Professor: Atty. Irvin Joseph M.

Fabella

Transcribers:
Marc Roby de Chavez (MARX)

Mon Cristhoper Pasia (MON)

Jennielyn Reyes (JEN)
Angela dela Cruz (ANGELA)
 Sales Notes by MARX, MON, ANGELA & JEN

SALES1
What are the essential elements of a contract of sale?
Article 1458. By the contract of sale one of the contracting • Consent or meeting of minds
parties obligates himself to transfer the ownership and to • determinate subject matter,
deliver a determinate thing, and the other to pay therefor a • price certain in money or its equivalent
price certain in money or its equivalent.
Natural Elements –those which are inherent in the contract,
A contract of sale may be absolute or conditional. and which in the absence of any contrary provision, are
deemed to exist in the contract
What is a contract of sale? • Warranty against eviction
By the contract of sale one of the contracting parties • Warranty against hidden defects
obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay Accidental elements- those which may be present or absent
therefor a price certain in money or its equivalent. in the stipulation
(Codal definition) • Place of payment
A contract of sale is when one of the contracting • Time of payment
parties obligates himself to deliver or to transfer • Presence of conditions
ownership of a thing and the other party pay a price • Etc….
certain in money or its equivalent.
Can there be a valid sale against the will of one of the parties?
What is the primary purpose of the contract of sale? Yes. In expropriation and foreclosure proceedings.
Transfer of ownership. Because that was what the There can be a valid sale but it is not by meeting of
buyer wants. The buyer will not want delivery of the the minds by the party because the other party is
object if he does not acquire ownership of the thing. compelled to enter into a contract.
Why? What are the kinds of sale as to the nature of subject matter?
For example in contracts to sell, there is delivery but you did
• Sale of real property
not acquire ownership. Even if you have possession of the
• Sale of personal property
thing but there is no transfer of ownership, there is no
contract of sale.
What are the kinds of sale based on the value of the thing
exchanged?
What are the essential characteristics of a contract of sale?
• Commutative sale- value of the thing may be
Explain each.
equivalent as to each other
• Consensual – it is perfected by mere consent;
• Aleatory sale- one is greater than to the other
• Principal contract – there is no necessity for it to
depend upon the existence of another valid contract
As to the quantity of the object?
• Either Commutative or Aleatory
• Wholesale
o Commutative- as a rule, because the values
• Retail
exchanged are almost equivalent to each
other
Classification of the kind of sale based on its validity?
o Aleatory- by way of exception (example:
• Valid sale
lottery ticket – the thing itself may not be
the equivalent of consideration); • Rescissible sale
• Bilateral – parties are boundby the obligation • Voidable sale
dependent upon each other; • Unenforceable sale
• Nominate – there is a specific name given by law or • Void sale
the code
As to legality of the object?
Can there be a contract of sale by unilateral agreement? • Sale of licit object
No. • sale of illicit object

What are the classifications of the elements of a contract of Classifications of illicit objects
sale? • Illicit per se- of its nature
• Essential Elements • Illicit per accidens- made illegal by provision of the
• Natural Elements law
• Accidental Elements
1
 Sales Notes by MARX, MON, ANGELA & JEN
Classification of sale based on whether the object is tangible
or not?
• sale of property (chose in possession)
• sale of a right (chose in action)
Distinguish between chose in possession and chose in action
• Chose in possession – object of the sale is tangible;
• Chose in action – object of the sale is intangible
Classification of the kind of sale based on the presence or
absence of a condition?
• Absolute- no imposed condition, then the
obligations of the parties are demandable being an
essential element of a contract of sale
• Conditional-
The classification of the contract of sale as to the presence or
absence of a condition is limited only to the accidental
element. Meaning, the contract of sale may or may not have
conditions.
What are natural elements?
• Warranty against eviction
• Warranty against hidden defects
What distinguishes it from an essential element?
If it is an essential element, even if you stipulate
otherwise, you can’t do it, otherwise the contract is
void. If it is just a natural element, if there is a
contrary stipulation even if it is an inherent element,
you may dispense with it.
What are the characteristics of a wholesale sale?
• The quantity is large;
• It is resold unaltered and for profit;
• Purchaser has no use of the goods or it is in excess of
his requirement;
• Seller must be habitually engaged in selling a large
number of quantities
The sale of 2 tons of recycled newspaper to a publishing
house, as opposed to a sale of 2 tons of newspaper to a junk
shop. Which is wholesale sale and which is retail sale?
The sale to the publishing house is a retail sale.
Because the goods (newspaper) are already altered
when sold (in the form of a book for example). The
sale to the junk shop can either be a wholesale or
retail, depending upon whether it is in excess of the
requirement of business or not.
What are the kinds of sale based on the proximate
inducement?
• Sale by description- where seller things as being of a
certain kind, the buyer merely relying on the seller’s
representations or descriptions. Generally, the buyer
2
has not previously seen the goods, or even if he has
seen them, he believes that description tallies with
the goods he has seen
• Sale by sample- that where the seller warrants that
the bulk (not the major part or the majority of the
goods but the goods themselves) of the goods shall
correspond with the sample in kind quality and
character. Only the sample is exhibited
• Sale by description and sample- must satisfy the
requirements in both, and not in only one
You bought the property because of the description of the
goods or by the sample given to you or both.
Is the contract of sale valid even if the other party gives a
reluctant consent?
No
Is a reluctant consent a vitiated consent?
The contract is still valid because a reluctant consent
is not a vitiated consent.
Can there be a perfected contract of sale if the seller fails to
acquire ownership of the object of the sale at the time of its
supposed delivery to the buyer? If not what is the remedy, if
so what is the effect?
There is a perfected contract of sale. The contract of
sale is perfected upon the meeting of the minds, and
you need ownership only upon delivery and not
upon the meeting of the minds.
If the seller fails to deliver the property at the time of its
supposed delivery, what is the remedy? Is the contract
automatically voided?
The contract is not automatically voided. The
remedy is an action for damages based on breach of
warranty against eviction
What if it is an absolute sale without an imposed condition,
can there be an action for damages? or there would be
mutual restitution?
There can be an action for damages, because
warranty against eviction is a natural element of the
contract, unless, there is a contrary stipulation. So if
you are entering a contract of sale, do not waive
your right against warranty against eviction.
Meaning if the seller does not acquire ownership of
the property at the time of its supposed delivery you
have a cause of action for damages.
Can services be the object of a contract of sale?
No. Because there can be no transfer of ownership if
the object of the contract of sale is services.
Distuinguish between emptio rei sperati and and emptio spei.
 Sales Notes by MARX, MON, ANGELA & JEN
• Emptio spei is the sale of the hope itself;
• Emptio rei sperati is the sale of an expected future
thing.
SALES2
What is Cession?
Cession- that which consist in the abandonment of
all the property of the debtor for the benefit of his
creditors in order that the latter may apply the
proceeds thereof to the satisfaction of their credits
It is a mode of payment whereby the debtor assigns his
property to his creditors on the matter of which to acquire
the right on the thing and to apply the proceeds to the debts
of the debtor. It is the assignment of all and not just the sum
of the property of debtor in favour of the creditor not for the
creditor to acquire ownership of the thing assigned to them
but for them to have the right to sell them and after the sale
the proceeds shall be applied to the debt and that is how the
debts are paid. That is cession.
What is the distinction between Cession and Dation in
Payment?
Dation in Payment Cession
One creditor is sufficient There must be 2 or more
creditors
Not all properties of the All the debtor’s properties
debtor are conveyed are conveyed
Insolvency is immaterial Takes place only when the
debtor is insolvent
The creditor becomes the The creditors do not become
owner of the thing conveyed owners of the thing
conveyed
How many creditors are there in Dation in payment and how
many creditors are there in Cession?
In dation in payment one creditor is sufficient and in
cession there must be two or more creditors.
As to the number of property given by the debtor.
We all know that in cession all of the properties must be
assigned and not some of them. In dation in payment one is
enough as long as the value of the property is sufficient to
answer for the debts. The number of the property will
depend on the amount of the debt. If one property is
sufficient to cover the debt and that is accepted by the
creditor then dation in payment will be completed even if you
assign or give 3 properties should the value will not be
sufficient there can never be dation in payment and the
creditor will assign and not accept your property. But the
general rule is for as long as it is sufficient and the same is
acceptable to the creditor then one property is enough. Again
as compared in cession all the property must be ceded or
3
assigned whether or not it is twice or thrice the value of the
debt of the debtor.
As regards solvency of the debtor what’s the rule? Do they
have to know the solvency of the debtor in dation in
payment? How about in cession?
In dation in payment it does not matter whether the
debtor is solvent or insolvent. In cession the debtor
required to be insolvent.
Why require being insolvent in cession?
We are agreeing that you need to be insolvent for
you to have applied or for you to have cession or for
you to abandon all your property and give it to all
your creditors for them to sell it and apply the
proceeds to your debt. If you are insolvent the
presumption is that your asset is less than your
liabilities. If your asset is more than your liabilities,
because after the sale you still have the remaining
balance over the liability, then you are solvent and if
you are not insolvent then it would not apply
cession. You have to take the consequences of
insolvency, your debt to your creditor share
whatever asset you have remain. If you have asset
more than your liability then your creditor may
without abandoning all your property because if you
have abandon your property to your creditor you
have nothing to get back because all the proceeds
will be divided to your creditor depending on the
range of liability or the debts that you owe your
creditor. You have to be insolvent because it is a
requisite for the abandonment of all your property.
The presumption there is you cant claim all of them
so that in order for you to be relieved from liability
you are showing them that you have given them all
your property such that even if it less than the value
of the debt share depending on the debt you owe to
them on a pro rata basis. That’s why you have to be
insolvent first before you can apply cession.
What is the contract to sell?
A contact to sell is a bilateral agreement whereby
the seller while reserving right on ownership to the
property binds himself to sell the property upon
payment of the purchase price by the prospective
buyer so the obligation of the prospective seller is
not to get the transfer of ownership but actually the
obligation to sell because a contract of sale is
different from the contract to sell. Upon compliance
of the prospective buyer of his obligation to pay the
purchase price then the seller now is bound to enter
into a contract of sale whereby he is required to
transfer ownership. So in a contract to sell the
obligation is actually first to be bound to sell the
object subject of the contract upon payment of the
 Sales Notes by MARX, MON, ANGELA & JEN
full purchase price then the seller is now to sell,
deliver and transfer ownership.
Can seller be liable for estafa in failing to deliver a thing
because of his failure to acquire ownership?
The buyer full paid the property- the seller bound
himself to deliver the thing at the agreed period,
however he failed to deliver it on the agreed date
because he failed to acquire ownership on the thing.
Initially, the contract is valid because you don’t have
to own the property at the perfection of the contract
A seller may be held liable of estafa, if he is guilty of deceit in
selling a thing which he cannot own or which belongs to
somebody else
If you know that you don’t own the property but you honestly
believe that you can acquire ownership of the property with
sufficient time before delivery or at least you know that you
can acquire ownership at the time of delivery then there is no
deceit or fraud on your part on that example and if there is
no deceit or fraud on your part estafa will not lie.
However if you actively represented and misrepresented that
you can own the object of the thing at the delivery but you
ought to know that that is an absolute impossibility, you are
deceiving the buyer and there is that deceit in the
representation at the time of the perfection that will qualify
for estafa. Without that you will only be liable for damages.
If it is not estafa can you be held liable at all?
Yes, That is for breach of contract for damages for
failure to acquire ownership.
When is the thing considered determinate?
A thing is determinate when it is particularly
designated or physically segregated from all others
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. The thing cannot be
determinate by the stipulation of the parties because even if
the parties stipulated that the thing is determinate but if it is
not actually determinate under the provision of the law it
cannot be considered determinate thing, therefore it cannot
be element or essential element of a contract of sale. Now if
the thing cannot be particularly designated or physically
segregated from all others of the same class it is sufficient
that at the time the parties enter into a contract of sale the
thing is capable of being made determinate without the
parties having to enter to new or further agreement for that
matter.
4
What is the basis of the validity of the thing having potential
existence?
You can either classify it as Emptio Rei Sperai and
Emptio Spei. That is based on expected or
expectancy of a thing which is existing then it is
valid. On the other hand if it is actually not based on
something that will exist but a mere fact of sale of
hope or expectancy then it is also valid depending on
that thing.
What’s the basis?
Based on the validity of the thing with potential
existence.
Validity of the thing to what will it depend?
Based on the intention,
why?
If the party intends to valid the contract upon the
existence of a thing with potential existence if such
thing will not exist or failed to exist then you will not
have a valid contract. However if the party merely
intends to enter into a contract WON the thing will
come into existence the contract itself is valid
already even if you fail to have existence for your
potential thing so based on the intention of the
party you will have your validity.
Again depending on the intention of the party in the contract
of thing or sale of thing with potential existence will depend,
why?
If the party intends to validate a contract based on
the existence of a potential thing then only if the
thing exist will the contract be considered valid
because that is your intention the contract will only
be valid if this potential thing will exist. However if
the party intends to enter into a contract even
without the existence of the thing with potential
existence even if you fail to have even the potential
thing failed to exist you will have a valid contract.
Give me an example of something with potential existence?
Future crop, if you enter into a contract your
intention is that you should have a crop in the future
if you fail to get your future crop, you did not get any
crop at the end of the harvest season you will not
have a valid contract of sale because it depends on
the existence of the crop because you intends to
have a crop harvested at the end of the season but if
your intention is just to enter the contract WON this
future crop exist at the end of the harvest season
that’s another thing if you intend to enter into a
contract now WON you harvested something at the
end of the season is already immaterial nor the
intention will bind the contract of sale.
 Sales Notes by MARX, MON, ANGELA & JEN
So what’s the difference now between Emptio Rei Sperati and
Emptio Spei?
If you intend to violate your sale depending on the existence
of the sale with potential existence then you are actually
entering into what kind of sale?
Emptio Rei Sperati because you are entering into a contract
depending on the potential existence of something with
potential existence. It is the expected thing that you intend to
acquire. If it is Emptio Spei it is actually a sale of the hope or
expectancy itself to sell the thing with potential existence.
That’s the difference, you bought the hope or expectancy it is
the fact of expectancy that you bought and not the existence
of the expectancy. That’s why based on the intention you can
have validity of the sale of thing with potential existence.
What are the kinds of goods under the law on sales?
Future goods and Existing goods.
What are goods? Is that goods money? Will it consider
money?
Money of legal tender in the Philippines cannot be
subject of goods because the law does not consider
it as a good.
What is a contract for piece of work?
If I order a pair of shoe, is that a contract of sale or
piece of work? Fro example I’m size 10, a leathered
shoes and there is no size 10 available in the market,
so I ordered for that size of leathered shoes.
What’s that?
It is a contract for piece of work only if it is specially
manufactured for the buyer and it not readily
available for the general market. If it is available for
general consumption only that it is not available at
that time even if it is specially made because of the
order that does not qualify as contract for piece of
work. For example they have a pair of shoes
available for general market only at that particular
time you have no available size and even if it is no
longer available and they manufacture it because of
the order especially for the buyer in ordering that
particular shoe it will not make for a contract for a
piece of work because the fact remains that it
available for general consumption not specifically
made for the buyer. So the qualification actually
WON it is a special product for the buyer and that it
is unique and not readily available for general
consumption. If it is it is a contract of sale and if not
it is a contract for piece of work.
5
SALES3
Can all things be the subject of a contract of sale?
Only licit things. Illicit thing cannot.
What are the kinds of illicit things?
Illicit per se/ illicit in nature – human flesh or flesher
Illicit per accidence – prohibited by law.
i.e. prohibited drugs
What is the nature/status of a contract if its object is illicit?
Void. The object is unlawful therefore one of the
essential elements of the contract is absent. If you
don’t have a lawful object you don’t have a valid
contract therefore the contract is from the start
void.
Can you sell rights?
Yes.
Legal basis: objects of a contract in general
“Things which are not outside the commerce of men and
rights which are not intransmissible (transmissible rights).”
What are examples of instrasmissible right?
Marital rights, rights of suffrage, right to life, liberty
What are examples of transmissible right?
Right to usufruct, right of redemption.
How about right to inheritance?
Yes, but only inheritance which has already been
acquired. Future inheritance cannot be transferred.
When can you consider a thing as determinate?
Particularly designated or physically segregated from
all the other of the same class.
If it is not particularly designated or physically segregated,
how can that requirement of a determinate thing be
satisfied?
If at the time the contract was entered into the
object is capable of being made determinate w/o
need of a new contract between the parties.
What are the kinds of goods that may be the object to a
contract of sale?
• Existing goods - owned and possessed by the seller
at the time the sale
• Future goods - does not exist but w/ potential
existence
If you are a seller selling existing goods what is the
presumption? If you have the power to deliver and to transfer
ownership, what is the presumption?
The presumption is that you have possession
 Sales Notes by MARX, MON, ANGELA & JEN

What are the kinds of future goods? Even if the thing is consumable by nature (i.e. rice, sugar, salt)
1. goods to be manufactured – i.e. car if the intention of the parties are for them to be returned, it is
2. those which are to be raised – i.e. young of animals non-fungible.
3. goods to be acquired by the seller after the i.e. If the intention of the parties is for exhibition.
perfection of the contract
a. anything you promised which you do not What is the rule regarding sale of fungible goods?
have ownership of yet at time of the There may be sale of undivided share of specific
perfection of the contract may be the mass although the seller purports to sell and the
subject of a contract of sale because you buyer
can acquire ownership
b. anything you may acquire after the i.e. Buyer wants to buy 100 cavans of rice. The entire mass
perfection of the contract produced is 150. 100 cavans should be owned by the buyer
i. i.e. You promise to sell a parcel of who purports to buy specific numbers, weight or measure.
land which you do not have Since the cavans turned out to be more than what the buyer
ownership yet at the time of the wants what will be the resulting ownership of the entire
perfection of the contract of sale. If mass? The seller and the buyer will both own the 150 cavans
you acquire it subsequently. in proportion to what they actually buy and sell. 100 cavans
4. things whose acquisition depends upon a will be owned by the buyer the remaining 50 will be owned
contingency which may or may not happen. by the seller. The entire mass will be co-owned by them.
c. i.e. A will sell to B a house of lot if A pass
the bar. What happens if the entire mass only produced 50 cavans?
It will entirely be owned by the buyer.
What are the kinds of delivery?
1. Actual - physical delivery to the buyer which transfer What will happen to the remaining 50? Is the contract valid
ownership only w/ respect to 50 cavans produced?
Transfer of personal property – actual Yes but the seller is obligated to fulfill the remaining
physical transfer of possession obligations (remaining 50) because that is the
2. Constructive – merely symbolic delivery which also subject of the contract of sale.
transfers ownership
- i.e. In real property – by giving of the title or Distinguish between sale and Agency
execution of the deed of conveyance
Sale Agency
What are fungible and non-fungible goods? 1. Seller receives the purchase Agent receives the payment
Fungible – If based on the intention of the parties, it price from the buyer as owner in trust for the seller with
may be substituted the obligation to deliver the
Non-fungible – …it cannot be substituted 2. seller directly receives the price to the seller
purchase price Agent receives the purchase
What are consumable and non-consumable things? price in behalf of the seller
Consumable –by the nature of the object it cannot 3. buyer becomes the owner Even if there is delivery the
be used w/o being consumed of the object upon its delivery agent does not acquire
Non-consumable – …it can be used even w/o being ownership over the object of
consumed 4. if the goods/object is the contract
defective the buyer cannot Agent can return the goods
What is the basis of their distinction? Consumable and non- return the them. His remedy
consumable is damages
The nature of the thing.

What is the basis of the distinction between a fungible and What is the test to determine whether the contract is a sale or
non-fungible? agency?
st
Intention of the parties 1 determination of whether there is acquisition of
ownership.
nd
Can a real property be fungible? 2 resulting relationship from contract or
A Real property is actually non-consumable but if it transaction - buyer and seller or principal and agent
is based on the intention of the parties they may be a) Sale results in a Debtor creditor relationship
considered fungible – one is liable to the other; it means that he
6
 Sales Notes by MARX, MON, ANGELA & JEN
is acting on his own behalf therefore has
failure or nonpayment of the consideration
of the contract makes him liable as debtor.
b) In an Agency is the agent liable to the
seller?
No because he merely acts on behalf of
the seller (agent principal relationship).
Distinguish Sale and Piece of work?
Sale Piece of work
Goods are Manufactured or Specially manufactured for a
procured for the general customer and upon his order
market, available upon and it is not available for the
demand general market
How do you characterize a contract if the consideration is
partly paid in money AND partly paid in kind?
st
1 determine the intention
nd
2 determine the value of the goods (if the 1
st
cannot be determined)
Value of thing in kind > value of money partly used
for payment – barter otherwise sale
If the consideration is entirely in kind OR entirely in money
don’t distinguish between the 2 contracts.
Only classify something sale and barter only the consideration
is both in money AND in kind. Only if the consideration partly
in kind and in money will you determine the value of the
thing in kind over the value of the money.
value of the money > value of the thing in kind – sale
otherwise barter
same value – sale because you exchange something in money
or its equivalent
SALES 4
What is the rule for the price to be considered certain?
It shall be sufficient if
1. it is determinable by making reference to another
thing which is certain; or
2. determination is left to the judgment of a “specified”
person or persons
3. it is certain with reference to certain fact or facts
Can the determination of the price be left to one of the
parties?
Yes, if there is consent. If none, it cannot be, because
there is no meeting of the minds.
7
What if there is no meeting of the price but there is
knowledge of the price but w/o objection? Is it validated by
estoppel or laches?
No. If there is no consent, there is no meeting of the
minds. It will not be validated by estoppel or laches
because at the time you are asked to pay the price
you can say that you did not give your consent. And,
according to the civil code the price is determined by
the by one of the parties can only be valid if the
other party consents to it because this amounts to
meeting of the mind. Without that, one of the
essential elements of the contract therefore the
contract is void.
it is certain with reference to certain fact or facts
– i.e. securities grains and liquids
What is the rule? What are those facts that will make the
price certain?
• If it is certain on a definite day or on a particular
exchange or market; OR
• If the price is fixed above or below the price on that
definite day, or particular exchange or market
What is a price?
It signifies sum stipulated as the equivalent of the
thing sold and also all the considerations and
incidents taken to fix the price or the value of the
thing put to the debit of the vendee and agreed by
him.
What are the requisites of a valid price?
- it must be -
1) certain
2) unconscionable or grossly inferior to the value of the
thing subject of the contract
3) real and not fictitious (absolutely simulated)
rd
How can you impugn the price fixed by a 3 person?
You can ask to court to impugn it.
On what grounds?
1) Bad Faith
2) mistake
3) violation of the instruction or standards, set by the
parties, to accurately fix the price
Can you make the price certain by referring it to a pension
plan?
i.e. U r receiving P10 k a month. Seller said, “I am selling this
house and the price will be the same as ur pension plan that
you will get from the government.” Is this a valid price?
The price is based on the pension that your parents will get
from the gov’t in next 10 yrs.
That is certain if they will survive that year.
 Sales Notes by MARX, MON, ANGELA & JEN
They will get only a certain sum only up to the point of their
life. Meaning, if they die, i.e. 3 after the contract they will
only get the equivalent. This is no longer certain.
The basis actually of pension is life itself. Since life is not
certain, you cannot base the price on life pension.
Any price referred to a life pension cannot be certain because
life itself is not certain.
What is inadequate price?
If it insufficient to satisfy the actual value of the
thing subject of the contract
What are the kinds of inadequate price?
1. Gross
2. Negligible – immaterial / diminimis
If the inadequacy of the price is negligible is a contract valid?
Yes, because it is practically immaterial.
i.e. if the value of the thing is P50 K the price to be paid is
P49K.
If the inadequacy is gross is the contract valid?
GR - gross inadequacy will not invalidate the contract
EXCPs
1. defect in the consent resulting to a vitiated
consent. The status is of the contract is voidable
/annullable.
2. if it can be inferred that the intention of the
parties is that of donation or sine other contract
– it is considered, not a contract of sale but a
donation if it complies with the requisites of a
donation
3. shocking to the conscience that it would result
to the invalidation of a contract of sale.
4. If the guardian sold the property for less than
25% of its value then the ward suffers lesion,
the court may invalidate the price and fix
another. This can be a gauge on how much is
inadequate.
If less than ¼ of its value it can be
considered as grossly inadequate to shock
the conscience of the court.
Can the court invalidate the sale?
No, because there is a price only that it is grossly
inadequate. The court will fix the price based on
what is acceptable under the prevailing
circumstance.
rd
Is the 3 rule absolute?
No. The exception applies only in a judicial sale.
It does not apply to ordinary sale, because there is freedom
to contract and whatever they stipulate will validate the
8
contract. The presumption is that they voluntary agreed on
the inadequate price and the court has no power to
invalidate such law between the parties
How is ordinary sale different from judicial sale?
There is no voluntariness. The debtor is forced part
with his property or to enter into the contract of
sale. Since there is no freedom to contract, court
may step in and protect your rights. If it is now unfair
because you already parted with your property and
you are still made to pay for more than the value of
the deficiency in the auction sale. The court can
enter into the picture to protect your rights and fix
the price.
Is it an absolute rule that in a judicial sale and the price is
shocking?
No.
It does not apply if the debtor is given the right to
redemption because it gives more freedom to the debtor to
redeem the property in a much lower price.
Is there an exception in ordinary sale?
Yes. If the court based on EQUITY says that the price
cannot be considered, it can enter into the picture
and fix the price.
If the guardian sold the property for less than 25% of its value
then the ward suffers lesion, the court may invalidate the
price and fix another. This can be a gauge on how much is
inadequate.
If less than ¼ of its value it can be considered as
grossly inadequate to shock the conscience of the
court.
Are all lesions invalid?
Not if it is approved by the court.
How do you question gross inadequacy of the price? It is
enough that you allege in the court that is less than ¼ of the
value of the property and it is grossly inadequate as to shock
the conscience of the court?
No. You have to present proof or evidence to show
the court that the price is shocking.
What is the status of the contract if the price is simulated?
What is a simulated price?
It is a fictitious price.
What are the classifications of simulated price
1) absolutely simulated – parties did not intend to be
bound at all
2) relatively simulated - parties conceal their true
agreement
 Sales Notes by MARX, MON, ANGELA & JEN
Is an absolutely simulated contract absolutely void?
Yes
Is a relatively simulated contract also void?
No. The concealed agreement is binding upon the
rd
parties and is enforceable IF it does not prejudice 3
person AND is not intended for any purpose not
contrary to law, morals, good customs, public order
and public policy.
Why is a simulated is price void?
Simulated price is tantamount to lack of price or
consideration. If there is no consideration then there
is no valid contract.
If the price is not paid, is the contract valid?
Yes. There is a price only that it was not paid.
If the parties made it appear that price was agreed upon but
there was none, is the contract valid or void?
Void
If a forfeited or counterfeited currency was used as payment,
is contract valid or void?
Valid, because the price is certain, the price is valid.
Only the mode of payment is void.
What if the parties agreed that the consideration shall be paid
in a counterfeit or forfeited currency?
Valid because the price is certain what was agreed is
the mode of payment.
It such was the agreement it does not mean that
there was no agreed price.
HOWEVER if it is to the effect that the agreement to
pay in a counterfeit currency results to an
agreement that there is actually no necessity for
payment of a price that may result to simulated
price which will invalidate the contract of sale.
What is the remedy/action to invalidate a null and void
contract?
Declaration of nullity
What is the prescriptive period for such action?
If the contract is not valid from the start it is
imprescriptible, meaning you can bring an action for
declaration of nullity anytime. No prescriptive
period.
What is the status of the contract if he price cannot be
determined?
It is inefficacious, meaning it is ineffective.
9
What will happen if the thing was already appropriated by
the buyer before it was determined that the contract was
inefficacious?
Buyer shall be obliged to pay reasonable price.
The object has already been delivered, and was later
appropriated by the buyer however the price is uncertain and
not paid therefore the contract is invalid. What is the remedy
of the seller?
To demand the buyer to pay a reasonable price.
What is the standard of reasonable price?
Fair market value- Reasonable sum which the
property would command in a fair sale by a man
willing sell but not obliged to sell and by buyer
willing to buy but not obliged to buy.
What if the goods are still intact?
Seller can demand the return of the object subject to
the ___(150) damages that the seller would demand
from the buyer.
If the seller delivers a thing to buyer which is different from
what the buyer demand and the latter accepts the thing, how
much should he pay?
i.e. Object A for 100 K. the seller delivers object B, which the
buyer knows is P200 K, he accepts delivery, ownership is
transferred. How much the buyer obliged to pay?
P200 K. Knowledge of the price and acceptance of
delivery is tantamount to a new contract.
There is a price certain (P100 K) but is there a determinate
thing?
None there was a no delivery. It is a perfected
contract subject to damages. But how much can you
be compelled for the delivery? P200 K. It is a new
contract, it is new accepted offer for a definite thing.
So you are required to pay P200 K.
You can compel the buyer to pay because he accepted it.
He should have rejected delivery of object B because it is not
the object of their contract, therefore there can never be
demand for P200 K.
But the point, the sale is valid because it is in effect an
accepted offer of a new thing. Since he accepted he can be
obliged to pay P200 K.
st
Is the seller released from his responsibility from the 1
contract?
No. The contract is perfected. The remedy is
damages.
 Sales Notes by MARX, MON, ANGELA & JEN
SALES 5
What is the status of the contract if the price cannot be
determined?
What are the requisites of the price for the contract of sale to
be valid?
• Certain
• Must not be grossly be inferior to the value of the
thing EXCEPT when the parties intended it to be a
donation.
• Real not fictitious
What are the rules for it to be made certain?
1. reference to another thing which is certain
i.e. I will sell my car based on the price of the BMW
sold to Mr. A.
2. determination is entrusted to the judgment of a
specified person or persons
3. reference to certain facts or facts
Sale of securities, grains, liquids or other things certainty may
be referred to what facts?
We have specific rules on sale of securities, grains
and liquids because their price is difficult to ascertain
at a definite day or at the week you purchase or the
sell these things. The code allows the setting of the
price –
1) based on its particular market value or price at a
definite day or definite/particular exchange or
market.
i.e. your price for the sale of your grains will
be certain even if you don’t know the price
today, if you stipulated that price will be the
price of the grains 5 days from now at its
regular market value (i.e. P30/kilo)
2) It can also be based at a price below or above
the price on that particular/ definite day or on a
particular market or exchange.
If there is no certainty as to the price based on the rules the
contract is inefficacious. There is no contract because there is
no price fixed as a consideration. And a consideration is
essential element of a contract of sale. Without that the
contract is sale from the start.
When do you need to determine the market value of the
thing?
When a sale is inefficacious but delivery had been
made to the buyer who appropriated the same. The
latter required to pay reasonable price therefore.
Fair market value is a good standard to determine
reasonable price.
There is no thing to return by reason of the void contract.
GR when contract is void mutual restitution is proper.
10
If there is already appropriation because it has been
previously delivered, it cannot be returned for this reason
that what should be returned is the value of the thing.
What will be the basis of value of the thing?
Fair market value.
What is market value?
ibid
• -Price is set by the market (not unilaterally set by the
seller) in a fair sale. In the market it is the price of
the property.
When is a contract of sale perfected?
From the moment of the meeting of the minds upon
the thing which is the object of the contract and
upon the price.
Is it always the case that upon meeting of the minds of the
parties on the thing and price there is already perfected
contract of sale?
No. If the obligation/contract is subject to a
suspensive condition.
If such is the case when is the sale perfected?
Upon the fulfillment of the condition.
i.e. A will sell the house and lot to B for P100 K if B
pass the bar exam. Even if buyer accepts the price
and agree that he will buy the house and lot, the
contract is not yet perfected until B passeses bar.
What if the seller offers the buyer to buy the house and for
100 K and gives the buyer 1 mo. w/in which to decide on
whether to buy the property. Can the seller sell the property
before 1 mo.?
When can the seller not sell the property within 1 mo?
What is an option money?
Consideration distinct from the price for the seller to
be bound by the option contract.
If the buyer said, “I will exercise that option and if I do decide
to buy the property after I mo. I will give you $110 K instead
of $100 K” is this a proper option? Can the seller still sell the
property within 1 month?
Code provides that there should be separate and distinct
consideration to support the contract of option. Is this
required to be received by the seller?
If there is an option to buy within 1 month it should be
coupled w/ option money or a consideration distinct from the
price for the seller be bound by the option contract. If he is
 Sales Notes by MARX, MON, ANGELA & JEN
bound by the option contract he cannot sell the property
before the expiration of the option period.
If the buyer did buyer did not give option money but
promises “I will exercise that option and if I do decide to buy
the property after I mo. I will give you $110 K instead of $100
K” is this a proper option? Can the seller still sell the property
within 1 month, will this bind the seller thereby preventing
him to sell the property w/in 1 month?
Is actual receipt of money required? Can the seller be bound
even if there is no actual payment of the option money?
Art 1479 provides only that there must be a separate
and distinct consideration that will support the
option contract. Is it required that it is given to the
seller already?
Is an option contract different from other contract that
receiving of the consideration is necessary?
If you are face to face with your seller or buyer when is your
contract perfected?
If parties actually agreed on the price and the thing
subject of the contract and the acceptance of both is
unconditional. Because a conditional acceptance
would make the contract subject to the fulfillment of
that condition. Therefore even if you are fact to face
with your buyer/seller the contract of sale is not yet
perfected.
What if the acceptance is based on a correspondence?
The buyer accepted the offer of the seller through a regular
mail. The seller received the mail indicating the acceptance
this morning. Without reading it the seller he offered the
property to other people in the afternoon. Since knowledge is
material does it mean there is no perfected contract of sale,
because the seller did not read the mail? Is there a perfected
contract?
Contract is perfected upon acceptance and knowledge of
acceptance
Is it true although it is knowledge which is required if there is
actual receipt it is your fault that you have not read the mail
or acceptance then he can perfectly enter into another
contract because it is as if has been withdrawn before the
acceptance?
If there is an offer, it can be withdrawn before knowledge of
the acceptance. Meaning when if buyer enters into another
contract using the same property, because if you offer the
same thing to other people, it means you are withdrawing
your offer and withdrawn offer will not ripen to a perfected
contract of sale.
11
Does this rule apply to the said case?
What if the letter was received one week before the
withdrawal?
The rule is there should be Actual knowledge, meaning you
give your offer, so entirely it have to be accepted and the
acceptance ____ made face to face or orally ____ knowledge
must be made known to the offeror.
How about if it is through writing/ correspondence? There
must be actual knowledge. the seller should have read the
acceptance before it is considered a perfected acceptance
leading to a perfected contract of sale.
HOWEVER based on evidence receipt is actually knowledge,
because if you go to court you cannot say, “Yes I received the
letter today but I did not read it, so I did not know of the
acceptance.” That will not be accepted by the court because
once you receive a letter it is as if you have received it
because you would not have received the letter in the first
place if you have no intention of reading it. So if we are
looking at evidence the best way to go around that, if there is
actual withdrawal is to check the time of receipt.
i.e. If you received the letter at 10 am today but at 9 am you
have proof that you have actually already offered the
property to somebody else. So even if you received and made
an offer at that same day evidence will show that you have
actually withdrawn your offer prior to your knowledge or
receipt of the acceptance. This can be given credit by the
court.
However if you received the letter in the morning and with is
proof that you receive the letter in the morning and also
proof that you offered it to another person in that same
afternoon, then that cannot be considered as a valid sale
because there is already bad faith.
So if there is bad faith, the court will lean towards what
should have been done, because there is a valid offer and a
valid acceptance. Its dependent on your discretion on
whether or not the contract is perfected, however the law
provides for the perfection of the contract. Therefore there is
meeting of the mind there.
But that evidence is a second thing, in actual practice you
cannot easily say that it is done the day before or the offer
was done before actual receipt.
But for purposes of academic discussion the material there is
that it must reach the knowledge of the offeror. If there is
knowledge of the offeror of the acceptance, then there is
presumably perfected contract of sale.
For purposes of contract of sale under statutes of fraud, what
the contracts that have to be in writing?
sale of real property
sale of personal property if the value is P500 or more
 Sales Notes by MARX, MON, ANGELA & JEN
If the sale is not in writing what is the status of the contract?
Unenforceable. Contracts which are not in writing
but should be in writing under the statute of fraud
are unenforceable contracts. You cannot enforce it.
Even if you are compelled by the court to comply
with the obligation you have a valid defense that it
cannot be enforced under the statutes of fraud.
What are defective contracts?
Void, voidable, rescissible, and uneforceable
However even if these contracts are not in writing there are
instances when you can enforce them. How?
Can you cannot ratify an unenforceable contract, esp. it is
violative of statutes of fraud?
What are your defenses in case contracts are entered orally
for you to enforce it?
What are the exceptions that contracts violative of statute of
fraud are unenforceable?
If there is waiver of the privilege/right under statute
frauds
Contact already been partially (or under the book,
completely executed)
If it is completely executed what is there to enforce?
No more.
What is the rule on sale by auction?
When is contract of sale by auction perfected?
When the auctioneer announces its perfection of the sale by
the fall of the hammer or in some other customary manner (if
there is no hammer) where bid is accepted.
Prior to the fall of the hammer/perfection of the contract may
the bidder withdraw his bid?
Yes. It is merely an offer and if there is no
acceptance yet it can be withdrawn properly,
because there is no meeting of the minds yet.
Therefore there is no valid contract of sale yet.
Can the auctioneer withdraw the thing for sale prior even if
there is a bid?
If the public is notified that the auctioneer will not
actually withdraw or will have no right to withdraw it
then that is the rule.
W/o that reservation. The customary thing to do is
to accept it. So there is a perfected contract of sale.
If there is reservation on the part of the auctioneer
he may withdraw even if there is already a bid,
because there is merely an offer and unless it is
accepted there is no meeting of the minds.
Therefore there is no perfected contract of sale yet.
12
Who are by-bidders or puffers?
Those employed by the seller to represent them in
biddings and make a bid in their behalf.
They may represent juridical entites.
Can they be juridical entities or just natural persons?
No, because by-bidders and puffers are actual
bidders.
Can juridical persons do that?
No
Can juridical entities be bidders?
Yes.
Is the presence of by-bidders or puffers prohibited?
If there is no notice the seller has the right to bid, if
the seller bids either by himself or through a puffer
or by-bidder, then that sale with by-bidder and
puffer is fraudulent.
Why is it fraudulent?
Due to the misrepresentation that may be caused by
making the buyer believe the value of the thing is
actually higher than actual market value/price. The
by-bidders or puffers take into consideration the
interest of the seller may actually bid higher so that
interested of the buyer may top their bid and
actually buy the property at an exaggerated price.
The defrauded buyer/bidder may invalidate the sale
by reason of fraud.
Ownership is transferred by delivery.
Delivery may be actual or constructive delivery.
Actual delivery is the actual physical transfer of possession
from the seller to the buyer.
If there is actual delivery the ownership is transferred upon
delivery.
If it is impossible to physically transfer possession of the
property subject of the contract of sale, delivery may be done
constructively.
Classification of constructive delivery
1) Symbolic/ instrumental delivery
Under code/jurisprudence
2) tradicion longa manu
3) tradicion brevi manu
4) constitutum possessorium
5) by operation of law
5) Quasi-Tradicion
 Sales Notes by MARX, MON, ANGELA & JEN

Technically/ usually if there is a sale of immovable property

the physical transfer is impossible that’s why we resort to
constructive delivery through delivery ,for i.e., of title, deed
of conveyance or whatever that will represent symbolically
the real property.

Warehouse, for i.e., is transferred through delivery of the key

of the warehouse; house and lot (disregarding in meantime
the requisite for execution of the deed of sale and transfer of
title) through delivery of the key or any other symbols of the
immovable property subject of the sale.

GR delivery of the object of the contract transfers ownership

EXCP when there is a reservation as to the transfer of
ownership –Roman term - “Pactum Resvanti In Domini.” The
parties actually delivers the property subject of the contract
of sale however the ownership is reserved usually until full
payment of the price or fulfillment of the condition imposed
upon the buyer and agreed upon by both of the parties.

If there is a reservation as to ownership and there is delivery

of the property but the title remains with the seller. It is
considered a Contract TO sell.

Only upon payment of the full purchase price will that title be
transferred to the buyer.

If there is already transfer of ownership to the buyer the

contract to sell is usually changed with an absolute deed of
sale.

If there is already an absolute deed of sale, that is the deed of

conveyance actually transferring title to the buyer.

Why do you need a deed of sale if full payment and delivery

will already result to transfer of ownership?
It is required by the Register of Deeds. Because if
you have a deed of sale already it is a proof that you
are the owner. Especially if you have possession or
symbolic possession of the property that will
absolutely be you property already. But for purposes
of transferring title from the previous owner to the
new owner/to your name, you have to present the
deed of sale to the register of deeds and pay all the
taxes so that the title will by transfer to you.

13
 Sales Notes by MARX, MON, ANGELA & JEN
FINALS
What are the OBLIGATIONS OF A VENDOR?
• Transfer ownership
• Deliver the thing – this is important because this is
the very act of transferring ownership
• Preserve the thing from the perfection until it is
delivered to the buyer
• Warrant the thing sold against eviction and hidden
defects
Is it always necessary to stipulate on the time when the thing
is to be delivered?
No.
If there is no stipulation as to the time of delivery, when
should such delivery be made?
General Rule- at the time stipulated
If there is no stipulation, the nature of the contract
will be determined, such that if the time is the
essence of the contract then it should be delivered
within that particular period.
Otherwise it should be delivered within reasonable
time subject to the expectation of the parties.
When are things sold considered to be delivered?
When it is placed in the control and possession of
the vendee
Possession – if the thing is capable of physical
transfer of actual delivery
Control – it the thing is incapable or impossible to be
physically transferred or delivered
What are the KINDS of delivery?
• Actual/Real
• Constructive/Legal
• Quasi
Kinds of Constructive/Legal Delivery?
• Tradicio Symbolica – delivery of the keys of the
place or depositary where the goods are stored
• Symbolic delivery through the execution of legal
formalities – delivery through public instruments
(i.e. notarized deed of sale)
• Tradicion longa manu – executed when the vendor
points to the vendee the thing sold which at the of
the sale time of the sale cannot be transferred to the
possession of the vendee but must be within sight of
the parties
• Tradicion brevi manu – when the vendee is already
in possession of the thing b virtue of title other than
ownership and continues to hold the possession
thereof under the title of ownership
14
• Constitutum possessorium – owner’s continuous
possession of the property sold to another person
but his present possession is no longer that of an
owner but under another capacity like that of a
lessee, pledge, depositary etc.
What is quasi-tradicion?
Delivery of rights, credits, and other incorporeal
properties
CHUA vs CA
In a contract of sale, the title of the property passes
to the vendee upon the delivery of the thing sold
and the vendor loses ownership over the property
and cannot recover it until and unless the contract is
resolved or rescinded. In a contract to sell,
ownership is, by agreement, reserved in the vendor
and is not to pass to the vendee until full payment of
the purchase price and the title is retained by the
vendor until full payment of the price. Also in the
contract to sell, payment of the price is a positive
suspensive condition, failure of which is not a breach
but an event that prevents the obligation of the
vendor to convey title from becoming effective.
The receipt made by both of them shows that the
true agreement between the parties was a contract
to sell. Ownership over the property was retained by
Valdes-Choy and was not to pass to Chua until full
payment of the purchase price.
What are the requisites of actual/real delivery?
• Seller has control over the thing
• Such control is placed/transferred with the buyer
• For the purpose of transferring ownership
There can be delivery even without transferring
ownership, especially in instances where ownership is
reserved to the seller until the payment of the full
purchase price.
VISAYAN SAWMILL VS CA
The nature of the transaction between the petitioner
corporation and the private respondent is a mere
contract to sell or promise to sell, and not a contract
of sale.
The seller bound and promised itself to sell the scrap
iron upon the fulfillment by the private respondent
of his obligation to make or indorse an irrevocable
and unconditional letter of credit in payment of the
purchase price.
The VISAYAN SAWMILL's obligation to sell is
unequivocally subject to a positive suspensive
condition, i.e., the private respondent's opening,
making or indorsing of an irrevocable and
 Sales Notes by MARX, MON, ANGELA & JEN
unconditional letter of credit. The former agreed to
deliver the scrap iron only upon payment of the
purchase price by means of an irrevocable and
unconditional letter of credit. Otherwise stated, the
contract is not one of sale where the buyer acquired
ownership over the property subject to the
resolutory condition that the purchase price would
be paid after delivery. Thus, there was to be no
actual sale until the opening, making or indorsing of
the irrevocable and unconditional letter of credit.
Since what obtains in the case at bar is a mere
promise to sell, the failure of the private respondent
to comply with the positive suspensive condition
cannot even be considered a breach — casual or
serious — but simply an event that prevented the
obligation of petitioner corporation to convey title
from acquiring binding force.
Consequently, the obligation of the petitioner
corporation to sell did not arise; it therefore cannot
be compelled by specific performance to comply
with its prestation. In short, Article 1191 of the Civil
Code does not apply; on the contrary, pursuant to
Article 1597 of the Civil Code, the petitioner
corporation may totally rescind.
The trial court ruled, however, and the public
respondent was in agreement, that there had been
an implied delivery in this case of the subject scrap
iron because on 17 May 1983, private respondent's
men started digging up and gathering scrap iron
within the petitioner's premises. The entry of these
men was upon the private respondent's request.
This permission or consent can, by no stretch of the
imagination, be construed as delivery of the scrap
iron in the sense that, as held by the public
respondent, citing Article 1497 of the Civil Code,
petitioners placed the private respondent in control
and possession thereof. In the first place, said Article
15
1491 falls under the Chapter Obligations of the
Vendor, which is found in Title VI (Sales), Book IV of
the Civil Code. As such, therefore, the obligation
imposed therein is premised on an existing
obligation to deliver the subject of the contract. In
the instant case, in view of the private respondent's
failure to comply within the positive suspensive
condition earlier discussed, such an obligation had
not yet arisen. In the second place, it was a mere
accommodation to expedite the weighing and
hauling of the iron in the event that the sale would
materialize. The private respondent was not thereby
placed in possession of and control over the scrap
iron. Thirdly, the conversion of the initial contract or
promise to sell into a contract of sale by the
petitioner corporation's alleged implied delivery of
15
the scrap iron because its action and conduct in the
premises do not support this conclusion. Indeed,
petitioners demanded the fulfillment of the
suspensive condition and eventually cancelled the
contract.
MUNICIPALITY OF VICTORIAS v CA
It is expressly provided by law that the thing sold
shall be understood as delivered, when it is placed in
the control and possession of the vendee. Where
there is no express provision that title shall not pass
until payment of the price, and the thing gold has
been delivered, title passes from the moment the
thing sold is placed in the possession and control of
the buyer. Delivery produces its natural effects in
law, the principal and most important of which being
the conveyance of ownership, without prejudice to
the right of the vendor to payment of the price.
When the sale is made through a public instrument,
the execution thereof shall be equivalent to the
delivery of the thing which is the object of the
contract, if from the deed, the contrary does not
appear or cannot be clearly inferred. The execution
of the public instrument operates as a formal or
symbolic delivery of the property sold and
authorizes the buyer to use the document as proof
of ownership.
Respondent Norma Leuenberger admitted that she
inherited the land covered by Transfer Certificate of
Title No. T-34036 from her grandmother, who had
already sold the land to the petitioner in 1934;
hence, she merely stepped into the shoes of her
grandmother and she cannot claim a better right
than her predecessor-in-interest.
Is seller the required to deliver the object subject of the
auction sale to the buyer upon the perfection of the contract?
This is because delivery is for the purpose of
transferring ownership. In auction sale even if you
make the delivery it will not serve the purpose
because it will not transfer ownership, since
ownership is retained by the seller within 1 year.
This is because he still has the right of redemption.
Even if you make the delivery you can still exercise
the right of redemption and if the buyer takes
possession of the object prior to the expiration of
the period of redemption you can claim for damages
or take possession of the property with damages.
If the possession of the buyer extends after the
expiration of the period of redemption, meaning he
took possession of thing immediately after the sale
then continued to be in possession after the
remaining period of redemption, you have 2 cause of
 Sales Notes by MARX, MON, ANGELA & JEN
action before the expiration of the period of
redemption and 1 cause of action after.
Before the expiration of the period of the
redemption-
Take possession of the property and demand for
damages
After the period of redemption – you can only claim
for damages because you have lost your right of
possession
What is Tradicion/Delivery?
Mode of acquiring ownership as a consequence of
certain contracts such as sale by virtue which
actually or contstructively the object is placed under
the control and possession of the vendee.
When is delivery of goods considered on sale or return
contract of sale?
The buyer has the option of returning the goods
instead of paying the price.
Upon delivery there is already a transfer of
ownership, therefore he acquires ownership.
However he also has the option to revest the
ownership if he does not want to acquire ownership
for whatever reason depending only upon his
discretion.
What are the 2 rights acquired under this concept?
• Acquisition of ownership
• Revest the ownership after the period
If he has merely an option to return the goods when should it
be exercised?
• Within the period stipulated in the contract
• Within reasonable period time
What is Sale on approval or on trial or on satisfaction?
The only difference is that ownership even if there is
delivery is not automatically transferred to the
buyer.
When is ownership transferred?
If there is no notification that the goods are
approved/accepted but the buyer retains it without
notice of rejection then the ownership passes to the
buyer at the fixed for the return OR
If there is no time fixed for the return within a
reasonable time
Who bears the risk of loss in case of sale on approval or trial
or satisfaction?
General Rule - the seller because he still owns the goods even
if there is delivery which does amount to ownership.
Exceptions- (when risks are borne by buyer)
• stipulation that the buyer will bear the loss
• buyer is at fault
16
In a contract of sale of specific goods when is the seller still
considered the owner even if there is delivery?
Stipulation
Bill of lading is deliverable to the seller or his agent
or to their order – because the goods will be
deliverable to the seller or his agent or to their
orders therefore the buyer cannot get the goods yet
subject to certain conditions.
Bill of lading is deliverable to the buyer or his agent
or their order but the bill of lading is kept by the
seller – because without the bill of lading the buyer
cannot take possession of the goods because such
cannot be released without it.
If the bill of lading is deliverable to the buyer/his
agent or their order and the bill of lading is with him,
Bill of lading is coupled with a bill of exchange which
is usually the mode of payment. If the bill of
exchange is dishonoured by the buyer it is as if the
entire goods are likewise dishonoured therefore
there is no effective delivery.
What is the general rule as regards to risks of ownership?
Risk is with the seller until ownership is transferred
to the buyer.
Ownership is retained by the seller until after
ownership is transferred to the buyer
If ownership is transferred to the buyer who shall bear the risk
of loss?
The buyer.
If the ownership is transferred to the buyer without delivery?
The buyer, because he already owns the goods.
When can the buyer be liable for the loss even if the
ownership is retained by the seller?
• If the cause of the delay of the delivery is the buyer
• If the retention of ownership is for the purpose of
securing the performance of the buyer of his
obligation under the contract.
When can a negotiable document of title be negotiated by
delivery?
• If it is deliverable to the bearer– Negotiation is done
by indicating the it is negotiated to the bearer or
holder of the negotiable instrument
• If it is deliverable to the order of a specified person,
and such specified person indorsed it in blank or to
the bearer
What are the two forms of negotiating a negotiable
document of title?
• By delivery
 Sales Notes by MARX, MON, ANGELA & JEN
• By indorsement AND delivery – without delivery it
cannot be negotiated since it is retained by the
holder
Who can negotiate a negotiable document of title?
• Owner
• Person to whom possession and custody has been
entrusted by the owner if the bailee undertakes to
deliver it to the order of the person to whom
possession and custody has been entrusted by the
owner, or if by the very nature of the document at
the time it is entrusted to the said person, it was
indicated that it can be negotiated by mere delivery
What are the rights acquired by a person to whom a
negotiable document of title has been negotiated?
• Only such Title that the person negotiating had when
the document was negotiated
• Obligation to hold possession of the goods based on
the original terms of the goods
In CONSTRUCTIVE DELIVERY you must have control of the
thing subject of the contract.
Example 1:
You own a sports car but it is being used by your brother,
Ryan. You sold it to Ian. You told Ian that upon payment of
the purchase price it is now yours. Is Ian now the new owner
of the car? When do you transfer ownership? Is there
constructive delivery?
Yes. If by mere agreement the possession or
ownership is transferred there is constructive
delivery by tradition
Even if there is no agreement or consent there is
also constructive delivery by tradicio symbolica,i.e.,
by delivering the key to Ian.
Example 2:
Ryan is claiming ownership because you owe him an amount
of money equivalent to the value of the sports car. But you
did not acknowledge the debt. You sold the sports car to Ian,
telling him that he is now the owner of the sports car. Is there
constructive delivery?
None.
If you are in control, actually or constructively, you can
deliver. You can effect constructive delivery. If you do not
have control because there is impediment or claim of
ownership you may have control as an owner but you don’t
have effective control to be transferred to the buyer. If you
cannot place the control to the buyer then constructive
delivery is ineffective.
In this case, you may have control because you own it but
since there is a claim of ownership adverse to your own
ownership. You cannot place that control to your buyer.
17
Because of this you cannot effectively transfer ownership by
mere constructive delivery.
What will be your remedy/resort?
The Buyer may rescind the contract or demand
damages for failure to delivery
The Seller may to recover the personal property (by
means of replevin) and then effect
actual/constructive delivery. When you recover
actual possession of the property you can now have
effective control over your property therefore
constructive delivery may be effected.
Don’t be confused between actual and constructive delivery.
Constructive delivery is resorted only if actual delivery is not
possible or material.
The ideal is actual delivery if the object is capable of being
physically delivered to the buyer.
If it is impossible to deliver to the buyer because it is an
immovable or cannot physically be transferred to the buyer
then you can resort to constructive delivery through the
traditional delivery.
Even if there is constructive delivery don’t resort with it
immediately because the preference is actual delivery/actual
transfer of ownership.
SALES (make up class)
Is it always the case that when the seller is unpaid he may
resell?
• Only when the goods are perishable by nature
• Seller expressly reserved his right to resell in case of
default
• Buyer has been in default for unreasonable period of
time
Why is it necessary for you not to lose the benefit of the
period?
• If the period has been fixed for payment, the vendor
shall deliver the thing sold even if there is no
payment yet.
• If the buyer loses the right to the period the vendor
is excused from delivering the goods even after the
perfection of the contract if the buyer refuses to
make the payment
When do you lose your right to make use of the period?
Art. 1198
• When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
security for the debt
• When he does not furnish guaranties/securities
which he promised
 Sales Notes by MARX, MON, ANGELA & JEN
• When by his own acts he has impaired said
guarantees or securities after their establishment,
and when through a fortuitous event they disappear,
unless he immediately gives new ones equally
satisfactory
• When the he violates any undertaking, in
consideration of which the creditor agreed to the
period
• When the debtor attempts to abscond
What is the RULE OF PREFERNCE IN DOUBLE SALE? To whom
shall ownership pertain?
In case of sale of
• movable property – to the person who may have 1
st
taken “possession” thereof in good faith
• immovable property -
st
o The one who 1 registered/recorded his
deed of sale in good faith with the proper
Registry of Property
(INSCRIPTION/RECORDING)
st
o 1 possessor in good faith
o The one who presents the oldest title
*In all the above situations, the law requires the observance
of good faith.
Can you always invoke Art 1544 in case of double sale? What
is pre-requisite before you could invoke the rule on preference
under the Civil Code? What right should you present?
Conveyance came from somebody who owns the
immovable property and has the right to dispose of
it.
Because if you cannot show this, the rule on
preference cannot be invoked and the property will
be awarded to the person who can show the same.
If it came from an impostor you don’t need to apply
the rule on preference because no good title will
arise from a fraudulent transaction.
What is REGISTRATION?
The entry of the deeds or instruments of conveyance
involving lands in the official books of Registry of
Deeds.
The general rule is a mere possessor has lesser right over a
person who has recorded/registered title with the registry of
deeds, is there an instance where the former will have better
right?
In case of ACQUISITIVE PRESCRIPTION possession
st
ripens into ownership. This defeats the 1 rule in
preference.
Ordinary - possession for 10 years in good faith and
with just title
Extraordinary – possession for 30 years even if in
bad faith and no just title provided such possession
18
is in the concept of an owner and uninterrupted
(open, continuous, exclusive, and notorious).
General Rule - registrant in good faith will always have better
right over possessor in good faith because under the rule of
st
preference the person who made the 1 registration will have
a better right.
Only when there is no registration will you consider
possession.
If it is possession in good faith against possession if bad faith
credence is given to the former.
What is the EFFECT OF BADFAITH in registration?
It is as if you have not registered and therefore rule
on possession in good faith and on just title will
govern preference.
Is possession limited to actual possession?
No. It can be constructive/symbolical possession.
This means that if you are a possessor in good faith
but merely in constructive possession you can still
invoke the rule on preference.
Actual possession is not required. Constructive
possession is sufficient because there are instances
wherein the property is placed in your possession
constructively such as the execution of a public
instrument.
In double sale there are two contracts, the one will be upheld
and the other, w/c is not preferred, will be nullified. What will
happen to the contract between the buyer and the seller that
was declared void because it is not preferred? What are the
remedies of the buyer whose contract of sale was not
preferred?
He is entitled to the reimbursement of the purchase
price plus interest, and damages (if he is good faith).
Is it always the case that he is entitled to damages?
If the buyer was in bad faith in entering of the
contract. He is entitled only to reimbursement of
purchase price plus interest.
What are your remedies/rights in case of non-performance of
CONDITIONS AND WARRANTIES?
• Refuse to proceed with the contract OR
• Waive the performance of the condition and
proceed with the contract.
What is an EXPRESS WARRANTY?
Any affirmation of fact or any promise by the seller
relating to the thing which has the natural tendency
to induce the buyer to purchase the same.
 Sales Notes by MARX, MON, ANGELA & JEN
Where do you put the express warranty?
It cannot be enforced unless it is written/ included in
the contract which conditions are factors that
induced the buyer in entering into the contract.
Who can invoke/enforce express warranties?
The buyer
i.e. Joseph is the original seller he sold the property to Carlo.
Carlo sold the property to Joanna. Can Joanna invoke her
warranties against Joseph?
As a General rule the basis of the express warranty is
your contract. Your contract can be enforced only
against the other contracting party/privy to the
contract your seller. Therefore your warranty can be
enforced only against your seller.
Can your express warranty be enforced against somebody
who is not privy to the contract, in this case original seller?
General Rule: No. Parties not privy to the contract is
not bound to the contract
Exceptions:
• If the original seller warrants the goods to
subsequent buyers
• if the your seller assigns his right to enforce
the warranty against the original seller
What are the kinds of IMPLIED WARRANTIES?
• Warranty of title
• Warranty against hidden/latent defects
What is WARRANTY OF TITLE?
Composed of 3 assurance
• Seller is the owner of the property
• Seller has the right to sell the thing
• The buyer will be provided with the right to
enjoy quiet possession of the goods. Such
that if he is evicted or ejected from the
property he may enforce his warranty
against eviction.
What is LATENT/HIDDEN DEFECT? What are the CONDITIONS
for a defect may be considered as such?
It must be hidden from knowledge AND sight.
It should not be discoverable by inspection or
exercise of ordinary diligence. This is a more
important condition of the defect to be considered
latent.
What is EVICTION?
A judicial process by virtue of which ownership is
removed or a person is deprived of ownership.
19
Eviction shall take place whenever by a final
judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of
the whole or of a part of the thing purchased. (Art
1548)
To be validly considered as a warranty what particular portion
of the eviction are required?
Final Judgment.
As consequence of final judgment the buyer is
deprived, in whole or in part, of the ownership of the
thing sold
It was based on a right prior to the sale or an act
imputable to the vendor
Vendor must be notified of the case in the form of
summons.
What is the difference between summons and subpoena?
Summons – served for the purpose of acquiring
jurisdiction. This is only given to parties impleaded in
the case. You are part of the case the case if such is
served upon you.
Subpoena – You may or may not be part of the case.
You are either invited by the court as a witness to
testify or as an expert to give your opinion. You may
be subpoenaed as a witness even if you are party to
the case.
The notice required for you the preliminarily invoke
your right of warranty against eviction is for you to
implead/include the vendor. Summons, meaning you
have to include him as one of the defendants.
rd
Procedurally there is a complaint. A 3 party filed a
case against you claiming that he has ownership of
the property. So in anticipation against eviction in
case there is a good ground for you to be
evicted/ejected from the property you implead your
seller by asking the court to serve summons upon
him. If you served summons it is considered as
rd
another complaint, a 3 party complaint, against the
vendor.
If you just informed him that the case have been
filed against you involving the property, that is not
sufficient notification. If you lose your right/property
you cannot enforce your warranty for failure to
comply with the requisites.
What is the purpose why you are required serve summons to
the vendor?
To give the vendor an opportunity to prove that the
contract of sale is valid.
 Sales Notes by MARX, MON, ANGELA & JEN
If there is proper notification and you lost the case in the
lower court but you did not file an appeal making the decision
final and executory, will this lapse on your part be considered
against your enforcement of the warranty?
No. The Code provides that you do not lose your
warranty against eviction if you did not file an appeal
(Art 1549).
What is an express warranty?
Any affirmation of fact or any promise by the seller
relating to the thing subject of the sale is an express
warranty if the natural tendency of such affirmation
or promise is to induce the buyer to purchase the
same, and if the buyer purchases the thing relying
thereon.
When do you have an express warranty? Must it be written
on the contract of sale?
In order to be enforceable it must be written on the
contract of sale.
Are all affirmation of facts written in the contract of sale
considered as an express warranty?
No. No affirmation of the value of the thing, nor any
statement purporting to be a statement of the
seller’s opinion only, shall be construed as a
warranty, unless the made such affirmation or
statement as an expert and it was relied upon by the
buyer.
Why is an affirmation of the value of thing not considered a
warranty? Why is a statement of the seller’s opinion not a
warranty?
Because the law permits exaggeration. It is what you
call sales talk or dealers talk.
Are all affirmation of facts or promise in relation to the goods
which has the tendency to induce the buyer considered an
express warranty?
No. Only if the buyer relied on the affirmation or
promise to buy the goods
Can you have a contrary stipulation that you don’t want an
express warranty or an implied warranty? When the parties
forgot to provide for an express warranty, did the implied
warranty automatically apply?
Generally, yes
When will the implied warranty not apply?
When a contrary intention appears
What are the implied warranties?
(a) Warranty against hidden defects
(b) warranty of title
20
What are the division of the warranty of title?
An implied warranty on the part of the seller that:
(a) he is the owner
(b) he has the authority to sell
(c) he will give the buyer legal and peaceful
possession of the thing
(d) that the thing is free from any charge or lien by
third persons
What is a hidden defect?
When it is hidden from knowledge and sight and it
cannot be discovered even by the exercise of due
diligence
What are the kinds of deprivation of property?
(a) deprivation in fact
(b) deprivation in law
Distinguish one from the other
In deprivation in law there is intervention of judicial
authorities and in deprivation in fact there is no
intervention of competent authority but mere
performance by a third person of an act depriving
ownership
Which type of deprivation is covered by warranty against
eviction?
Deprivation in law
Why?
Because eviction takes place when the vendee is
deprived in whole or in part of the thing purchased
by virtue of a final judgement
What are the requisites in warranty in case of eviction?
A: there is a final judgement; there is deprivation of
property in whole or in part; there must be
notification to the vendor in the form of summons;
by virtue of an act imputable to the vendor
Give an example of deprivation which does not arise from any
act of the vendor
sale of property in a foreclosure; sale of your
property in a tax sale because you fail to pay taxes
Even if it is a tax sale, when can you enforce the warranty?
If the reason why the property was sold for non-
payment of tax is because of the failure of the
vendor to pay taxes which is prior to the sale to the
vendee
What are the obligations of the vendor for purposes of
warranty against eviction?
To respect peaceful possession; To indemnify the
vendee
 Sales Notes by MARX, MON, ANGELA & JEN
To whom can you enforce the warranty?
To the vendor
If there are 10 vendors, can you enforce the warranty against
all of them?
Only to your immediate vendor
What are the exceptions that it is enforceable only to the
immediate vendor?
(a) If the previous vendor has warranted or has
bound himself to answer for any warranty against
eviction in favor of all succeeding vendees/if the
original vendor bound himself to be liable for the
warranties in case of all subsequent buyers
(b) if there is an assignment of your right to enforce
your warranty against your own vendor in which
case you are stepping into the shoes of your own
vendor; your own vendor has the right to enforce
your warranty against his or her own vendor, in
such case you can go directly the vendor of your own
vendor
If the decision is final, can you already enforce your warranty?
Yes. Because by express provision, the vendee need
not appeal from the decision in order that the
vendor may become liable for eviction.
Is that inadvertence (did not appeal) can be use against the
vendee?
No. In fact the vendee don’t even have to
participate since it is the role of the vendor to
appeal, that’s the reason why in notifying the
vendor you have to implead him as one of the
rd
parties to the case by way of 3 party complaint.
Can you waive your warranty against eviction?
Yes
When will your waiver will not be recognized?
If there is bad faith, in which case the waiver is void
and the vendee may enforce the warranty
Where can you make the waiver?
It must be formally expressed in writing in the
contract of sale
What are the kinds of waiver?
Waiver without the knowledge of the risk of eviction
and waiver with the knowledge of eviction
What is the effect of the waiver?
You cannot enforce your warranty against eviction
21
If you have the warranty, what are your rights against the
vendor?
to demand the return of the value of the thing
subject of the contract; to deliver income or fruits;
the expenses of the contract, if the vendee is the
one who paid them; the costs of the suit which
caused the eviction; damages, interests and
ornamental expenses but only when the sale is made
in bad faith
If you waive without the knowledge of the risk of eviction,
what rights are lost and what rights are retained?
A: If the waiver was made without the knowledge of
the risk of eviction, you will only retain the right to
demand the return of the value of the thing
What if the waiver was made with the knowledge of the risk
of eviction?
If the waiver was made with the knowledge of the
risk of eviction, it means you are already assuming
the risk of eviction and therefore, even the value of
the thing you will lose.
What are the rights of the vendee if the eviction result in the
deprivation of the property or part of the property?
Rescission of the contract or enforcement of the
vendor’s liability for eviction. Should the vendee
lose by reason of the eviction a part of the thing sold
of such importance, in relation to the whole, that he
would not have bought it without said part, he may
demand the rescission of the contract. Other than
that, he may enforce the contract.
Give an example of a non-apparent servitude
Ex. A burden on your property that limits
construction beyond a certain height. For example,
th
you can only construct a building up to 10 floor,
and you bought the property precisely to build a 50-
storey building not being aware that there is
restriction as to height.
Give the remedy if there is a non-apparent servitude
Rescission and indemnity
Are both remedies available at once?
General Rule - Rescission is only available if the non-
apparent servitude is of such nature that it must be
presumed that the vendee would not have acquired
the property had he been aware thereof.
What is the exception?
You cannot exercise rescission or indemnity if the
non-apparent servitude is recorded in the Registry of
Property, because such is a constructive notice t and
therefore you should have known that there is non-
apparent servitude.
 Sales Notes by MARX, MON, ANGELA & JEN
What is the exception to the exception?
You can still exercise your right to rescind or ask for
indemnification even if it is recorded in the Registry
of Property when there is an express warranty that
the object is free from all burdens and
encumbrances.
SALES TRANSCRIBE:
What are the requisites for the warranty of hidden defects?

The defect must be important or grave.

The defect must be hidden.

The defect must be present at the time of the
execution of the sale. Otherwise, if the defect is after
the perfection of the sale then it will not warrant the
enforcement of warranty. The defect must not have
been excluded by the contract

The vendee must not have waived the warranty
against hidden defects.

The action for rescission or reduction of price must
be filed within the prescriptive period.

The defect is unknown or could not have been
known to the vendee or the buyer even with the
exercise of due diligence on the part of the buyer.

The defect must render or diminish the fitness of the
goods bought.
When will you bring the action for warranty against hidden
defects? What is the prescriptive period?
Within 6 mos. from the delivery of the thing.
As regards the requisite of the importance of the goods, the
goods must not be diminishing the use for which it is
intended. What is the test of use of the goods bought? How
will you determine if it can be use for the purpose for which it
is intended?

If the party stipulated that the thing will be use for
this particular purpose then that is the first test. If
the thing cannot be used for the purpose for which it
was stipulated then it implies that the sale was
diminish by or its use or the fitness.

Second in the absence of stipulation as to use how
will you determine? You check the nature of the
thing, if it could be used for a particular purpose
then the thing should be used for that particular
purpose. If by reason of the defect the thing in the
absence of stipulation cannot be used as to its
nature then you can enforce the warranty against
eviction.

In the absence of any adaptation as to its nature the
last test is the business, operation, or trade of the
buyer.
22
Is there a warranty against hidden defects in case of second
hand goods? Generally or absolutely?
Generally because it is sold on the act of the
purchaser and therefore it is presumed that it is not
in a perfect condition. If the buyer buys second hand
goods then the presumption is he knows that it is
not in a perfect condition and that there are defects
that maybe hidden both from his knowledge and
sight that may render the object ineffective for the
use for which it is intended. however because he
knows that it is a second hand then he assumes as a
general rule the risk of it. however if the fact that it
is a second hand did not for a consideration and that
the buyer bought the goods on the assumption and
on the inducement by the seller that it will perform
and that it can be used based on the purpose for
which it was intended then the exception to that is
that second hand will also be subject to implied
warranty against hidden defects.
When there is an implied warranty or condition as to the
quality or fitness of the goods? There are 2 warranties under
this.

Warranty of fitness for a particular purpose.
If the buyer makes known to the seller the
particular purpose for which the goods for
and the buyer relies on the assurance of the
seller’s skill or judgement that the goods
will be or can be used for a particular
purpose.

Merchantability or the warranty of merchantable
quality.
Where the goods are bought by description
from a seller who deals in goods of that
description.
What is merchantable quality?
The article is in such condition that a reasonable
man would after a full examination accept it under
the circumstances of the case in performance of his
offer to buy that article whether he buys it for his
own use or to sell again.
In order for an implied warranty of fitness for a particular
purpose to be enforced the buyer must have known his
purpose for the goods and that he relies on the judgement or
skill of the seller that the goods will actually perform such
use. Is it always necessary that the buyer makes known the
purpose for which he needs to be used for? meaning without
telling the seller that he needs the goods for a particular
purpose can there be an implied warranty for fitness for a
particular purpose? Yes if based on past experiences the
seller already knows for which purpose the buyer needs the
goods for inwhich case if he sells the goods to the buyer there
is also an equally implied warranty that such goods based on
 Sales Notes by MARX, MON, ANGELA & JEN
past experience will defeat for a particular purpose needed
by the buyer.
Is the vendor responsible for warranty against hidden defects
if it is not known or he is not aware of such defect? Or is it a
prerequisite to the vendor should have known the defect and
that he fulfilled such information from the vendee.
As a Gen. Rule: the vendor may not be excused even
if he’s not aware of the defect when the thing was
sold to the buyer except when there’s stipulation
from that even he’s not aware he’ll not be excused
then the warranty against hidden defect will not be
enforced.
In case of warranty against hidden defects what are the
actions available to the vendee?

Accion Redhibitoria or Redhibitory Action –
withdrawal from the contract by reason of the
hidden defect.

Accion quanti minores or estimatoria – When do you accept delivery and pay the purchase price?
proportionate reduction of the price by reason of
hidden defect.

Damages is a consequence of the annulment of the
contract.
What are the obligations of the vendor if he is aware of the
hidden defect and the thing is lost and the vendee can enforce
it against warranty hidden defect?

Vendor shall bears the loss

Vendor is obliged to return the price

Refund the expenses of the contract

Payment of damages
If he is not aware of the hidden defect then the vendor is only
liable to return the purchase price plus interest and the
expenses of the contract.
Can animals have hidden defect?
Yes.
What do you call that?
Redhibitory defect.
Can you always enforce redhibitory defect against all animals
assuming that there is a redhibitory defect?
Not all animals because those which are sold at fair
or public auction are exempted from the warranty
and second even if they are not sold at public
auction or at fairs but you failed to bring the action
within the reglementary period then there may be a
warranty but it is no longer enforceable.
What is a redhibitory defect?
Defect of animals which cannot be detected or
discovered even through the help of professional
inspection or expert knowledge.
23
What are the requisites to enforce a warranty against hidden
defects for animals?

The defect must be hidden or redhibitory.

It must be brought within the prescriptive period of
40 days from delivery of animals or the action has
not yet prescribed upon the enforcement of
warranty.

The defect must be determined by law, local
customs meaning it must be redhibitory.

The sale must not have been made at public auction
or fairs and the animals must not have been sold as
condemned.
ONLY WITH THESE REQUISITES CAN YOU ENFORCE
REDHIBITORY DEFECTS.
What are the obligations of the vendee?

To accept delivery

Pay the purchase price.
Vendee accepts and pays the price at the time and
place stipulated by the parties because there are
instances when delivery is not simultaneous with the
requirement of payment.
In the absence of stipulation when do you accept and pay?
Then there is where acceptance and payment
becomes simultaneous. In the absence of stipulation
your acceptance and payment should be made at
the time and place of delivery of the thing sold.
If the thing is delivered without stipulation as to the place of
payment but the seller did not accept or ask payment at the
time of delivery when can the seller demand for payment?
Anytime after delivery. Actually there is no
requirement of reasonable time otherwise you will
be bound by reasonableness of the time for as long
as you delivered there is already obligation on the
part of the other party to pay otherwise he be
enriching himself unjustly at the expense of the
seller. So if there is no simultaneous payment upon
delivery it will not prejudice the right of the seller
because anytime after delivery he can enforce
payment either extra-judicially or through judicial
action.
What is the rule in case the delivery was made for less than
the quantity of the stipulation? What are the rights of the
buyer?
So as a general rule for what shall have been
stipulated should be complied with meaning if you
stipulated to deliver for a 100 sacks of rice for
example 100 sacks of rice should be delivered. What
if what was delivered was less than the quantity
agreed upon? What is the basis of right? So the GR is
there is no delivery by instalments only if it is
 Sales Notes by MARX, MON, ANGELA & JEN
stipulated by the parties. So if what was delivered is
by instalments then the buyer has the right to totally
refuse acceptance of delivery and therefore may
already bring an action for breach of contract as a
whole. So he’s not bound to accept instalments.
Can the right of the buyer and the seller in the delivery and
acceptance for payment be waived?
You apply the waiver of the right and obligation of
the buyer and the seller in the acceptance of goods
only in case of delivery by instalments.
When can you waive delivery and the right if the seller?
GR there is no delivery by instalments only if there is
stipulation to that effect.
If there is stipulation to that effect then what are your rights
in case of failure to make delivery?
He may refuse to proceed with simultaneous claim
for damages or he may ask for compensation if the
breach is severable.
When are these rights waivable and what are the
circumstances when first these rights have been waived by
the seller?
The obligation of the buyer upon delivery is payment
and if it is by instalments then necessarily the
payment is also by instalment. Your right as a seller
is to collect upon delivery.
When can you waive that right?
If the seller will deliver or make delivery even if
there is notice of the default of payment on the part
of the buyer. If he continues to make even after
notice of default of payment that’s one of the waiver
on the part of the seller. Second if accepts belated
payment of the buyer then it is as if he is waiving his
right to either act for the refuse or rescission of the
contract or compensation and therefore enforcing in
effect in full the contract between the parties. So #1
if there is continuous delivery even after notice of
default. #2 acceptance of belated payment from the
buyer.
What are the circumstances of the waiver on the part of the
buyer?
If there is payment and acceptance of delivery and if
there is waiver or the waiver is apparent on the face
that the buyer is willing to accept delivery even after
the default on delivery on the part of the seller.
What is the right of examination? Is there actual acceptance
in the right of examination?
Yes because upon acceptance it is the time where
you examine the goods if they conform for the
purpose for which they are intended or bought
24
but is that contemplated acceptance where payment is
already due?
No it is not deemed accepted for purposes of
requiring payment from the buyer unless there is
appropriate examination on the part of the buyer
but is it accepted literally?
Yes because you have to examine it and that’s the
way on how you can examine the goods delivered to
you by literally accepting them but for legal
acceptance for purposes of payment of the
obligation it is not deemed accepted yet unless and
until there is reasonable opportunity for examining
the goods.
What is the right of the seller or the buyer if the seller refuse
to allow the buyer reasonable examination? Refuse payment?
What if there is already payment? Examination request?
What if examination request has been refused? What’s your
remedy?
If there is no examination yet there is no legal
acceptance yet so technically still the seller’s
obligation and you have no obligation actually to
accept it yet.
What’s your remedy if you are refused of examination? What
will happen to the payment that has been advanced for
example or paid by the buyer for supposed delivery?
If there is money advance and there is refusal on the
part of the seller you provide for appropriate
examination time for the buyer to examine then the
obligation maybe considered withdrawn on the part
of the buyer and if there is already payment
advanced by the buyer then that payment advance is
reimbursable on the buyer.
When are the goods deemed accepted by the buyer?
If he communicates or intimates his acceptance to
the seller. If accepts delivery without actually
accepting but he shows acts in relation to which
there is inconsistency with the ownership of the
seller then that is already deemed acceptance. Or if
within a reasonable time he retains possession of
the goods without intimating to the seller that he
has rejected the goods then it also deemed an
acceptance of the goods.
What are the acts inconsistent with the ownership of the
seller? Give examples.

If there is conveyance of the goods.

Resale of the goods.

If you continues possession and the use of the goods
because necessarily it is only the seller as the owner
who should use or possess the goods.

If you mortgage the goods for example. You are the
owner and cannot be the mortgagor. However if you
 Sales Notes by MARX, MON, ANGELA & JEN
mortgage the goods it is already inconsistent as
personal with the owner.

If short of reselling the goods if you offer it for sale.
In case of breach or warranty what is the requirement for you
to enforce that breach? In connection with the acceptance of
the goods by the buyer.
Inform or notify the seller for the breach of
warranty.
What is the purpose?
To correct the inconsistencies or the breach.
When should the notice be made?
Within reasonable time.
Why do you need to give notice within reasonable time?
There is breach of warranty after acceptance of the
goods. After acceptance of the goods you notice or
discovered that there are breaches of warranty for
the goods then the requirement of the law to notify
the seller as regards those warranties within a
reasonable time. Notify to correct the breach within
reasonable time because remember notice or
notification is for the protection of the seller in order
for him to be given a chance to correct or rectify the
mistake or the breach and to protect him for belated
claim. And therefore those claims must be made
within reasonable time.
Is it still required for the buyer to notify the seller if the seller
knows of the breach? Would it be futile and useless or
unnecessary anymore if the seller already knows of this fact
constituting the breach?
Notice is required for knowledge to inform the seller
of the facts constituting the breach because the
notice in nit intended merely for purposes of
informing the seller that there are facts constituting
breach. The notice is intended primarily to inform
the seller that each fact actually constitute breach
from the point of view of the buyer and therefore
that fact should be rectified because even facts exist
within the knowledge of both the buyer and the
seller without information coming from the buyer
that those facts constitute breach from the point of
view of the buyer then that cannot be considered
breach and therefore you have to notify the seller of
this fact constituting breach and that should be
rectified.
When is the vendee liable for interest?
Even if there is stipulation that you are liable for
interest you will not be liable without delivery. It is
only after delivery you are required to pay interest if
the object delivered to you and there is no payment
25
yet. If there is payment after delivery there is no
liability for interest.
When are you required after delivery to pay interest?

If there is stipulation to that effect

If the thing sold is delivered produce fruits or income
When the buyer is in default. When should he be in default?
If there is judicial demand.
When should extra-judicial demand put the buyer in default?
How do you complete extra-judicial demand?
By giving a demand letter and from that time the
buyer is considered in default.
When is judicial demand made?
By filing an action in court for the payment. So you
could either go directly with the court demand for
payment but usually in practice you have to give
demand first to give the seller the opportunity to
pay.
When can you suspend payment?
If there is disturbance to possession or ownership of
the goods.
If there without actual disturbance of the possession
or ownership there is reasonable ground to fear
such disturbance caused by a foreclosure or
reinvicatory action or mortgage then the seller
should or may suspend the payment.
Until when this suspension be made in case of fear of
disturbance or actual disturbance of possession? If the fear of
disturbance or the disturbance has already ceased or if the
vendor has caused such disturbance or danger ceased.
Suspension is not proper or resorted to if there is security or
bond given for the goods because you can reasonably
addressed such fear by just enforcing the security meaning
there is no reasonable fear actually if there is security
because you can be sufficiently covered by such security .
For example if there is trespass to dwelling can you already
suspend payment?
Mere trespass to dwelling will not warrant
suspension of payment by express provision of the
civil code. By way of exception if it is a mere trespass
to dwelling even if there is actually disturbance of
possession or fear of disturbance by express
provision of the law such act will not warrant
suspension of payment.
 Sales Notes by MARX, MON, ANGELA & JEN
How much can you retain when you suspend payment? For
example the property is worth 1M and there is reasonable
fear of disturbance or actual disturbance how much will you
retain or how much payment will you suspend?
The concept of retention is that you are not to pay
yet, you can retain payment to yourself. You can
only retain the portion of the disturbance, if what
has been disturb or your possession is only a portion
of the property disturb then you can only retain
payment for the value of the property or the portion
disturbed. So if only 500k is disturb then you can
only suspend that portion and not the entire
purchase price.
How much security required to be given for that 1M property?
Considering depreciation can you require security of worth
1.1M?
It should be equivalent of the property it cannot
exceed the value of the property. If the seller wants
to give for more than the value of the property its
fine but if the question is if he does not want he
cannot be compelled to give security for more than
the value of the property what is required is just
equivalent or anything left in value for as long as
there is security for payment anyway the
disturbance may or may not involve the entire
property subject to it.
When can you actually rescind the contract instead of just
retaining the payment?
When there is loss of immovable property.
When there is loss?
When the seller has reasonable ground the loss of
the immovable property then he may immediately
pursue for rescission.
Will this provision apply if there is security or bond given?
If there is security or bond given as security for the
value of the property even if you have reasonable
fear of the loss of immovable property or of the
purchase price you cannot rescind the contract.
Is it always the case that if there is security or bond then there
is no reasonable fear of loss? Qualify between a solvent and
insolvent buyer. Is it material that there is security?
If the fact that the buyer or the seller solvent or
insolvent when material under this article for
purposes of rescinding the contract or if the
presence of security or bond already sufficient to
counter the fear of loss of the immovable property?
First is it material? Yes why? In what from does it
become material? If there is security or bond for
solvency and insolvency is not material because you
are sufficiently secured and therefore that security
will counter your fear of loss of the immovable
26
property. Even if you lose the immovable property
on the price you can apply the bond or security to
complete or to answer for the loss. Only if there is
no bond or security can solvency or insolvency be
used or be material for purposes of invoking this
article.
What are the conditions before a vendor a retro can exercise
right of repurchase?
1. He must return to the vendee the “price of the sale”.
2. Expenses of the contract and legitimate expenses
3. Necessary and useful expenses.
What is legal redemption?
The right to be subrogated upon the same terms and
conditions stipulated in the contract, in the place of one who
acquires a thing by:
1 purchase or
2 dation in payment, or
3 any other transaction whereby ownership is
transmitted by onerous title
If there is legal redemption, in effect what do you have?
Right to subrogation. You are exercising legal
redemption because something is transferred to you
and you are allowed to exercise the right of the
original vendee or original vendor.
Can anybody exercise legal redemption?
Yes as a General Rule Everybody can exercise legal
redemption
Except if the obligation is personal to the vendee
Only transmissible obligations can be subrogated and
therefore can be the subject of legal redemption.
Obligations which the performance is only personal to the
vendee or obligations which were contracted personally by
the vendee cannot be subrogated therefore cannot be
subject of legal redemption.
What is pre-emption?
Right of any person to be given “preference” of the
sale over any other buyer.
Without “preference” it is the same with all other
rights. Your right of pre-emption is superior because
given equal treatment, if you have right of
preference and right of pre-emption, then you will
be preferred over all other prospective buyers.
To whom do you direct the right of pre-emption?
Technically and the law provides only the seller gives
you that preference and only to him can you enforce
the right of pre-emption.
 Sales Notes by MARX, MON, ANGELA & JEN
But for practical purposes you may implead the
buyer to bind and inform him of the right of pre-
emption.
How is pre-emption distinguished from redemption?
Pre-emption is prior to the sale where you enforce
your preference
Redemption is after the sale where you exercise
subrogation
“...co-owners of a thing” what is the coverage of the thing
referred to by the law? Is it co-ownership of movable,
immovable, right or is it limited to immovable property where
you have the right of legal redemption?
No distinction therefore the thing referred to is either a
movable or immovable or a right.
If you are a co-owner of a right, or if there are co-owners of a
particular thing whether it is a movable/immovable or a right
what is the right of legal redemption? When can you exercise
the right of legal redemption?
If one or all of the co-owners sold their shares to a
rd
3 person then that is the time when one can
exercise his right of legal redemption as a co-owner.
What if there are 2 co-owners who want to exercise the right
of legal redemption? What is the extent of the right?
What is the right of pre-emption/redemption in adjacent
property?
Only with the respect to the proportion of their share in the
co-ownership.
Why does the law allow redemption of a co-owner? What are
the reason of the law?
1. To prevent strangers from owning the property
co-owned by the co-owners.
2. It has the effect of consolidating ownership in as
many shares as one has.
Because the purpose of the law is to eliminate and
reduce numbers of ownership or sharing in a
particular property or community. So if that will
serve the purpose of the law of reducing participants
in a particular property and vesting it only to a sole
owner then that is promoted by redemption of one
owner to the other.
There are 3 co-owners (A, B, C) of a particular immovable
property The property is worth P3M each co-owner owns
P1M.
A sold his share to B. Does C have the right of redemption? If
so how much?
Can C redeem 50% of the property sold to B since the law
provides that a co-owner can only redeem with the respect to
the “proportion” of his share in the co-ownership
Can B actually own the entire 1M of A?
27
There is no right of redemption because it is applicable only if
rd
the person who bought the property is a 3 person is not the
st
owner of the property because the 1 purpose of the law, to
exclude strangers, is not present.
You only exercise the right of redemption against a stranger
to the co-ownership and not against a co-owner. If the
nd
property is sold to a co-owner the 2 purpose of the law is
met, title is already consolidated and ownership is reduced to
2.
What are the conditions before you can exercise your right as
an adjoining owner of a land?
1. If it pertains to a “rural” land
What does “rural” land mean?
Main purpose is agriculture.
Principally used for agriculture
Is the classification of land to rural or urban a matter of
location (i.e only if it located in the province)?
Location is immaterial with respect to the
classification of land to be a rural or urban land.
Classification is based on the use not actually the
purpose because the parties may intend it be
agricultural but the government classifies it as
residential or commercial because it cannot be used
for agricultural purposes but it is fit for commercial
or residential purposes.
So for purposes of exercising this right location may
be immaterial but rural land should be those
intended and classified for agricultural purposes.
2. Grantee must also own adjoining rural land
3. Two lands must not separated by any servitude
4. Rural lands alienated and to be redeemed must not exceed
1 hectare/10 K sq m
Your adjoining rural land is composed of 3 hectares all
alienated to 1 particular person. The 3 parcels of land are
actually 1 hectare per parcel but all 3 of them were sold to a
buyer.
Can you exercise your right of redemption?
Yes but only up to 1 hectare.
Can you exercise your right of redemption successively to
comply with the law?
No. Whether or not it is successive or 1 time
redemption your are only allowed 1 hectare.
 Sales Notes by MARX, MON, ANGELA & JEN
Can you compel the buyer to give you half a hectare only
because that is what you can only afford?
You cannot compel the buyer exercise of right of
redemptoin only with respect to a portion of 1
parcel of land because the law discourages and
frowns upon division. You cannot divide.
You can only exercise your right of redemption for a
particular parcel of land. And if it happens to be one
hectare then you can exercise it.
However if for example the 3 hectares are divided
into more than 1 hectare each your right of
redemption is lost. You can exercise only up to that
portion.
What if there are 2 adjoining owners who wants to exercise
right of redemption what is the preference given by law?
In rural lands, the preference is given to one who has
smaller ownership for him to consolidate it to a
bigger adjoining property.
st
If both areas are the same the one who 1 requisted
for redemption.
Remember: Not all rural lands are covered by this
provision. Only “rural lands intended for agricultural
purposes”. Any way all rural lands are classified as
agricultural. Lands are either classified as
agricultural, residential and all other kinds of land.
For this particular land we are referring to
agricultural land intended for agricultural purposes.
What are the reasons for the law why they promote
redemption only upon adjacent adjoining agricultural land?
Promotion and protection of agriculture in general.
When you have a bigger lot to cultivate for
agricultural purposes the intention of the law is to
help agriculture to flourish. So you are given more
land to cultivate and in return it will promote and
protect agriculture in general.
There are 2 adjoining owners of a rural agricultural land, if 1
smaller but far from the adjoining land and 1 is bigger but
exactly adjoining the land, who will be preferred? Which will
serve the purpose of the law?
The smaller, the law does not distinguish and in fact
the law will give you preference because you have
smaller preference to give you more chances of
promoting agriculture.
What is your right in case of urban land?
right of either pre-emption or redemption
What are the conditions before you can exercise these rights?
1. The piece of urban land is so small that it cannot be used
for any practical purpose within reasonable time
2. Such land was bought for speculation
28
If there are 2 owner of the adjoining land who will be
preferred?
The one whose intended use for the property appears to be
the best justified
Is the right of pre-emption available if there is only 1 claimant
or only if there are 2 claimants?
The problem with our code is that as it allows pre-emption
st
under the 1 paragraph because of the word “if about to be
sold” meaning the property is not yet sold, and if the
property is not yet sold your right is pre-emption.
However the code is also specific that he will also exercise the
right of redemption.
nd
Notice that in the 2 paragraph both the right of pre-
nd
emption and redemption are mentioned, meaning the 2
paragraph recognizes pre-emption and redemption which is
st
absent in the 1 paragraph
A reasonable interpretation of the law is that when there is 1
claimant is only the right of redemption.
Even if you have the right of pre-emption you cannot exercise
it before the sale but you can redeem the property. Anyway
there is no difference. Even if you invoke the right before or
after, the ultimate end is that you can have the property with
you.
However, there are commentaries who says that pre-emption
st
and redemption are proper under the 1 paragraph because
nd
the word “to be sold” and under the 2 paragraph because
of the express provision of the law.
In either case Atty. Favilla subscribe to the opinion that you
have the right in both instances for pre-emption and
redemption. There is no practical purpose to prohibit pre-
st
emption in the 1 instance because the code expressly
provide that you have that right prior to sale and it will also
serve the same purpose. At any rate if there is no pre-
emption it will also be served by the right of redemption.
So either answer will be acceptable for as long as the purpose
is for the acquisition of the property by the adjoining owner
of the land.
When do you exercise the right of pre-emption and
redemption?
Within 30 days from the notice in writing by the
prospective vendor/ by the vendor.
The prospective vendor wrote the notice today, by regular
mail, the prospective buyer received it 2 mos. after today. Can
the vendor still exercise the right redemption or pre-emption?
 Sales Notes by MARX, MON, ANGELA & JEN
Yes. The law requires written notice, and it is only
upon receipt of that notice will the period of 30 days
will commence to run.
There is a notice on the way but you knew of the sale already,
what would be the reckoning period – from knowledge or
notice of the sale or from receipt of the notice in writing?
The law requires written notice, and it is only upon
receipt of that notice will the period of 30 days
commence to run.
Knowledge is immaterial otherwise the law could
have provided that only knowledge on the part of
the prospective buyer would be sufficient to start
the period of redemption.
What is assignment of credit?
This is an agreement whereby credits, incorporeal
rights or actions pertaining to the person (assignor)
are transferred by him to another (assignee) either
onerously or gratuitously who acquires the power to
enforce the same against the debtors.
What are the rights assigned?
1. Right to collect the full credit or value of the
obligation
2. Accessory rights – which includes the right to sue for
the performance of the obligation
3. The debtor retains all his rights available against the
original creditor and since the creditor only assigns
all his rights to the assignee, the assignee is only
entitled to enforce the right of the creditor subject
also to all the defences available to the debtor
against the original creditor.
When is assignment of credit binding?
Assignment is only binding to the debtor from
knowledge of the assignment. Therefore prior to the
knowledge whether or not there is already an
assignment is immaterial the debtor will be released
if he pays the original creditor.
However, if there is already knowledge on the part
of the debtor that assignment has been made in
rd
favor of a 3 person, now the assignee payment to
the creditor will not release the debtor.
Why?
Payment made to the original creditor after notice of
assignment is tantamount to bad faith because you
already know of the assignment. Because there is
bad faith you will not be benefited of the payment
made.
29
So it will not result to the extinguishment of the obligation
but you will not be precluded from demanding back the
payment from the creditor.
It is different if you have no knowledge because payment to
the original creditor already extinguishes the obligation. You
have no obligation anymore to pay the assignee or new
creditor.
The difference is you still have to pay but not necessarily
another amount, you can demand it back from the creditor
who is no longer entitled to the payment you made to him.
rd
“It will be binding to 3 person from notice of the assignee” is
there a qualification if it is movable or immovable property?
You have to register your assignment especially with
respect to immovable property and only upon
rd
registration can there be a binding effect to 3
person where you can enforce your right of the
assignment.
What is the general warranty in case of assignment of credit?
As a general rule the assignor Warranty the
existence of the credit. He warrants that the credit is
valid at the time of the assignment.
But you do not warrant the solvency of the debtor.
When can there be warranty as to the solvency of the debtor?
1. Express stipulation of the solvency of the debtor
2. If the insolvency of the debtor was prior to the sale and
you assign you credit now then there is warranty of the
solvency.
You don’t warrant solvency if the debtor is solvent already. So
you are giving assurance that he can pay, even if prior to the
sale there is insolvency. Otherwise the assignor will not get
the credit.
What is the limitation of the warranty of solvency?
The Assignor gave the assignment now and he
warrants the solvency of the debtor now. The debtor
becomes insolvent 1 yr from now is it covered by
Assignor’s warrant of solvency?
If there is warranty of solvency it does not
warrant future solvency of the debtor. It is
only limited to 1 yr from the time of the
assignment. After that future insolvency
occurring after the period covered will no
longer be covered by the warranty of
solvency of the debtor. Therefore the
assignor will be relieved from the
obligation.
Who are excepted from assignments or sale?
Assignments or sales made to:
1. co-heir or co-owner of the right assigned
 Sales Notes by MARX, MON, ANGELA & JEN

2. creditor in payment of his credit

3. possessor of a tenement or piece of land which is
subject to the right in litigation assigned

30