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1 CONTRACT OF SALE CONTRACT OF SALE One of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Contract of Sale Contract to Sell Absolute Conditional Real obligation obligation to give Personal obligation obligation to do Title passes to the buyer upon delivery Ownership is reserved in the seller and will pass to the buyer only upon full payment of the price Non-payment of the price is a negative resolutory condition Full payment is a positive suspensive condition, the failure of which is not a breach but prevents the obligation of the vendor to convey title to arise remedies available: 1. specific performance 2. rescission 3. damages remedies available: 1. resolution 2. damages I. ELEMENTS OF A CONTRACT OF SALE 1. Consent 2. Determinate subject matter 3. Price certain in money or its equivalent II. STAGES IN LIFE OF CONTRACT OF SALE 1. Negotiation 2. Perfection 3. Consummation III. OBLIGATIONS CREATED - 2 sets of real obligations to give IV. CHARACTERISTICS OF CONTRACT OF SALE: 1. Nominate 2. Principal 3. Consensual 4. Bilateral 5. Reciprocal 6. Onerous 7. Commutative 8. Title and not a mode

V. DISTINGUISHED FROM OTHER CONTRACTS Donation Sale Gratuitous or onerous Onerous Formal contract Consensual contract Governed by law on donation Governed by law on sale Barter Sale Consideration: giving of a thing Consideration: giving of money as payment Governed by law on sales: species of the genus sales If consideration consists party in money and partly by thing look at manifest intention; If intention is not clear: value of thing is more than amount of money barter If intention is not clear: value of thing is equal or less than amount of money sale Contract for piece of work Sale Goods are to be manufactured specially for a customer and upon special order and not for the general market Contract for delivery of an article which the vendor in the ordinary course of business manufactures or procures for general market (whether on hand or not) Essence is service Essence is object Jurisprudence: 1. Timing test under art 1467: whether the thing transferred would have never existed but for the order 2. Habituality test if manufacturer engages in activity with need to employ extraordinary skills and equipment (Celestino v

CIR) 3. Nature of the object test each products nature of executionATENEO CENTRAL BAR OPERATIONS 2007
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ii. When delivered and does

any act inconsistent with ownership of seller iii. Retains without intimating to seller that he has rejected 3. Sale of Goods on installment a. Goods must be delivered in full, except when stipulated b. When not examined by buyer not accepted until examined or at least had reasonable time to examine 4. Acceptance of goods in general, absent contrary express stipulation, does not discharge seller from liability in case of breach of warranties (unless no notice or failure to give it within reasonable time) 5. When buyer has a right to refuse goods, no need to return; shall be considered as depositary; unless there is stipulation to the contrary Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. (1473) DOUBLE SALE General Rule: FIRST IN TIME, PRIORITY IN RIGHT When does it apply: when not all requisites embodied in 1544 concur. I. REQUISITES FOR DOUBLE SALES TO EXIST: (VOCS) 1. Two or more sales transactions must constitute valid sales; 2. Two or more sales transactions must pertain to the same object or subject matter; 3. Two or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests;

and 4. Two or more buyers must each have bought from the very same seller. Consolidated Rural Bank (Cagayan Valley_ vs. CA [Jan. 17, 2005] If not all the elements are present for Art. 1544 to aply, the priniciple of prior tempore, potior jure or simply he who is first in time is preferred in right should apply. Undisputably, he is a purchaser in good faith because at the time he bought the real property, there was still no sale to as a second vendee. II. RULES ACCORDING TO 1544: 1. MOVABLE a. Owner is first to posses in good faith 2. IMMOVABLE a. First to register in good faith b. No inscription, first to possess in good faith c. No inscription and no possession in good faith Person who presents oldest title in good faith d. Good Faith - one who buys property without notice that another person has a right or interest in such property; one who has paid price before notice that another has claim or interest III. LIS PENDENS notice that subject matter is in litigation IV. ADVERSE CLAIM notice that somebody is claiming better right V. POSSESSION Both actual or constructive VI. REGISTRATION: any entry made in the books of the registry, including both registration in its ordinary and strict sense, and cancellation, annotation, and even marginal notes. It is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights. 1. registered under Torrens system 1544 applies
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2. not registered under the Torrens system 1544 still applies Jurisprudence if 2nd sale is a judicial sale (by way of levy on execution), buyer merely steps into the shoes of the judgment debtor. Outside of such situation must apply to conflicting sales over the same unregistered

parcel of land If sale 1 occurs when land is not yet registered and sale 2 is done when land is already registered apply FIRST IN TIME, PRIORITY IN RIGHT Gabriel v. Mabanta, et al. [2003] Good faith must concur with registration. To be entitled to priority, the second purchaser must not only establish prior recording of his deed, but must have acted in good faith. CONDITION 1. Effect of Non-Fulfillment of Condition The other party may a. refuse to proceed with the contract b. proceed with the contract, waiving the performance of the condition If the condition is in the nature of a promise that it should happen, the non-performance of such condition may be treated by the other party as breach of warranty. 2. Effect if buyer has already sold the goods General Rule: The unpaid sellers right to lien or stoppage in transitu remains even if buyer has sold the goods Exception: o When the seller has given consent thereto, or o When the buyer is a purchaser in good faith for value of a negotiable document of title. NEGOTIABLE DOCUMENTS OF TITLE See Article 1636 1. Not creation of law but by merchants to allow them to deal with merchandise without having to physically carry them around 2. Pertains to specific type of movables only : GOODS a. Documents of title serve two (2) functions: i. evidence of existence and possession of goods described therein ii. medium by which seller is able to transfer possession of goods 3. A document of title which states that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document 4. Negotiable by delivery or indorsement TYPES 1. NEGOTIABLE a. deliver to bearer (negotiation by mere delivery) b. deliver to specific person or his order (negotiation by endorsement + delivery) i. even if face of instrument says NONNEGOTIABLE, it is still

NEGOTIABLE; limiting words does not destroy negotiability ii. If order instrument and no endorsement was made equivalent to assignment 2. NON-NEGOTIABLE EFFECTS OF UNAUTHORIZED NEGOTIATION The validity of the negotiation of a negotiable document is not impaired by the fact that negotiation was done in breach of duty or that the owner of the document was deprived of the same by loss, theft, accident, fraud, mistake if the person to whom the document is delivered is in good faith and without notice of the said irregularities. Important Considerations 1. Negotiation gives better right than assignment 2. Assignee takes document with defects of the assignor 3. Obligation of bailee bailee is immediately bound to the document Warranties on Negotiation 1. the document is genuine 2. he has legal right to negotiate or transfer it 3. he has knowledge of no fact which would impair the validity or worth of the document 4. he has right to transfer title to goods and