence
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Before introduced - It is necessary that due execution and subsequent loss of the
original instrument evidencing transaction be proved.
Due execution may be proved by
• Testimony of the person who has executed it
• Person whom its execution was acknowledged
• Person who was present and saw it executed and delivered
• Who, after its execution and delivery, saw it and recognized the signature
• Person to whom the parties to the instrument had previously confessed the
execution
Sec. 34 Electronic Commerce Act (RA 8792)
Electronic documents shall have legal effect, validity, enforceability as any other
document or legal writing.
As long as maintains the integrity and reliability.
Capable of being displayed to the person to whom it is to be presented, containing
electronic signature of the person sending it.
d. “Deed of Absolute Sale” and “Contract to Sell” compared to

“Conditional Sale”
i. Sample of Contract to Sell and Deed of Absolute Sale
ii. Spouses Dijamco v. CA G.R No. 113665 October 7, 2004
FACTS:
The case is a petition for review of the Jan. 7, 1994 resolution and Mar. 30, 1993 decision of
CA affirming the decision of RTC which dismissed the petitioners complaint against Premiere
Development Bank (PDB) for the recovery of real property and damages. The facts of the
case are as follows:
• Sps. Dijamco were granted four separate loans by defendant bank: 1 st was granted
on April 1976for P75,000, 2nd on March 1980 P80,000, 3rd on Feb. 1986 P80,000 and
the subject of the complaint, 4th on October 1981 for P210,000 which was secured by
a REM over a parcel of land in Pasay City which has an improvement of 5-door
apartment.
• Sps. Failed to remit monthly amortizations regularly on the 4th loan and also on the
2nd and 3rd. Sps. Negotiated for the settlement of the 2nd and 3rd. The 4th loan was
about 10months in arrears. Sps. Approached Atty. Araos, president of PDB and a
family friend, advised them to 1st settle the two smaller loans and not to worry about
the 4th loan (210,000) PDB alleges that the Sps. Scheme to pay off the 2nd and 3rd loan
1st so that they then use the collateral from another which proceeds they would use
to pay off the 4th loan.
• On Mar. 1983, PDB sought assistance to City Sheriff of Pasay re: the petition for
extrajudicial forecloseure of mortgage against the Sps. Dijamco for their violations of
the mortgage contract that was executed. On Sept. 1983, the Deputy Sheriff issued
a Notice of Sheriff’s Sale to be conducted on Oct 1983. But this was postponed due
the postponement filed. Sps. Requested for 5 consecutive postponements but on
Mar. 1984 the Ex-officio Sheriff of Pasay issued a Certificate of Sale stating the
mortgaged land was sold to PDB as the highest bidder.
• Sps. Failed to redeem the property within the redemption period. In a letter dated
June 1986, Remedios Dijamco offered repurchase of the said property to the
President of PDB.It stated “ we could pay the interest monthly, just so the principal of
P622,095.00 as of May 30, 1986 will no longer be increased..we wish to pay the
repurchase of foreclosed properties within a year’s time”, “failure to remit the
interest payment when the same is due will render this proposal automatically
revoked without need of formal demand and you may immediately enforce your Writ
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of Possession”, “Failure to repurchase within the period, all interest and other
payment made by us shall be treated as rentals for the use of property.”
• In compliance with the letter-agreement, plaintiffs paid the bank 6 monthly
remittances of P13,478.73 or of a total of P80,872.38. The payment was discontinued
by the plaintiffs when Atty. Araos was informed that none of the payment will be
deducted from the purchase price.
• Sps. sued PDB and claimed that the latter employed fraud and undue advantage
depriving them of their property and prayed for recovery of said property for
P350,000 and damages. RTC dismissed the complaint for utter lack of merit and CA
affirmed dismissal. Hence this appeal
ISSUE: Whether there was fraud and undue advantage employed in their contract?NO.
HELD:
• The respondent bank validly acquired the property at the auction sale and that it was
only after the title was consolidated and transferred to the banks that Sps.
Dijamco signed the June 1986 agreement to purchase the same property.
Remedios entered into the June 1986 agreement without fraud and undue
advantage from PDB. Such was binding, valid and unenforceable between the
parties.
• The court held that the said agreement was contract of option to purchase and a
contract to sell. It was contract to sell because the agreement contains: 1. that
Sps. are granted right to repurchase the property involved at the fixed price of
622,095.00 within a year provided they paid the monthly instalments, 2. No
transfer of conveyance ownership was effected by its terms, 3. The interest
payment were not part of the purchase price because in case of failure to
exercise the right to repurchase they would be considered as rentals, and 5) the
interest payments,in a way was a consideration to preserve the right to
repurchase.
• The stipulation on the interest payments was actually a reconsideration for the
contract of option to purchase in compliance of 2nd par. Of article 1479 of CC.”An
accepted unilateral promise to buy (by the petitioners) or to sell a determinate
thing(the subject real property) for a price certain(for P622,995) is binding upon
the promissor if the promise is supported by a consideration distinct from the
price(the monthly interest payment of P13,478). “
• A Judicial action for recission 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.
Contract of Sale Contract to Sell

Title passes to the buyer upon the where, by agreement, the ownership is
delivery of the thing sold reserved by the seller till full payment of
the purchase price.
Non-payment of the price is a negative Full payment is a positive suspensive
resolutory condition condition
Vendor has lost and cannot recover the The title remains in the vendor if the
ownership of the thing sold until and vendee does not comply with the
unless the contract of sale is itself condition precedent of making payment
resolved and set aside at the time specified in the contract. If
the vendor, because of non compliance
with the suspensive condition stipulated,
seeks to eject the buyer from the land
object agreement, said vendor is
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enforcing the contract is not resolving

the same.
III. Capacity of the parties

a. Sale to Minors, Sales between husbands and wife, agents, public
officers, executors, guardians etc.
CHAPTER 2 - CAPACITY TO BUY OR SELL
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. (1457a)
Art. 1490. The husband and the wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements;
or
(2) When there has been a judicial separation or property under Article 191.
(1458a)
Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his
guardianship;
(2) Agents, the property whose administration or sale may have been entrusted
to them, unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under
administration;
(4) Public officers and employees, the property of the State or of any subdivision
thereof, or of any government-owned or controlled corporation, or institution, the
administration of which has been intrusted to them; this provision shall apply to
judges and government experts who, in any manner whatsoever, take part in the
sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts,
and other officers and employees connected with the administration of justice,
the property and rights in litigation or levied upon an execution before the court
within whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession.
(6) Any others specially disqualified by law. (1459a)
Art. 1492. The prohibitions in the two preceding articles are applicable to sales in
legal redemption, compromises and renunciations. (n)

Sec. 18 Absolute Incapacity
The following cannot validly give consent to contracts:
• Minors
• Insane or demented persons
• Deaf-mutes who do not know how to write
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Necessaries – those which are indispensable for his support, according to the
social position of the family; Things indispensable, or things proper and useful, for
the sustenance of human life.
• when sold and delivered to a minor or other person without capacity to act,
he must pay a reasonable price
Sec. 19 Relative Incapacity
*H & W cannot sell property to each other EXC when a separation of property was
agreed upon in marriage settlements or there has been a judicial separation of
property.
Why? To protect 3rd persons
Persons who cannot also acquire by purchase, public or judicial sale, or by
assignment, compromise, renunciation or sale in legal redemption, either in person
or through the mediation of another:
1) guardian – property of the person under his guardianship
2) agents - property whose administration and sale is entrusted to them
UNLESS the consent of the principal is given
3) executors and administrators – property under their administration
4) public officers and employees – property of the State or any of the
subdivision or GOCC, of administration has been entrusted to them
5) justices, judges prosecutor, attorneys, clerk of superior and inferior courts
and other officers and employees – connected with administration of justice,
property and rights in litigation or levied upon execution before the court
6) lawyer - with respect to the property and rights in litigation in which they may
take part of virtue of their profession
7) aliens of private corporation/ or associations- with respect to lands located in
the Philippines
a. EXC former natural-born Filipinos – allowed to acquire residential lands
not exceeding 1,000 sq. Meters urban land or one hectare rural land
Persons under 1-6. Occupy fiduciary relationship with the owner of the properties
and prevent them from being tempted to take advantage of their position
*Contracts prohibited by law are VOID and CANNOT BE RATIFIED. Neither can set up
a defense for illegality be waived.
Sec.20 Spouse
The FC vests the power to administer, alienate, or encumber the community
property and conjugal partnership property in both spouses.
In case of disagreement – the husband’s decision shall prevail.
-wife’s remedy of recourse within 5 years from the execution of the contract
-any alienation or encumbrance by one spouse without the consent of the
other shall render the contract void.
GR. Transfers are void. UNLESS there has been: a) separation of property agreed
upon the marriage settlement or b) ordered by the court.
Sec.21 Executors, Guardians, Etc.

Executors – administer the property pertaining to the estate, do not administer the
hereditary rights of any heir.
*Right is vested entirely in the heirs who retain and transmit it in whole or in part,
independent of the executor.
Does not form part of the property delivered to the executor for administration.
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Executor can buy the hereditary rights of an heir to the estate under his
administration.
Guardianship – trust of the highest order

*Trustee can not be allowed to have any inducement to neglect his wards interest.
*When guardian acquires property through an intermediary, he violates the law,
and such transaction and subsequent one shall be ANNULLED
*It is essential to prove actual collusion between the guardian and the purchaser to
buy the property for the guardian.
Sec. 22 Agent
Agent – one who accepts another’s representation to perform in his name certain
acts of more or less transcendency ( Surpassing others; preeminent or supreme.)
Broker - a mere go-between or middleman between the seller and the buyer
bringing them togerher to make the contract themselves.
Sec. 23 Public Officers, Judges Etc.

Prohibition refers to properties that the administration of which have been
entrusted to them.
Intention: to remove any occasion to fraud but also surround them with the prestige
necessary to carry out their functions by freeing them from all suspicion which
although unfounded, tends to discredit the institution by putting into question the
honor of said functionaries.
Justice of SC and CA- incapacity extends to properties or rights in litigation in their
territorial jurisdiction
Judge of CFI – can buy properties in litigation pending outside his territorial
jurisdiction;
*Prohibition extends to properties levied upon execution before the court within
whose territorial jurisdiction they exercise their respective function.
Sec. 24 Lawyers
Intention: to curtail any undue influence of the lawyer on his client on account of
their confidential association.
*When property in litigation was sold by a party in case to the lawyer representing
him in such litigation during the pendency of the same, sale was VOID and cannot
be cured by ratification.
*If judgment became final, assignment to the lawyer by his client of an interest in
the property litigated does not violate the prohibition.
-Any person may invoke the inexistence of the contract whenever judicial effects
founded thereon asserted against him.
Sec. 25 Indigenous Cultural Communities(ICC)/ Indiginous Peoples

Ancestral domains of ICC belong to all generations and cannot be sold or disposed
-EXC to/among of the same, subject to their customary laws and traditions
Organic Act of ARMM and CAR: lands of ancestral domain titled or owned by an
indigenous cultural community shall not be disposed of to non-members
-UNLESS authorized by the Regional Assembly
Public Land Act
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Conveyances of lands acquired under it by illiterate non-Christian or literate non-

Christians where the instrument of conveyance is in a language is not understood
by said non Christian shall not be valid.
-UNLESS duly approved by the National Commission on Indigenous People.
ii. Rubias v. Batiller No. L-35702 May 29, 1973

FACTS:
On Aug. 1964, Plaintiff Domingo D. Rubias (Rubias), lawyer, filed a suit to recover the
ownership and possession of certain lot in Viejo, Iloilo which he brought from his father in
law, Francisco Militante (Militante) in 1956 against it present occupant Isaias
Batiller(Batiller), who alleged entered the lot on two occasions (1945 and 1959). Batiller
counter-claim that Rubias does not state a cause of action and he and his predecessors in
interest have always been in actual, open and continuous possession of the property since
time immemorial.
The trial court issued a pre-trial order. During the said pre trial the parties agreed that
following facts are attendant in this case. It was said that Francisco Militante claimed
ownership of the land which he caused to be surveyed in 1934 and was issued a plan PSU
99791 where the land contained 171.3561 hectares. Before the war with Japan, Militante
filed with CFI of Iloilo an application for registration of title of the land but was opposed by
Director of Lands, Director of Forestry and other oppositors. During the war with Japan, the
records of the case was lost and Militante petitioned to reconstitute the records of the case.
CFI dismissed the application for registration and he appealed.
Pending disposal of the appeal, Militante sold the lot to Rubias and was duly recorder in the
Office of Register of Deeds of Iloilo. Militante executed a deed of sale and sold to Rubias, his
son in law, for the sum of P2,000 the untitled land.
On Sept 1958, CA confirmed the decision of dismissing the application of registration filed by
Militante.
The land claimed by Isaias Batiller as his own on June 1956 and approced by the Director of
Lands on Nov. 1956.
On Apr. 1960, plaintiff filed forcible entry and detainer against Batiller in the Justice of Peace
Court of Iloilo. The Municipal court ruled in favour of Batiller. Rubias appealed and the court
ruled again in favour of Batiller.
During the trial, Rubias claims that the land he purchased from Militante was formerly
owned by Demontaño. On Sept 1919 the land was sold at public auction by virtue of a civil
case. Yap Pongco was the purchaser and the sale was registered and a deed of sale was
executed by the Sheriff Canto in favour of Pongco on Feb. 1934.On Sept. 1934, Pongco sold
this land to Militante by a notarial deed which was registered in Registry of Deeds on May
1940.
Defendant claimed that the land was owned by Felipe Batiller grandfather of the defendant,
who was succeeded by Basilio Batiller on the death of the former in 1920 as his sole heir.
Isaias Batiller succeeded his father in the ownership and possession of the land in 1930 up
to present. The predecessors in interest of the plaintiff has never been in actual possession
of the land had never had title thereto. And the land was subject to free patent application
of the defendant was approved.
The Appelate court related more development in the case, the defendants counsel
manifested that the property in dispute which plaintiff allegedly bought from his father in
law, Francisco Militante was the subject matter in LRC No. 695 filed in CFI Iloilo which was
brought on appeal to this court in which plaintiff was the counsel on record of his father in
law, Francisco Militante. Invoking Art. 1409 and 1491 of the civil code,” Art. 1409 The
following contracts are inexistent and void from the beginning XXX (7) those expressly
prohibited or declared void by law. Art. 1491 The ff. Cannot acquire any purchase, even at a
public or judicial auction, either in person or through the mediator of another: XXX (5)
Justices, Judges, Prosecuting Attorneys, Clerk of Superior and Inferior Courts and other
officers and employees connected with the administration of justice, the property and rights
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in litigation or levied upon an execution before the court within whose jurisdiction or
territory they exercise their respective function; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect to the property and rights may be
the object of any litigation in which they may take part by virtue of their profession.”
Defendant claims that the plaintiff could not have acquired any interest in the property as
the contract he (plaintiff) had with Militante was inexistent and void. Plaintiff strongly
opposed defendant’s motion to dismiss. The lower court ordered dismissing plaintiffs
complaint, agreed with defendant’s contention that the contract between the plaintiff and
Militante was null and void. Plaintiff filed MR but was denied and hence this appeal.
ISSUE: W/N the Contract of Sale between appellant and his father in law, Militante over the
property was void because the plaintiff was the counsel of his father in law in a land
registration case involving the property in dispute?
HELD:
When CA dismissed the application of registration of the land, the lack of any rightful claim
or title of Militante to the land was conclusively and judicially determined. Hence there was
no right or title to the land that could be transferred or sold by Militante’s purported sales in
1956 in favour of the plaintiff.
Plaintiffs purchase of the property in litigation from his client was void and could produce no
legal effect under Art. 1409 par. 7 Civil Code provides that contracts “expressly prohibited
and declared void by law” are “inexistent and void from the beginning” and “that these
contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.”
Art. 1491 Civil code prohibits certain person, by reason of the relation of trust or their
peculiar control either directly or indirectly and “even at a public or judicial auction” as
follows 1) guardian 2) agents 3) administrators 4) public officers and employees 5)judicial
officers and employees,prosecuting attorneys and lawyers 6) others specially disqualified by
law.
Criterion of nullity of contracts under 1491 was a matter of public order and policy. This was
adopted to Art. 1409 declaring such contracts as “inexistent and void from the beginning.”
Such prohibited contracts is definite and permanent and cannot be cured by ratification. The
public interest and public policy remain paramount and do not permit compromise and
ratification.
The permanent disqualification of public and judicial officers and lawyers grounded on public
policy differs from 1st three cases of guardians, agents and administrators. It may be
“ratified” by means of and “in the form of a new contract, in which case its validity shall be
determined only by circumstances at the time of 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 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
cleared by the parties. The ratification or 2nd contract would then be valid from its execution;
however, it does not retroact to the date of the 1st contract.
IV Price
a. Article 1469-1474
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.
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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. (1447a)
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)
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. (1448)
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. (1449a)
Art. 1474. Where the price cannot be determined in accordance with the
preceding articles, or in any other manner, the contract is inefficacious. However,
if the thing or any part thereof has been delivered to and appropriated by the
buyer he must pay a reasonable price therefor. What is a reasonable price is a
question of fact dependent on the circumstances of each particular case. (n)

IV. Price
A. In general
Sec. 53 Necessity of a Price
Contract of sale is null and void and produces no effect – if the same is
without cause or consideration or the price which appears to have been
paid has in fact never been paid
-permanent and incurable
The statement of false cause in contracts – VOID if it should not be proven
that they were founded upon another cause which is true and lawful
Fraud or Badfaith – VOIDABLE it is binding until annulled
Sec. 54 Inadequacy of Price

Gross Inadequacy of the price – does not affect a contract of sale
EXCEPT may indicate a defect in consent
Parties really intended a donation or some other act or contract.
When contract is entered by a guardian of a ward or a representative of
an absentee
-the owner suffers lesion (damage) by more than ¼ of the value of the
thing sold –RECISSIBLE unless approved by the court
-naturally suggests fraud Evidence: sufficient to show when taken in
connection with other circumstances such as ignorance or the fact that
one of the parties has an advantage over the other.
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Bargain coupled with inadequacy of price when both of the parties are in a
position to form an independent judgment concerning the transaction –
NOT sufficient ground for the annulment of the contract.
When transaction is invalidated on the ground of inadequacy of price or
inadequacy shocks the conscience as to justify the courts to interfere.
-DOES NOT FOLLOW when the law gives to the owner the right to redeem;
when there is right to redeem, inadequacy of price is not material because
judgment debtor may reacquire the property or else sell his right to
redeem and thus recover the loss he claims to have suffered of price
obtain in public auction
Where a public auction has been fairly and regularly made and confirmed
by trial court. –should not be set aside for inadequacy of price alone,
without a proper showing that in the event a resale was made, the
property would sell at an increased price
- UNLESS inadequacy be so great as to shock the conscience of the court
Special grounds must be laid: fraud and collusion, accident, mutual
mistake, breach of trust or misconduct on the part of purchaser or other
party connected with the sale, which has worked injustice to the party
complaining and was unknown to him at the time the sale was confirmed.
Sec.55 Definiteness and certainty

Fixing of the price can never be left to the discretion of one of the
contracting parties.
If the price is fixed by one of the parties is accepted by the other, the sale
is PERFECTED.
Price considered certain – when the price agreed upon is that which the
thing sold would have on a definite day or in a particular exchange or
market or could be determined with reference to another thing certain. (ie
10% below the inventory price, 10% below the invoice price)
Determination of the price may be left to the judgment of specified
persons.
If unable or unwilling to fix the price – INEFFICACIOUS contract
Where 3rd persons are prevented from fixing the price by fault of the seller
or the buyer, the party at fault shall be answerable for damages based on
fraud.
If 3rd persons acted in bad faith or made a mistake – the aggrieved party
may impugn such determination and the court may fix the price.
If in the opinion of the party, 3rd person incurred a mistake – cannot be
impugned because persons are bound to have differences in judgment.
Where price can not be determined in any manner – CONTRACT IS
INEFFICACIOUS
-if thing has been delivered w/o arriving at a price – buyer must pay a
reasonable price or the true value of the thing on the principle of unjust
enrichment.
B. Medium of Payment
Sec. 56 In Money or its equivalent
Price – payable in money or its equivalent (letters of credit)
--otherwise transaction may be barter or an innominate contract
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If price consists of a life annuity or obligation to give support – not SALE

because the price is a prestation w/c cannot be certain.
Dation in payment Sale

Presupposes a previous credit and Obligations are created from the
extinguishes the obligation perfection of the contract
Fixing of the price is more or less
arrived at with ample contractual
freedom than the value of the thing
given in the former
If consideration is partly money and partly in another thing

-depends upon the intention of the parties whether they intended it to be sale or
barter
-does not clearly appear –BARTER – if value given as part of the consideration
EXCEEDS the amount of the money or its equivalent
-the true cause of the contract for the other party is the thing transferred to him and
not the money; OTHERWISE it is a SALE
Sec. 57 Earnest Money
Absence of express stipulation to the contrary, earnest money or token is given in a
contract of sale – considered as part of the price and as proof of the perfection of the
contract, & not a penal clause.
Parties may stipulate that earnest money be regarded in both senses.
Sec. 58 Under Prior laws
Partdas: EM given in a contract of purchase and sale is considered as a penal clause
or as an ostensible sign of the perfection of the contract.
-first case: fulfilment or non-fulfillment of the contract is dependent on the will of the
parties, subject to the penalty that the buyer loses the earnest money or the vendor
returns double the amount, as the case may be. The sale was not perfected upon the
giving of the earnest money; only the penal clause is effective.
2nd case: the parties were bound to comply with the contract of sale which became
absolutely perfected and the giving of the EM was an ostensible and material sign of
proof and perfection of the contract.
Spanish Code:
Whenever EM or token has been given in a contract of purchase and sale, the
contract may be RESCINDED
If the vendee shall agree to forfeit it or the vendor to return double the amount. –
RECISSIBLE upon the will of the parties. However the giving of the price can not be
presumed to be EM unless such was the intention of the parties.
Spanish Code of Commerce:

EM given in commercial sales- considered paid on account of the price and as proof
of the ratification of the contract UNLESS there was agreement to the contrary.
Embodied by NCC.
b. “Earnest Money” as compared to “Option”, Articles 1482, 1479
Art. 1482. Whenever earnest money is given in a contract of sale, it shall be

considered as part of the price and as proof of the perfection of the contract.
(1454a)
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
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An accepted unilateral promise to buy or to sell a determinate thing for a price

certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price. (1451a)
i. Sanchez v. Rigos No. L-25494 June 14, 1972

FACTS:
On April 3, 1961, Plaintiff Nicolas Sanchez and defendant Severina Rigos
executed Option to Purchase whereby Rigos agreed, promised and committed
to sell to Sanchez a parcel of land in San Jose, Nueva Ecija for P1510. In the
agreement it is said that the option shall be deemed terminated and elapsed
within 2 years and if Sanchez shall fail to exercise his right to buy the
property.
Several payments were made by Sanchez within the said period, but were
rejected by Rigos. On Mar. 12, 1963, Sanchez deposited the amount with CFI
and commenced the present action for specific performance and damages
The defendant’s special defense was that the contract between the parties “is
a unilateral promise to sell, and the same being unsupported by any valuable
consideration, by force of the NCC, is null and void.
On Feb. 11, 1964, both parties moved for judgment. The lower court rendered
judgment for Sanchez, ordering Rigos to judicially consigned by him and to
execute, his favor the deed of conveyance. Rigos was sentenced to pay P200
attorney’s fees and the costs and hence this appeal.
ISSUE: W/N the contract was an “option to purchase”?
HELD:
The case hinges on the proper application of 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 sell a determinate thing is
supported by a consideration distinct from the price. “
The court said that although the defendant had “agreed, promised and
committed” herself to sell the land to the plaintiff, it is not true that the
latter had, in turn, “agreed and committed herself” to buy the
property.
The promise did not impose upon the plaintiff the obligation to
purchase the defendant’s properties. The contract is not a contract to
buy and sell, it merely granted plaintiff an “option to buy”. Both parties
understood it, as indicated by the caption “Option to Purchase” given
by them in the instrument. Also the contract did not mention that the
agreement, promise and undertaking in is supported by a
consideration “distinct from the price” stipulated for the sale of land.
Under Art. 1354, the lower court presumed the existence of said
consideration which is the main factor that influenced the decision in
plaintiff’s favor. However it should be noted that: 1) Art. 1354 applies
to general contracts whereas the 2nd par. Of Art. 1479 refers to “sales”
in particular “an accepted unilateral promise to buy or sell” Art. 1479 is
controlling in the case at bar. 2) that said unilateral promise “may be
binding” upon the promisor, Art. 1479 requires the concurrence of a
condition, namely, that the promise be “supported by a consideration
distinct from the price.” Accordingly, the promise can not compel the
promisor to comply with the promise, unless the former establishes the
existence of a distinct consideration. The promisee has the burden of
proving such consideration which was not alleged in his complaint. 3)
22
Sales – SY 2010
the defendant averred that the absence of consideration for her

promise to sell and by joining in the petition for a judgment on the
pleadings the plaintiff has impliedly admitted the truth of said
averment in defendants answer. The court said that there may no valid
contract without a cause or consideration, the promisor is not bound
by his promise and may, accordingly withdraw from it. Pending notice
of its withdrawal, his accepted promise partakes however of an offer to
sell which, if accepted results in a perfected contract of sale.
In Statutory Construction, provision of the same should be reconciled.
In avoiding conflict between Art. 1324 – general principles of contracts
– and Art. 1479 – on sales – it is a cardinal in statcon that in construing
different provisions of one and the same law, such interpretation
should be favoured as will reconcile and harmonize the said provision
and avoid conflict between them.
The decision of Southwestern Sugar & Molasses Co v. Atlantic Gulf in
holding Art. 1324 is modified by Art. 1479 of the Code, considers the
latter an exception to the former, and exception are not favoured
unless the intention to the contrary is clear.
Earnest Money Option Money

Part of the purchase price (Art. Money given as distinct
1479 par.2) consideration for the option
contract
Given only when there is already Applies to a sale not yet perfected
a sale
Is given, the buyer is bound to When the would-be buyer gives
pay the balance option money, he is not required
to buy
*may become earnest money if
parties so agree.
V. Subject Matter of Sale
a. Article 1459-1465, Article 1181
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. (n)
Art. 1460. A thing is determinate when it is particularly designated or physical

segregated from all other of the same class.
The requisite that a thing be determinate is satisfied if at the time the contract is
entered into, the thing is capable of being made determinate without the
necessity of a new or further agreement between the parties. (n)
Art. 1461. Things having a potential existence may be the object of the contract
of sale.
23
Sales – SY 2010
The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
The sale of a vain hope or expectancy is void. (n)
Art. 1462. The goods which form the subject of a contract of sale may be either
existing goods, owned or possessed by the seller, or goods to be manufactured,
raised, or acquired by the seller after the perfection of the contract of sale, in this
Title called "future goods."
There may be a contract of sale of goods, whose acquisition by the seller depends
upon a contingency which may or may not happen. (n)
Art. 1463. The sole owner of a thing may sell an undivided interest therein. (n)
Art. 1464. In the case of fungible goods, there may be a sale of an undivided
share of a specific mass, though the seller purports to sell and the buyer to buy a
definite number, weight or measure of the goods in the mass, and though the
number, weight or measure of the goods in the mass is undetermined. By such a
sale the buyer becomes owner in common of such a share of the mass as the
number, weight or measure bought bears to the number, weight or measure of
the mass. If the mass contains less than the number, weight or measure bought,
the buyer becomes the owner of the whole mass and the seller is bound to make
good the deficiency from goods of the same kind and quality, unless a contrary
intent appears. (n)
Art. 1465. Things subject to a resolutory condition may be the object of the
contract of sale. (n)
Art. 1181. In conditional obligations, the acquisition of rights, as well as the

extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition. (1114)

III. Subject Matter of Sale
A. Must Be Licit
Sec. 39 In General
Object of sale must be licit and within the commerce of men
Examples of Prohibited by law: narcotics and dangerous drugs, sale of wild animals
or rare plants protected by law, tubli or other poisonous plants or fruits, dynamited
fish, explosives and ammunition
More examples of outside commerce of men:
• Properties belonging to the State or its political subdivisions – intended for
public use or service or for development of natural wealth.
• Churches
• Rivers
• Patrimonial Property of the State – when property no longer intended for
public use or service
B. Must be Determinate
Sec. 41 Meaning of Determinate
24
Sales – SY 2010
-when it is particularly designated or physically segregated from all others of

the same class or is capable of being made determinate without the
necessity of a further agreement between the parties.
- to cover generic things, future goods and undivided interest (Civil Code
expanded the meaning)
Sec. 42 Under the Old Civil Code
Determinate is the same meaning on obligation ie. Specific opposed to
indeterminate or generic.
Thus is sale is by description and goods have not be physically segregated –
mere contract to sell and not a perfected sale.
Distinction was important to Old Civil Code. If object of sale was specific or
fungible, it had already weighed, counted or measured, the risk of loss is
imputable to the vendee, even before delivery of the thing.
C. Particular Kinds
Sec. 43 Future Goods
May be the object – goods are still to be manufactured, raised or acquired by
the seller AFTER the perfection of the contract of sale
Things having potential or possible existence as the natural increment of
something already belonging to the seller (i.e grain in ricefield, wool that may
grow on sheep)
Sale of a mere hope of expectance (ie. “the next catch”of a fisherman) –
deemed subject to the condition that thing will come to existence.
-different from roman law on the sale of hope of expectancy (venditio
sempei)
Effect: the sale is effective even if the thing does not come into
existence because the object of the contract is the hope or
expectancy.
Sec. 44 Sale of Undivided Interest or Share
Sole owner of a thing may sell an undivided interest
Sale of an undivided share in a specific mass of fungible goods results in
making the buyer a co-owner of the entire mass in proportion to the amount
bought by him, and if the mass contains less than the amount bought, the
seller is bound to make good the deficiency from goods of the same kind and
quality, unless intent appears.
Co-owner cannot sell more than his share
Sec. 45 Sale of things in Litigation
Recissible – sale of things under litigation entered into by a defendant
without the knowledge and approval of the litigants or of the court
Recission cannot take place when things are legally in the possession of 3rd
persons who did not act in bad faith.
If movable property sold by the defendant without the knowledge and
approval of the plaintiff or the court, the sale can not be rescinded if the
purchaser did not know the thing is involved in litigation.
In action affecting the right of possession of real property
-the plaintiff may record in the office of the registrar of deeds of the province
in which the property may be situated, a notice of pendency of action
-from the time of filing of notice, third persons are charged with notice of the
litigation, and takes the property subject to the outcome of the litigation
Sec. 46 Things subject to Resolutory condition
May be subject of a contract of sale
25
Sales – SY 2010
Things acquired under a legal or conventional right of redemption, or subject

or reserva troncal
During the period of legal or conventional redemption, the vendee a retro
may sell the property to another. Should the vendor a retro redeem the
property, he can recover it from the subsequent purchaser without prejudice
to the provisions of Land Registration Act, requiring previous registration to
the right to redeem.
Req. Of registration – to enable redemptioner to recover the property from a
subsequent purchaser
-not applicable to unregistered lands. Lands acquired under homestead
or free patent where the patentee or his heirs invoked their right of legal
redemption
Property subject to reserva troncal is subject to a resolutory condition that
the reservee will outlive the reservor. The latter during his lifetime , sell the
property to another. The sale will be extinguished, in case the reserve should
outlive the reservor.
ii. “Documents of title to goods” (Baviera p.8)

Bill of Lading, dock warrant, “quedan” or warehouse receipt or order for the
delivery of goods,or * any other document used in the ordinary course of business
in the sale of transfer of goods as proof of possession or control of the goods, or
authorizing or purporting to authorize the possessor of the document to transfer or
receive, either by indorsement or delivery, the goods represented by such
document.
The Uniform Sales Act was incorporated with the Civil Code:
Sec. 47 of Warehouse Receipt “ the validity of a receipt is not impaired ... such
negotiation was a breach of duty on the part of the person making the negotiation,
or by the fact that the owner of the receipt was induced by fraud, mistake, or duress
to intrust the possession or custody of the receipt to such person, if the person to
whom the receipt was subsequently negotiated, paid value therefor, without notice
of breach of duty, or fraud, mistake or duress”
Art. 1518 of NCC “the validity of the negotiation of a negotiable document of title is
not impaired by the fact that the negotiation was breach of duty on the part of the
person making the negotiation, or by the fact that the owner of the document was
deprived of the possession of the same by loss, theft, fraud, accident, mistake
duress, or conversion, if the same by the person to whom the document was
negotiated or a person to whom the document was subsequently negotiated or a
person to whom the document was subsequently negotiated paid value therefor in
goodfaith without notice of the breach of duty or loss, theft, fraud, accident,
mistake, duress or conversion”
b. Article 1539, 1542, Sale of real estate where there is greater or

lesser area
26
Sales – SY 2010
Art. 1539. The obligation to deliver the thing sold includes that of placing in
the control of the vendee all that is mentioned in the contract, in conformity
with the following rules:
If the sale of real estate should be made with a statement of its area, at the
rate of a certain price for a unit of measure or number, the vendor shall be
obliged to deliver to the vendee, if the latter should demand it, all that may
have been stated in the contract; but, should this be not possible, the vendee
may choose between a proportional reduction of the price and the rescission
of the contract, provided that, in the latter case, the lack in the area be not
less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the
immovable is not of the quality specified in the contract.
The rescission, in this case, shall only take place at the will of the vendee,
when the inferior value of the thing sold exceeds one-tenth of the price agreed
upon.
Nevertheless, if the vendee would not have bought the immovable had he
known of its smaller area of inferior quality, he may rescind the sale. (1469a)
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate
of a certain sum for a unit of measure or number, there shall be no increase or
decrease of the price, although there be a greater or less area or number than
that stated in the contract.
The same rule shall be applied when two or more immovables as sold for a
single price; but if, besides mentioning the boundaries, which is indispensable
in every conveyance of real estate, its area or number should be designated in
the contract, the vendor shall be bound to deliver all that is included within
said boundaries, even when it exceeds the area or number specified in the
contract; and, should he not be able to do so, he shall suffer a reduction in the
price, in proportion to what is lacking in the area or number, unless the
contract is rescinded because the vendee does not accede to the failure to
deliver what has been stipulated. (1471)
c. Article 1543, Prescription of Action

Art. 1543. The actions arising from Articles 1539 and 1542 shall prescribe in
six months, counted from the day of delivery. (1472a)
VI. Delivery of movable property

a. Article 1477-1478, 1480, 1496, 1497 1588 general provisions on transfer of
ownership; res perit domino
The maxim res perit domino means the thing perishes for the owner. The maxim
refers to the contractual principle that risk in the goods pass with ownership.
Art. 1477. The ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof. (n)
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to
the purchaser until he has fully paid the price. (n)
27
Sales – SY 2010
Art. 1480. Any injury to or benefit from the thing sold, after the contract has been
perfected, from the moment of the perfection of the contract to the time of
delivery, shall be governed by Articles 1163 to 1165, and 1262.
This rule shall apply to the sale of fungible things, made independently and for a
single price, or without consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed according to weight, number, or
measure, the risk shall not be imputed to the vendee until they have been
weighed, counted, or measured and delivered, unless the latter has incurred in
delay. (1452a)
Art. 1496. The ownership of the thing sold is acquired by the vendee from the
moment it is delivered to him in any of the ways specified in Articles 1497 to
1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee. (n)
Art. 1497. The thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee. (1462a)
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. (n)
i. Chrysler Phils. Corp. v. CA G.R. No. L-55684 December 19, 1984

FACTS:
• Petitioner is a domestic co. engaged in assembling and sale of motor vehicles and
automotive products. Respondent Sambok Motors Co., a general partnership, dealer
for automotive products with offices at Bacolod (Sambok, Bacolod) and Iloilo
(Sambok, Iloilo) These two offices were run by Miguel Ng, Asssistant Manager for
Sambok, Bacolod and elder brother Pepito Ng, President.
• Sept. 1972, Petitioner filed with CFI Rizal a complaint for Damages against Allied
Brokerage Co., Negros Co. and Sambok, Bacolod, alleging that on Oct. 1970, Sambok,
Bacolod ordered from Chrysler various automotive products worth P30,909.61,
payable in 45 days. On Nov 1950, Chrysler delivered the products to its forwarding
agent, Allied Brokerage Co. for shipment and loaded the goods on M/S Dona
Florentina, owned by Negros Navigation, for delivery to Sambok, Bacolod. When
Chrysler tried to collect the payment Sambok, Bacolod refused to pay claiming that it
had not received the merchandise; and Chrysler demanded the return of the
merchandise or their value from Allied Brokeraga and Negros Navigation, but both
denied liability.
• Sambok, Bacolod, denied having received the products and professed no knowledge
of having ordered from Chrysler.
• Trial Court rendered dismissing the complaint against Negros Nav. For lack of COA,
but finding Sambok, Bacolod liable for the claim of petitioner. Also found Sambok,
Bacolod, “in refusing to take delivery of shipment for justifiable reason from Negros
Nav. Despite having received the Bill of Lading constituted wrongful neglect or
refusal to accept and pay for the subject shipment, by reason Sambok motors held
liable for damages.”
• Sambok, Bacolod appealed and set aside the appealed judgment and dismissed
petitioner’s complaint, after finding that the latter had not performed its part of the
obligation under the contract by not delivering the goods at Sambok, Iloilo, the place
designated in the Order Form and must suffer the loss. Appellate Court found that
there was misdelivery. Hence this petition.
28
Sales – SY 2010
ISSUE:W/N there was delivery ?
HELD:
Matter of misdelivery is not the decisive factor for relieving Sambok, Bacolod of
liability. Under the order form it indicated Iloilo as the destination as testified by
Ordonez,Sales Rep. And made by Pepito Ng through his marketing consultant. Upon
receipt of the Bill of Lading, Sambok, Bacolod initiated but did not pursue the steps to
take the delivery as advised by Negros Nav. Because some parts were missing. It was
only 4 years later, when a warehouseman of Negros Nav., Aguarte found in their off-
shore bodega the parts of the shipment in question but was already deteriorated and
valueless.
Sambok, Bacolod cannot be faulted for not accepting or refusing to accept the
shipment from Negros four years after shipment. The evidence is clear the Negros
could not produce the merchandise nor ascertain its whereabout at the time Sambok
was ready to take delivery.
Where the sellers delivers to the buyer a quantity of goods less than he contracted to
sell, the buyer may reject them.
Negros was negligent in failing to deliver the complete shipment to Sambok but the
Trial Court found, Chrysler failed to comply with the condition precedent to the filing
of a judicial action.
It is the petitioner (Chrysler) failed to comply with the conditions precedent to the
filing of judicial action.
Petitioner must shoulder the resulting loss. As a GR that before, delivery, the risk of
loss is home by the seller who is still the owner under the principle of res perit
domino is applicable.
Judgment of CA is sustained on non delivery since the merchandise was never placed
in the control and possession of Sambok, Bacolod.
ii. Union Motors Co. v. Sps. Bernal G.R. No. 117187 July 20, 2001
FACTS:
Sps. Bernal purchased from petitioner Union Motors Co.(Union) one jeepney for
P37,758.60 to be paid in instalments. Sps. Bernal executed a promissory note and a
deed of chattel mortgage in favor of Union.
Union entered into a contract of assignment of promissory note and chattel mortgage
with Jardine-Manila Finance Inc. (Jardine), through Manuel Sosmeña, agent of Union,
the parties agreed that Sps. Bernal would pay the amount of promissory note to
Jardine, latter being the assignee of the petitioner.
To effectuate the sale, Sps. Bernal were required to sign the documents (assignment
of PN, deed of assignment, sales invoice, registration certificate, affidavit and
disclosure statement), according to Sosmeña, it was a requirement to Union and
Jardine for the respondent Sps. to accomplish all said documents in order to have the
application approved.
Sps paid the downpayment of P10,037.00 and the petitioner’s acceptance of the
same approved the sale. Sps. have not yet physically possessed the vehicle but
Sosmeña required them to sign the receipt as a condition for the delivery of the
vehicle.
Sps. Bernal continued paying the agreed instalments even if the Jeep remained
undelivered inasmuch as Jardine promised to deliver the vehicle. Sps. have paid a
total of P7,507.00 worth of instalments before they discontinued paying on account
of non-delivery of the jeep. According to Sps. Bernal, the vehicle was not delivered
because Sosmeña allegedly took the subject motor vehicle in his personal capacity.
On Sept. 1981 , Jardine filed a complaint for a sum of money against the Sps. Bernal
before the CFI of Manila. The case was transferred to RTC of Makati and was
amended to include petitioner Union as alternative defendant because Sps. refusal to
29
Sales – SY 2010
pay Jardine was due to Union’s nondelivery of the unit and pay Jardine what has been
advanced to the petitioner.
Union and Sps. filed their claims against Jardine. After Jardine’s presentation of
evidence, the Sps. Bernal presented as witnesses. Petitioner did not present any
witnesses because of repeated failure to appear for hearings. Trial court deemed the
presentation of witnesses have been waived. The Trial Court ordered plaintiff to pay
Sps. Bernal P7,507.15 plus legal interest and Union to pay them of the downpayment
P10,037. Also Union to pay plaintiff 23,268.29 and attorney’s fees. Union shallfurther
pay Sps. 20,000 as moral damages and 10,000 attorneys fees.
Petitioner appealed to CA and Sps appealed to hold petitioner solidarily liable with
Jardine. The appellate court denied and affirmed trial courts decision holding that
defendant had failed to adduce evidence in court to support its claim for non-liability.
Hence this petition.
ISSUE: Whether there has been a delivery, physical or constructive of the jeep? No.
HELD:
Sps. Bernal did not come into possession of the Jeep that was supposed to be
delivered to them by the petitioner. The registration cert., receipt and sales invoice
that the Sps. signed was explained in the hearing. According to the evidence, the
documents were signed as part of the processing and for the approval of their
application to by the Jeep. Without such documents, no sale, much less delivery of
the subject jeepney could be made. The documents were not an acknowledgement
by respondent spouses of the physical acquisition of the jeep but merely a
requirement of petitioner so that the jeep would be delivered to them.
The court ruled that the issuance of a sales invoice does not prove transfer of
ownership of the thing sold to buyer, an invoice is nothing more than a detailed
statement of the nature, quantity and cost of the thing sold and has been considered
not a bill of sale.
The registration cert. Signed by the Sps. does not conclusively prove that the
constructive delivery was made nor that ownership has been transferred to the Sps.
this was qualified by the fact that it was a requirement of the petitioner for the sale
and financing to be approved.
In all forms of delivery, it is necessary that the act of delivery, whether constructive
or actual, should be coupled by the intention of delivering the thing. The act without
the intention is insufficient. The critical factor in the different modes of effecting
delivery which gives legal effect to that act, is the actual intention on the vendor to
deliver, and its acceptance by the vendee. Without that intention, there is no
tradition.
Addison v. Felix and Tioco: in order that this symbolic delivery may produce the
effect of tradition, it is necessary that the vendor shall have had control over the
thing sold that, at the moment of the sale, its material delivery could have been
made. It is not enough to confer upon the purchaser the ownership and the right of
possession. The thing sold must be placed in his control. When there is no
impediment whatever to prevent the thing sold passing into the tenancy of the
purchaser by the sole will of the vendor; symbolic delivery through the execution of a
public instrument is sufficient. But if notwithstanding the execution of the
instrument, the purchaser cannot have the enjoyment and material tenancy of the
thing and make use of it himself or through another in his name, because such
tenancy and enjoyment are opposed by the interposition of another will, then fiction
yields to reality the delivery has not been effected. (Italics supplied)
The act of signing the registration certificate was not intended to transfer the
ownership of the jeep to Sps. Bernal, the petitioner needed the same for the approval
30
Sales – SY 2010
of financing contract with Jardine. The fact that the registration certificate was kept
by Jardine and unhesitating move to give the same to Sosmeña just shows that the
Sps. still had no complete control over the subject motor vehicle as they did not even
possess the certificate of registration nor consent was sought when Jardine handed
over the said document to Sosmeña.
There was neither physical of constructive delivery of determinate thing (in the case,
subject motor vehicle), the thing sold remained at the seller’s risk. The petitioner
should bear the loss of the subject motor vehicle after Sosmeña allegedly stole the
same.
Reliance on the Chattel Mortgage by the petitioner does not held its assertion of
ownership has been transferred to the Sps. since there was neither delivery nor
transfer of possession of the subject motor vehicle to the Sps. the CM has no legal
effect, Sps. were not absolute owners, ownership of the mortgagor being an essential
requirement for valid mortgage contract.
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Sales – SY 2010

Atty. Joanne Cañete-Chan

I. Nature and form of a contract of sale

b. Article 1409, contracts that are contrary to law, void contracts

c. Article 1330, 1390 voidable contracts

d. Article 1381 (3) and (4) rescissible contract

e. Article 1403, Statue of Frauds, unenforceable contracts

unenforceable by action, unless the same, or some note or memorandum, thereof,

f. Article 1466 to 1468 – Sale as distinguished from Agency,

Sec.13 Distinguished from Lease of Things

Sec. 14 Distinguished for Agency to Buy or Sell

Unforeseen events: unfavourable to the

Sec. 15 Distinguished form Barter or Exchange

Sec. 16 Distinguished for Dacion en pago

creditor acceptsa thing in payment of

Sec.17 Distinguished from Chattel Mortgage

II. Perfection of the contract

Sec.27 Form of Offer

Sec.28 Forms of acceptance

ii. Goyena v. Tambunting No. 956 November 18, 1902 –private

iv. Soriano v. Latono No. L-3408 Dec. 23, 1950

b. Article 1330, contracts entered into by mistake, fraud,

ii. Pineda v. Santos No. 34845 March 3, 1932 –

c. Article 1483, Statute of Frauds, Article 1403

CHAPTER 8 - UNENFORCEABLE CONTRACTS (n)

Made through telegram or verbally – such order subsequently confirmed, no

Sec. 31 Statue of Frauds

ii. Sale of Real Property to an agent must be in writing

Sec. 32 Sale of Realty by an Agent

Sec. 33 Secondary Evidence

d. “Deed of Absolute Sale” and “Contract to Sell” compared to

Contract of Sale Contract to Sell

enforcing the contract is not resolving

III. Capacity of the parties

i.Notes: (Baviera p.17-22)

Sec.21 Executors, Guardians, Etc.

Guardianship – trust of the highest order

Sec. 23 Public Officers, Judges Etc.

Sec. 25 Indigenous Cultural Communities(ICC)/ Indiginous Peoples

Conveyances of lands acquired under it by illiterate non-Christian or literate non-

ii. Rubias v. Batiller No. L-35702 May 29, 1973

i.Notes: (Baviera p.49-53)

Sec. 54 Inadequacy of Price

Sec.55 Definiteness and certainty

If price consists of a life annuity or obligation to give support – not SALE

Dation in payment Sale

If consideration is partly money and partly in another thing

Spanish Code of Commerce:

Art. 1482. Whenever earnest money is given in a contract of sale, it shall be

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

i. Sanchez v. Rigos No. L-25494 June 14, 1972

the defendant averred that the absence of consideration for her

Earnest Money Option Money

V. Subject Matter of Sale

a. Article 1459-1465, Article 1181

Art. 1460. A thing is determinate when it is particularly designated or physical

The sale of a vain hope or expectancy is void. (n)

Art. 1181. In conditional obligations, the acquisition of rights, as well as the

i.Notes: (Baviera p.37-42)

-when it is particularly designated or physically segregated from all others of

Things acquired under a legal or conventional right of redemption, or subject

ii. “Documents of title to goods” (Baviera p.8)