I.

NATURE AND FORM OF THE CONTRACT

Sources of the Law on Sales
Sales are governed by the provisions of the Civil Code:
1. Book IV, Title VI, Articles 1!"#1$%& 'Sales(
). Title I, Arts. 11!$#1)) '*bligations and Contracts(
%. *pinions of Co++entators
. ,-rispr-dence
Concept of Contract of Sale
The contract of sales is an agree+ent .hereby one of the parties 'called the seller or vendor(
obligates hi+self to deliver so+ething to the other 'called the b-yer or p-rchaser or vendee( .ho, on
his part, hinds hi+self to pay therefore a s-+ of +oney or its e/-ivalent 'kno.n as the price(.
The transfer of title to property or the agree+ent to transfer title for a price paid or pro+ised, not
+ere physical transfer of the property, is the essence of sale.
Characterstcs of a Contract of Sale
1. Consens-al # perfected by +ere consent of the parties .itho-t f-rther acts.
). Bilateral # both the contracting parties are bo-nd to f-lfill correlative
obligations to.ards each other 'the seller to deliver and transfer
o.nership of the thing sold, and the b-yer to pay the price(.
%. *nero-s # the thing sold is conveyed in consideration of the price and vice
versa.
. Co++-tative # the thing sold is considered the e/-ivalent of the price paid and
vice versa.
!. Aleatory # in the case of sale of hope, one of the parties or both reciprocally
bind the+selves to give or to do so+ething in consideration of
.hat the other shall give or do -pon the happening of an event
.hich is -ncertain, or .hich is to occ-r at an indeter+inate ti+e.
$. 0o+inate # the contract is given a special na+e or designation in the Civil
Code.
&. 1rincipal # the contract does not depend for its e2istence and validity -pon
another contract.

Essental Re!ustes of a Contract of Sale
1. Consent or +eeting of the +inds 3 refers to the confor+ity of the parties to the ter+s of the
contract, the acceptance by one of the offer +ade by the other. As a bilateral contract, the
acceptance of pay+ent by a party is an indication of his consent to a contract of sale, thereby
precl-ding hi+ fro+ re4ecting its binding effect [Clarin vs. Rulova, 127 SCRA 512].
There +ay be a sale against the .ill of the o.ner in case of e2propriation and the three
different kinds of sale -nder the la. 3 ordinary e2ec-tion sale, 4-dicial foreclos-re sale, and
e2tra#4-dicial foreclos-re sale.
). *b4ect or s-b4ect +atter 3 refers to the deter+inate thing .hich is the ob4ect of the contract5
6ven a f-t-re thing not e2isting at the ti+e the contract is entered into +ay be the ob4ect
of sale, provided it has a potential or possible e2istence, that is, it is reasonably certain to
co+e into e2istence as the nat-ral incre+ent or -s-al incident of so+ething in e2istence
already belonging to the seller, and the tile .ill vest the b-yer the +o+ent the thing co+es
into e2istence 'Art. 1$1(.
E"pto re speratae
'sale of thing e2pected(
Re spetae
# the sale of a thing not yet in e2istence,
s-b4ect to the condition that the thing .ill
e2ist and on fail-re of the condition, the
contract beco+es ineffective and hence, the
b-yer has not obligation to pay the price5
# the sale of hope itself that the thing .ill co+e
into e2istence, .here it is agreed that the
b-yer .ill pay the price even if the thing does
not event-ally e2ist5
# the f-t-re thing is certain as to itself b-t
-ncertain as to its /-antity and /-ality5
# like the sale of a s.eepstake ticket, it is not
certain that the thing itself '.inning a pri7e(
.ill e2ist, +-ch less it /-antity and /-ality5
# contract deals .ith a f-t-re thing5 # contract relates to a thing .hich e2ists or is
present 3 the hope or e2pectancy5
# sale is s-b4ect to the condition that the
thing sho-ld e2ist, so that if it does not,
there .ill be no contract by reason of the
absence of an essential ele+ent.
# prod-ces effect even tho-gh the thing does
not co+e into e2istence beca-se the ob4ect of
the contract is the hope itself, -nless it is a
vain hope or e2pectancy 'like the sale of a
falsified s.eepstakes ticket .hich can never
.in(.
%. Ca-se or consideration 3 refers to the price certain in +oney or its e/-ivalent.
Natural Ele"ents 3 those .hich are dee+ed to e2ist in certain contracts, in the absence of any
contrary stip-lations, like .arranty against eviction5
Acc#ental Ele"ents 3 those .hich +ay be present or absent depending on the stip-lations of the
parties, like conditions, interest, penalty, ti+e or place of pay+ent.
$n#s of a Contract of Sale
1. As to presence or absence of conditions
Absol-te 3 .here the sale is not s-b4ect to any condition .hatsoever and .here the title passes to the
b-yer -pon delivery of the thing sold.
Conditional 3 .here the sale conte+plates a contingency and .here the contract is s-b4ect to certain
conditions, -s-ally in the case of the vendee, for the f-ll pay+ent of the agreed p-rchase price.
). *ther kinds
As to the nat-re of the s-b4ect +atter 3 real or personal, tangible or intangible
As to the +anner of pay+ent 3 cash or install+ent
As to its validity 3 valid, rescissible, -nenforceable, void
Contract of Sale Dstn%ushe# fro" Contract to Sell
Contract of Sale Contract to Sell
Transfer of
ttle&
' passes to the (u)er upon
#el*er) of the thn% sol#.
' re"ans wth the seller
untl full pa)"ent of the
a%ree# prce.
+a)"ent of
prce&
' non'pa)"ent of the prce s
a ne%at*e resolutor)
con#ton, an# the re"e#) s
to e-act fulfll"ent or to
rescn# the contract.
' full pa)"ent s a post*e
suspens*e con#ton, the
falure of whch s not a
(reach, casual or serous, of
the contract (ut s"pl) an
e*ent that pre*ents the
o(l%aton of the *en#or to
con*e) ttle fro" ac!urn%
(n#n% force.
Ownershp
of *en#or&
' *en#or loses an# cannot
reco*er ownershp of the
thn% sol# an# #el*ere#,
actuall) or construct*el)
untl an# unless the contract
of sale tself s resol*e# an#
set as#e.
' ttle re"ans n the *en#or
untl full pa)"ent of prce.
Sale Dstn%ushe# fro" Daton n +a)"ent:
Sale Daton n +a)"ent
# no pre#e2isting credit # there is pre#e2isting credit
# gives rise to obligation # e2ting-ishes obligation
# ca-se or consideration is the price, or the
ac/-isition of title to the property
# ca-se of consideration is e2ting-ish+ent of
the debt 'fro+ the point of vie. of the offeror(,
and the ac/-isition of the ob4ect offered 'fro+
the point of vie. of the creditor( in lie- of the
original credit
# there is greater freedo+ in the deter+ination # less freedo+
of the price
# giving of the price +ay generally end the
obligation of the b-yer
# the giving of the ob4ect in lie- of the credit
+ay e2ting-ish co+pletely or partially the
credit 'depending on the agree+ent(

Sale of %oo#s () #escrpton Sale of %oo#s () sa"ple
# occ-rs .here the p-rchaser has not seen
the article sold and relies on the description
given hi+ by the vendor, or has seen the
goods b-t the .ant of identity is not apparent
on inspection.# If the b-lk of the goods
delivered does not correspond .ith the
description, the contract +ay be rescinded.
'Art. 1"1.(

# the parties contracted solely .ith reference to
the sa+ple, .ith the -nderstanding that the
b-lk .as like it.# the vendor .arrants that the
thing sold and to be delivered by hi+ shall
confor+ .ith the sa+ple in kind, charater, and
/-ality.
For" of Contract of Sale
8enerally, a contract +ay be entered into in any for+ provided all the essential re/-isites for its
validity are present 'Art. 1%!$(. It +ay be in .riting, oral, or partly in .riting and party oral. It +ay
even be inferred fro+ the cond-ct of the parties, since sale is a consens-al contract that is perfected
by +ere consent.
9o.ever, in case the contract of sale sho-ld be covered by the Stat-te of :ra-ds, the la. re/-ires
that the agree+ent be in .riting s-bscribed by the party charged, or by his agent5 other.ise, the
contract cannot be enforced by action ;see Art. 1<%=.
>nder the Stat-te of :ra-ds 'Art. 1<% ;), a, d, e=.( of the Civil Code, the follo.ing
contracts +-st be in .riting to be enforceable:
'a( sale of personal property at a price not less than 1!<<5
'b( sale of real property or an interest therein regardless of the price involved5 and
'c( sale of property not to be perfor+ed .ithin a year fro+ the date thereof regardless of the nat-re
of the property and the price involved.
The Stat-te :ra-ds specifies three '%( .ays in .hich contracts of sales of goods .ithin its
ter+s +ay be +ade binding:
'a( the giving of a +e+orand-+5
'b( acceptance and receipt of part of the goods 'or things in action( sold and act-al receipt of the
sa+e 'Art. 1!"!(5 and
'c( pay+ent or acceptance at the ti+e so+e part of the p-rchase price.
The Stat-te of :ra-ds is applicable only to e2ec-tory contracts '.here no perfor+ance,
i.e., delivery and pay+ent, has as yet been +ade by both parties(, and not to contracts .hich
are totally cons-++ated or partially perfor+ed [Vda. De Espiritu vs. CFI o Cavite, !7 SCRA
"5!].
Recto Law .Art. /0102 3 Re"e#es of 4en#or n Sale of +ersonal +ropert) +a)a(le n
Install"ents:
'a( elect f-lfill+ent -pon the vendee?s fail-re to pay5
'b( cancel the sale, if the vendee shall have failed to pay t.o or +ore install+ents5
'c( foreclose the chattel +ortgage, if one has been constit-ted, if the vendee shall have failed to pay
t.o or +ore install+ents.
These re+edies are alternative and are not to be e2ercised c-+-latively or s-ccessively
and the election of one is a .aiver of the right to resort to the others [#a$ii$ Co%%erial Co.
vs De la RA%a, &2 #'il. "()* +onato vs. IAC, 1!) SCRA 255].
In transactions involving the sale of financing of real estate on install+ent pay+ents,
incl-ding residential condo+ini-+ apart+ents, the follo.ing are the rights given to the b-yer
.ho has paid at least t.o ')( years of install+ents in case he defa-lts in the pay+ent of
s-cceeding pay+ents
'a( to pay .itho-t additional interest the -npaid install+ents d-e .ithin the total grace period
earned by hi+ fi2ed at the rate of one#+onth grace period for every one year of install+ent pay+ents
+ade 3 this right shall be e2ercised by hi+ only once in every five '!( years of the life of the contract
and its e2tension, if any5 and
,-. if the contract is cancelled, the seller shall ref-nd to the b-yer the cash s-rrender val-e of the
pay+ents on the property e/-ivalent to !<@ of the total pay+ents +ade and, after ! years of
install+ents, an additional !@ of every year b-t not to e2ceed A<@ of the total pay+ents
+ade. [Se$. ", RA &552 or t'e Realt/ Install%ent 0u/er #rote$tion A$t* see 1a/u2 vs. IAC, &7 SCRA
&27].
'c( The b-yer has the right to sell his right or assign the sa+e before act-al cancellation of the
contract and to pay in advance any -npaid install+ent anyti+e .itho-t interest and to have s-ch f-ll
pay+ent of the p-rchase price annotated in the certificate of title covering the property.
II. CA+ACIT5 TO 6U5 OR SELL
+ersons 7ho Ma) Enter Into a Contract of Sale
As a general r-le, all persons, .hether nat-ral or 4-ridical, .ho can bind the+selves, have the legal
capacity to b-y and sell.
+ersons 7ho Are Incapactate# to Enter Into a Contract of Sale
/. A(solute Incapact) 3 pertains to persons .ho cannot bind the+selves
'a( Binor
'b( Insane or de+ented persons
'c( Ceaf#+-tes .ho do not kno. ho. to read and .rite
Contracts entered into by a +inor and other incapacitated persons arevoidable. 9o.ever,
.here the necessaries are sold and delivered to hi+ '.itho-t the intervention of the parent or
g-ardian(, he +-st pay a reasonable price therefor. The contract is therefore valid, b-t the
+inor has the right to recover any e2cess above a reasonable val-e paid by hi+.
Sale of real property by +inors .ho have already passed the ages of p-berty and
adolescence and are no. in the ad-lt age, .hen they pretended to have already reached their
+a4ority, .hile in fact they have not, is valid, and they cannot be per+itted after.ards to
e2c-se the+selves fro+ co+pliance .ith the obligations ass-+ed by the+ or to seek their
ann-l+ent. This is in accord .ith the doctrine of estoppel[3er$ado and 3er$ado vs. Espiritu,
"7 #'il. 2&5].
8. Relat*e Incapact) 3 .here it e2ists only .ith reference to certain persons or class of property
'Art. 1A<#1A1(. The prohibition e2tends to sales by virt-e of legal rede+ption, co+pro+ises, and
ren-nciations.
'a( 9-sband and .ife to each other 3 e2cept .hen a separation of property .as agreed -pon in the
+arriage settle+ents, or .hen there has been a 4-dicial separation of property
'b( 8-ardian 3 as to the property of his .ard
'c( Agents 3 as to the property .hose ad+inistration or sale has been entr-sted to the+, -nless
consent of the principal is given
'd( 62ec-tors or ad+inistrators 3 as to the state -nder their ad+inistration
'e( 1-blic officers and e+ployees 3 as to the property of the State or any s-bdivision thereof, or of
the govern+ent#o.ned or controlled corporations, the ad+inistration of .hich is entr-sted to the+
'f( ,-dges and govern+ent e2perts .ho take part in the sale of the property and rights -nder
litigation
The prohibition is based on the fid-ciary relationship 'based on tr-st(, to prevent fra-d
and -nd-e and i+proper infl-ence.
Dith respect to 'b( to 'd(, the sale shall only be voidable beca-se in s-ch cases only
private interests are affected. The defect can be c-red by ratification by the seller. Dith
respect to 'e( and 'f(, the sale shall be n-ll and void, p-blic interests being involved
therein.
'g( Aliens .ho are dis/-alified to p-rchase private agric-lt-ral lands -nder Art. EII, Secs. % and & of
the Constit-tion
,'. >npaid seller having a right of lien or having estopped the goods in transitu
'i( *fficer holding the e2ec-tion or his dep-ty
III. EFFECTS OF THE CONTRACT 7HEN THE THIN9 SOLD HAS 6EEN LOST
Dhere the thing is entirely lost at the ti+e of perfection, the contract is ine2istent and
void beca-se there is no ob4ect. There being no contract, there is no necessity to bring an
action for ann-l+ent.
Dhere the thing is only partially lost, the vendee +ay elect bet.een .ithdra.ing fro+ the
contract and de+anding the re+aining part, paying its proportionate price.
The thing is lost .hen it perishes or goes o-t of co++erce or disappears in s-ch a .ay
that its e2istence is -nkno.n or it cannot be recovered.
I4. O6LI9ATIONS OF THE 4ENDOR
+rncpal O(l%atons of the 4en#or
to transfer the o.nership of the deter+inate thing sold 'Art. 1A!(5
The vendor need not be the o.ner of the thing at the ti+e of perfection of the contract5 it
is s-fficient that he has a right to transfer the o.nership thereof at the ti+e it is delivered
'Art. 1!A(.
If the seller pro+ised to deliver at a stip-lated period and s-ch period is of the essence of
the contract b-t did not co+ply .ith his obligation on ti+e, he has no right to de+and
pay+ent of the price. The vendee#b-yer is fact +ay ask for the rescission or resol-tion of the
sale.
If the fail-re of the seller to deliver on ti+e is not d-e to his fa-lt, as .hen it .as the
b-yer .ho failed to s-pply the necessary credit for the transportation of the goods, delay on
the part of the seller +ay be said to be s-fficiently e2c-sed.
to deliver the thing, .ith its accessions and accessories, if any, in the condition in .hich they .ere
-pon the perfection of the contract 'Art. 1!%&(5
to .arrant against eviction and against hidden defects 'Arts. 1A!, 1!&(5
to take care of the thing, pending delivery, .ith proper diligence 'Art. 11$%(5
to pay for the e2penses of the deed of sale, -nless there is a stip-lation to the contrary 'Art. 1"&(.
Del*er) or Tra#ton
Tradition or delivery is a derivative +ode of ac/-iring o.nership by virt-e of .hich one has the right
and intention to alienate a corporeal thing, trans+its it by virt-e of a 4-st title to one .ho accepts the
sa+e.
C-ty to Celiver at 62ec-tion Sale: a 4-dg+ent debtor is not obliged to deliver right a.ay5
he has one '1( year .ithin .hich to redee+ the property.
Finds of Celivery or Tradition
1. Act-al or Geal 'Art. 1A&( 3 the thing sold is placed in the control and possession of the
vendee or his agent. This involves the physical delivery of the thing and is -s-ally done by
the passing of a +ovable thing fro+ hand to hand.
). Hegal or Constr-ctive 'Arts. 1A"#1!<1( 3 thro-gh the e2ec-tion of a p-blic instr-+ent
Hegal for+alities 3 applies to real and personal properties, .here the delivery is +ade thro-gh the
e2ec-tion of a p-blic doc-+ent5
Traditio si+bolica 3 to effect delivery, the parties +ake -se of a token sy+bol to represent the thing
delivered5
Traditio longa +an- 3 +ovable property is delivered by +ere consent by the contracting parties if the
thing sold cannot be transferred to the possession of the vendee at the ti+e of the sale5
Traditio brevi +an- 3 the vendee already has the possession of the thing sold by virt-e of another title
as .hen the lessor sells the thing leased to the lessee5
Constitot-+ possessori-+ 3 the vendor contin-es in possession of the property sold not as o.ner b-t
in so+e other capacity 'e.g., as tenant of the vendee(.
%. I-asi#Traditio 'Art. 1!<1( 3 delivery of rights, credits or incorporeal real property, +ade by
placing the titles of o.nership in the hands of the vendee or la.yer, by e2ec-tion of a p-blic
instr-+ent, or by allo.ing the vendee to -se his rights as ne. o.ner .ith the consent of the vendor.
Re!ustes n construct*e #el*er) (efore ownershp "a) (e transferre# &
'a( Seller +-st have control over the thing5 other.ise, can he p-t another in controlJ
'b( B-yer +-st be p-t -nder control5
'c( There +-st be the intention to deliver the thing for p-rposes of o.nership.
Rules of construct*e #el*er) &
1. If a seller has an act-al possession, he cannot transfer o.nership by constr-ctive delivery.
). There can be no constr-ctive delivery by +eans of a p-blic instr-+ent if there is a stip-lation to the
contrary.
%. The e2ec-tion of a deed or contract is only pres-+ptive delivery.
An Unpa# Seller is one .ho has not been pair or rendered the .hole price or .ho has received a bill
of e2change or other negotiable instr-+ent as conditional pay+ent and the condition on .hich it .as
received has been broken by reason of the dishonor of the instr-+ent.
R%hts of an unpa# seller&
1. A lien on the goods or right to retain the+ for the price .hile in his possession
). A right of stopping the goods in transitu in case of insolvency of the b-yer5 re/-isites:
'a( the seller +-st be -npaid5
'b( the b-yer +-st be insolvent5
'c( the goods +-st be in transit5
'd( the seller +-st either act-ally take possession of the goods sold or give notice of his clai+ to the
carrier or other person in possession5
'e( the seller +-st s-rrender the negotiable doc-+ent of title, if any, iss-ed by the carrier or bailee5
and
'f( the seller +-st bear the e2penses of delivery of the goods after the e2ercise of the right.
%. A right of resale
. A right to rescind the sale
Rules n case of loss, #eteroraton, or "pro*e"ent of thn% (efore #el*er)
1. If the thing is lost .itho-t the fa-lt of the debtor, the obligation shall be e2ting-ished.
). If the thing is lost thro-gh the fa-lt of the debtor, he shall be obliged to pay da+ages, if is
-nderstood that the thing is lost .hen it perishes, or goes o-t of co++erce, or disappears
in s-ch a .ay that its e2istence is -nkno.n or it cannot be recovered.
%. Dhen the thing deteriorates .itho-t the fa-lt of the debtor, the i+pair+ent is to be borne
by the creditor.
. If it deteriorates thro-gh the fa-lt of the debtor, the creditor +ay choose bet.een the
rescission of the obligation and its f-lfill+ent, .ith inde+nity for da+ages in either case.
!. If the thing is i+proved by its nat-re, or by ti+e, the i+prove+ent shall in-re to the
benefit of the creditor.
$. If it is i+proved at the e2pense of the debtor, he shall have no other right than that
granted to the -s-fr-ct-ary.
Rules as to preference of ownershp n case of #ou(le sale
1. If the property sold is +ovable, the o.nership shall be ac/-ired by the vendee .ho first
takes possession in good faith [Villa Re/ 4ransit, In$. vs Ferrer, 25 SCRA (&1].
). If the property sold is i++ovable, the o.nership shall belong to:
'a( the vendee .ho first registers the sale in good faith in the Gegistry of Ceeds has preferred right
over another vendee .ho has not registered his title even if the latter is in act-al possession of the
i++ovable property 3 governed by the principle prius te%pore, patior 5ure 'first in ti+e, stronger in
right( 3 kno.ledge by the first b-yer of the second sale cannot defeat the first b-yer?s right e2cept
.hen the second first registers in good faith the second sale5
'b( in the absence of registration, the vendee .ho first takes possession in good faith5 and
'c( in the absence of both registration and possession, the vendee .ho presents the oldest title
'.ho first bo-ght the property( in good faith.
Article 1! has no application to lands not registered .ith the Torrens syste+.
4. CONDITION AND 7ARRANTIES
Condition +eans an -ncertain event or contingency on the happening of .hich the obligation 'or right(
of the contract depends.
Darranty is a state+ent or representation +ade by the seller of goods, conte+poraneo-sly and as a
part of the contract of sale, having reference to the character, /-ality, or title of the goods, and by
.hich he pro+ises or -ndertakes to ins-re that certain facts are or shall be as he then represents
the+.
If the obligation of either party is s-b4ect to any condition and s-ch condition is not f-lfilled, s-ch
party +ay either '1( ref-se to proceed .ith the contract, or ')( proceed .ith the contract, .aiving the
perfor+ance of the condition.
If the condition is in the nat-re of a pro+ise that it sho-ld happen, the non#perfor+ance of s-ch
condition +ay be treated by the other party as a breach of .arranty.
I+plied .arranty as to seller?s title 'Art. 1!"( 3 that the seller g-arantees that he has a right to sell
the thing sold and to transfer o.nership to the b-yer .ho shall not be dist-rbed in his legal and
peacef-l possession thereof.
I+plied .arranty against hidden defects or -nkno.n enc-+brance 'Art. 1!$)( 3 that the seller
g-arantees that the thing sold is reasonably fit for the kno.n partic-lar p-rpose for .hich it .as
ac/-ired by the b-yer or, .here it .as bo-ght by description, that it is of +erchantable /-ality.
Essental ele"ents of warrant) a%anst e*cton
1. the vendee is deprived in .hole or in part of the thing p-rchased5
). the vendee is so deprived by virt-e of a final 4-dg+ent 5
%. the 4-dg+ent is based on a right prior to the sale or an act i+p-table to the vendor5
. the vendor .as s-++oned in the s-it for eviction at the instance of the vendee5 and
!. there is no .aiver on the part of the vendee.
$n#s of wa*er of e*cton
1. Conscente 3 the .aiver is vol-ntarily +ade by the vendee .itho-t the kno.ledge and
ass-+ption of the risks of eviction. If the .aiver .as only conscio-s, the vendor shall pay
only the val-e .hich the thing sold had at the ti+e of eviction 3 this is a case of sol-tion
indebiti 3 the effect is to deprive the p-rchaser of the benefits +entioned in 0os. ), %,
and ! of Article 1!!!.
). Intencona#a 3 the .aiver is +ade by the vendee .ith kno.ledge of the risks of eviction
and ass-+ption of its conse/-ence. The vendor is e2e+pted fro+ the obligation to ans.er
for eviction, provided he did not act in bad faith [Anda/a vs. 3anansala, 1)7 #'il. 1151].
R%hts of the *en#ee a%anst the *en#or n case e*cton occurs .Art. /:::2
1. ret-rn of the val-e of the thing sold at the ti+e of eviction5
). inco+e or fr-its if he has been ordered to deliver the+ to the party .ho .on the s-it
against hi+5
%. costs of the s-it5
. e2penses of the contract5
!. da+ages and interests and orna+ental e2penses if the sale .as +ade in bad faith.
Re#h(ton Re#h(tor) acton Re#h(tor) *ce or #efect

# the avoidance of a sale on
acco-nt of so+e vice or
defect in the thing sold,
.hich renders its -se
i+possible, or so
inconvenient and i+perfect
# an action instit-ted to avoid a
sale on acco-nt of so+e vice or
defect in the thing sold .hich
renders its -se i+possible, or so
inconvenient and i+perfect that
it +-st be s-pposed that the
b-yer .o-ld not have
# a defect in the article sold
against .hich defect the seller
is bo-nd to .arrant. The vice
or defect +-st constit-te an
i+perfection, a defect in its
nat-re, of certain i+portance5
and a +inor defect does not
that it +-st be s-pposed
that the b-yer .o-ld not
have p-rchased it had he
kno.n of the vice.
p-rchased it had he kno.n of
the vice. The ob4ect is the
rescission of the contract. If the
ob4ect is to proc-re the ret-rn
of a part of the p-rchase price
paid by the vendee, the re+edy
is kno.n as a$$ion
%inoris oresti%atoris.
five rise to redhibition. The
+ere absence of a certain
/-ality in the thing sold .hich
the vendee tho-ght it to
contain is not necessarily a
redhibitory defect. *ne thing
is that is positively s-ffers fro+
certain defects.
Doctrnes of ca*eat *en#tor an# ca*eat e"ptor
Caveat venditor
'Het the seller be.are(
Caveat e+ptor
'Het the b-yer be.are(
# the vendor is liable to the vendee for any
hidden fa-lts or defects in the thing sold,
even tho-gh he .as not a.are thereof 'Art.
1!$$(.# Based on the principle that a so-nd
price .arrants a so-nd article.
# applies in sheriff?s sale, sales of ani+als, and
ta2 sales, for there is no .arranty of title or
/-ality on the part of the seller in s-ch sales.
# Also applies in do-ble sales of property
.here the iss-e is .ho bet.een t.o vendees
has a better right to the property .
# Ge/-ires the p-rchaser to be a.are of the
s-pposed title of the vendor and one .ho b-ys
.itho-t checking the vendor?s title takes all the
risks and losses conse/-ent to s-ch
fail-re [Solvoso vs. 4ane2a, (7 SCRA "!6].
Alternat*e re"e#es of the (u)er to enforce warrant) .Art. /:;<2&
1. Accion redhibitoria 3 to .ithdra. fro+ the contract
). Accion /-anti +inoris 3 de+and a proportionate red-ction of the price, .ith a right to
da+ages in either case
Effect of loss of thn% sol# on account of h##en #efects .Art. /:;12
If the vendor .as a.are of the hidden
defects in conse/-ence of .hich the thing
sold .as lost, he shall bear the loss beca-se
he acted in bad faith. In s-ch case, the
vendee has the right to recover:
'a( the e2penses of the price paid
b( the contract5 and
'c( da+ages.
If the vendor .as not a.are of the+, he
shall be obliged only to ret-rn:
'a( the price paid
'b( interest thereon5 and
'c( e2penses of the contract if paid by the
vendee. 9e is not +ade liable for da+ages
beca-se he is not g-ilty of bad faith.
4I. O6LI9ATIONS OF THE 4ENDEE
The vendee is obliged to '1( accept delivery5 and ')( pay the price of the thing sold.
The follo.ing r-les +-st be borne in +ind:
1. In contract of sale, the vendor is not re/-ired to deliver the thing sold -ntil the price is paid
nor the vendee pay the price before the thing is delivered in the absence of an agree+ent to
the contrary [1a Font vs. #as$a$io, 5 #'il. 561].
). If stip-lated, then the vendee is bo-nd to accept delivery and to pay the price at the ti+e
and place designated.
%. If there is no stip-lation as to the ti+e and place of pay+ent and delivery, the vendee is
bo-nd to pay at the ti+e and place of delivery.
. In the absence also of stip-lation, as to the place of delivery, it shall be +ade .herever the
thing +ight be at the +o+ent the contract .as perfected 'Art. 1)!1(.
!. If only the ti+e for delivery of the thing sold has been fi2ed in the contract, the vendee is
re/-ired to pay even before the thing is delivered to hi+5 if only the ti+e for pay+ent of the
price has been fi2ed, the vendee is entitled to delivery even before the price is paid by hi+
'Art. 1!)(.
Instances when the *en#ee "a) suspen# the pa)"ent of the prce&
a( sho-ld he be dist-rbed in the possession or o.nership of the thing sold5
b( sho-ld he have reasonable gro-nds to fear s-ch dist-rbance by a vindicatory action or by a
foreclos-re of +ortgage5
These r%hts #o not e-st n the follown% cases&
'a( sho-ld there be a stip-lation to that effect5 or
'b( sho-ld the vendor give sec-rity for the ret-rn of the price5 or
'c( sho-ld the vendor have ca-sed the dist-rbance or danger to cease5 or
'd( sho-ld the dist-rbance consist only of a +ere act or trespass.
4II. ACTIONS FOR THE 6REACH OF CONTRACT OF SALE OF 9OODS
8oods 3 incl-de all chattels personal b-t not things in action or +oney of legal tender in the
1hilippines. The ter+ incl-des gro.ing fr-its or crops.
Actons a*ala(le for (reach of the contract of sale of %oo#s&
Action by the seller for pay+ent of the price 'Art. 1!A!(
Action by the seller for da+ages for non#acceptance of the goods 'Art. 1!A$(
Action by the seller for rescission of the contract for breach thereof 'Art. 1!A&(
Action by the b-yer for specific perfor+ance 'Art. 1!A"(
Action by the b-yer for rescission or da+ages for breach of .arranty 'Art. 1!AA(
Re"e#es allowe# to the (u)er when the seller has (een %ult) of a (reach of pro"se or
warrant) .Art. /:==2&
1 Recoup"ent # accept the goods and set -p the seller?s breach to red-ce or e2ting-ish the
price.4'e t'eor/ o re$oup%ent is t'at t'e seller7s da%a2es are $ut do8n to an a%ount
8'i$' 8ill $o%pensate 'i% or t'e value o 8'at 'e 'as 2iven.
) Set'off or Countercla" for #a"a%es # accept the goods and +aintain an action for
da+ages for the breach of the .arranty. Both sides of the contract are enforced in the
sa+e litigation. The b-yer 'defendant( does not seek to avoid his obligation -nder the
contract b-t seeks to enforce the seller?s 'plaintiff?s( obligation and to ded-ct it fro+ his
liability for the price for breach of .arranty.
% Acton for #a"a%es 3 ref-se to accept the goods and +aintain an action for da+ages for
the breach of the .arranty.
Rescsson # rescind the contract of sale by ret-rning or offering the ret-rn of the goods,
and recover the price or any part thereof .hich has been paid. This re+edy is not
available in the follo.ing cases:
'a( if the b-yer accepted the goods kno.ing of the breach of .arranty .itho-t protest5
'b( if he fails to notify the seller .ithin a reasonable ti+e of his election to rescind5 and
'c( if he fails to ret-rn or offer to ret-rn the goods in s-bstantially as good condition as
they .ere in at the ti+e of the transfer of o.nership to hi+. B-t .here the in4-ry to the
goods .as ca-sed by the very defect against .hich the seller .arranted, the b-yer +ay
still rescind the sale.
4III. E>TIN9UISHMENT OF SALE
Classfcaton of "o#es or causes of e-tn%ushn% the contract of sale&
Co++on 3 those ca-ses .hich are also the +eans of e2ting-ishing all other contracts like pay+ent,
loss of the thing, condonation, etc. 'Art. 1)%1(.
Special 3 those ca-ses .hich are recogni7ed by the la. on sales 'those covered by Arts. 1", 1!%),
1!%A, 1!<, 1!), 1!!$, 1!$<, 1!$&, and 1!A1(.
62tra#special 3 conventional rede+ption and legal rede+ption.
Con*entonal Re#e"pton
'Arts. 1$<1#1$1"(
Le%al Re#e"pton
'Arts. 1$1A#1$)%(
It is the right .hich the vendor reserves to
hi+self, to reac/-ire the property sold
provided her ret-rns to the vendee the price of
the sale, the e2penses of the contract, any
other legiti+ate pay+ents +ade therefore and
the necessary and -sef-l e2penses +ade on
the thing sold, and f-lfills other stip-lations
It is the right to be s-brogated, -pon the sa+e
ter+s and conditions stip-lated in the contract,
in the place of one .ho ac/-ires a thing by
p-rchase or dation in pay+ent, or by any other
transaction .hereby o.nership is trans+itted
by onero-s title.
.hich +ay have been agreed -pon.
Nature&
'a( it is p-rely $ontra$tual beca-se it is a
right created, not by +andate of the la., b-t
by virt-e of an e2press contract[9rdo:e; vs.
Villaro%an, 7( #'il. 11&]5
'b( it is an a$$idental stip-lation and,
therefore, its n-llity cannot affect the sale of
itself since the latter +ight be entered into
.itho-t said stip-lation [Alo5ado vs. 1i%
Sion2$o, 51 #'il. ""6]5
'c( it is a real ri2't .hen registered, beca-se
it binds third persons [3ortera vs. 3artine;, 1!
#'il. 5!1]5
'd( it is a resolutor/ $ondition beca-se .hen
e2ercised, the right of o.nership ac/-ired by
the vendee is e2ting-ished[A<uino vs. Deal, &"
#'il. 5(2]5
'e( it is potestative beca-se it depends -pon
the .ill of the vendor5
'f( it is a po8er or privile2e, not an
obligation, that the vendor has reserved for
hi+self [9$a%po vs. #oten$iano, CA !( 9=
22")]5
'g( it is reserved at t'e %o%ent o t'e
pere$tion o t'e $ontra$t for if the right to
rep-rchase is agreed -pon after.ards, there is
only a pro+ise to sell .hich prod-ces different
rights and effects and is governed by Art.
1&A [Dia%ante vs. CA, 2)& SCRA 52]5
'h( the person entitled to e2ercise the right
of rede+ption necessarily is theo8ner o t'e
propert/ sold and not any third party [=allar
vs. >usain, 2) SCRA 1(&]5
'i( it 2ives rise to re$ipro$al o-li2ationthat
of ret-rning the price of sale and other
e2penses, on the part of the vendor, and that
of delivering the property and e2ec-ting a deed
Nature& 'a( identical .ith conventional
rede+ption, e2cept for the so-rce of the right
3 conventional rede+ption arises fro+ the
vol-ntary agree+ent of the parties5 legal
rede+ption proceeds fro+ la.5
'b( it is not predicated on proprietary right
b-t on a bare stat-tory privilege to be
e2ercised only by the person na+ed in the
stat-te 3 the stat-te does not +ake act-al
o.nership at the ti+e of sale or rede+ption a
condition precedent, the right follo.ing the
person and not the property[3a2no vs. Viola
and Sotto, &1 #'il. ()]5
'c( it is in the nat-re of a %ere
privile2ecreated partly for reason of p-blic
policy and partly for the benefit and
convenience of the rede+ptioner to afford hi+
a .ay o-t of .hat +ight be a disagreeable or
inconvenient association into .hich he has
been thr-st 3 it is intended to +ini+i7e co#
o.nership ;Basa vs. Ag-ilar, 11& SCGA 1)"5
Tan vs. CA, 1&) SCGA $$<=.

Instances of Hegal Gede+ption:

'a( >nder the Civil Code, those fo-nd in Arts.
1$)<#1$)), 1$%, and 1<""5

'b( >nder special la.s:
'1( rede+ption by o.ner of real property
sold for delin/-ent ta2es 3 period is .ithin 1
year fro+ date of sale5
')( rep-rchase by ho+esteader of
ho+estead sold -nder the 1-blic Hand Act 3
period is ! years ;T-pas vs. Ca+asco, 1%)
SCGA !A%=5
'%( rede+ption by 4-dg+ent debtor or
of sale therefore, on the part of the
vendee [#anda<uilla vs. =a;a, 12 #'il. &&"].
rede+ptioner or real property sold on
e2ec-tion 3 period is 1) +onths5
'( rede+ption by +ortgagor after
+ortgaged property has been 4-dicially
foreclosed and sold 3 period is A< days b-t
before confir+ation of sale by the co-rt 'in all
cases of e2tra#4-dicial foreclos-re sale, the
+ortgagor +ay redee+ the property .ithin 1
year fro+ the date of registration of the sale(5
'!( rede+ption by an agric-lt-ral lessee of
landholding sold by the lando.ner 3 period is
1"< days fro+ notice in .riting .hich shall be
served by the vendee on all lessees affected by
CAG -pon the registration of the sale.
An equitable mortgage is one .hich lacks the proper for+alities, for+ of .ords, or other re/-isites
prescribed by la. for a +ortgage, b-t sho.s the intention of the parties to +ake the property s-b4ect
of the contract as sec-rity for a debt and contains nothing i+possible or contrary to la. [Ca$'ola vs.
CA, 2)( SCRA !6&].
Dacion en pago is the trans+ission of the o.nership of a thing by the debtor to the creditor as the
accepted e/-ivalent of the perfor+ance of an obligation.
+acto #e retro Mort%a%e
*.nership is transferred b-t the o.nership is
s-b4ect to the condition that the seller +ight
recover the o.nership .ithin a certain period of
ti+e.
*.nership is not transferred b-t the property is
+erely s-b4ect to a charge or lien as sec-rity for
the co+pliance of a principal obligation, -s-ally
a loan.
If the seller does not rep-rchase the property
-pon the very day na+ed in the contract, he
loses all interest thereon.
The +ortgagor does not lose his interest in the
property if he fails to pay the debt at its
+at-rity.
There is no obligation resting -pon the
p-rchaser to foreclose5 neither does the vendor
have any right to redee+ the property after the
+at-rity of the debt.
It is the d-ty of the +ortgagee to foreclose the
+ortgage if he .ishes to sec-re a perfect title
thereto, and after the +at-rity of the debt
sec-red by the +ortgage and before foreclos-re,
the +ortgagor has a right to redee+ [0asilio vs.
En$arna$ion, 5 #'il. "&)].
Instances when con*entonal re#e"pton s presu"e# to (e an e!uta(le "ort%a%e&
1. .hen the price of a sale .ith right to rep-rchase is -n-s-ally inade/-ate5
). .hen the vendor re+ains in possession as lessee or other.ise5
%. .hen -pon or after the e2piration of the right to rep-rchase another instr-+ent e2tending
the period of rede+ption or granting a ne. period is e2ec-ted5
. .hen the p-rchaser retains for hi+self a part of the p-rchase price5
!. .hen the vendor binds hi+self to pay the ta2es on the thing sold5
$. in any other case .here it +ay be fairly inferred the real intention of the parties is that
the transaction shall sec-re the pay+ent of a debt or the perfor+ance of any other
obligation5 and
&. .hen there is a do-bt as to .hether the contract is a contract of sale .ith right or
rep-rchase or an e/-itable +ortgage.
Re!ustes (efore le%al re#e"pton can (e e-ercse#:
1 There +-st be a sale or assign+ent of credit. The concept of sale +-st be -nderstood in
its restricted sense. The right cannot be e2ercised if the transaction is e2change or
donation.
) There +-st be a pending litigation at the ti+e of the assign+ent. The co+plaint by the
assignor +-st have been filed and ans.ered by the creditor before the sale of the credit.
% The debtor +-st pay the assignee 'a( the price paid by hi+, 'b( the 4-dicial costs inc-rred
by hi+, and 'c( the interests on the price fro+ the date of pay+ent.
The right +-st be e2ercised by the debtor .ithin %< days fro+ the date the assignee
de+ands '4-dicially or e2tra#4-dicially( pay+ent fro+ hi+.

Re#e"pton +re'e"pton
1 The sale to a third person has already been
perfected
The sale to a third person has not yet been
perfected
) 9as a +-ch broader scope 0arro.er in scope 3 +ay be e2ercised only
.here there is a prospective resale of a s+all
piece of -rban land originally bo-ght by the
prospective vendor +erely for spec-lation
% Cirected against the third person .ho bo-ght
the property
Cirected against the prospective vendor .ho
is abo-t to resell the property
6ffect is to e2ting-ish a contract that has
already been perfected or even cons-++ated
6ffect is to prevent the birth or perfection of
a contract
I>. ASSI9NMENT OF CREDITS AND OTHER INCOR+OREAL RI9HTS
Assign+ent of credit 3 a contract by .hich the o.ner of a credit transfers to another his rights and
actions against a third person in consideration of a price certain in +oney or its e/-ivalent 'Art.
1!"(.
Assign+ent of credit and other incorporeal rights are consens-al, bilateral, onero-s, and co++-tative
or aleatory contracts. The assign+ent involves no transfer of o.nership b-t +erely effects the
transfer of rights .hich the assignor has at the ti+e to the assignee [Casa-uena vs. CA, 2(& SCRA
56!].
It +ay be done grat-ito-sly, b-t if done onero-sly, it is really a sale. Th-s, the s-b4ect +atter is the
credit or right assigned5 the consideration is the price paid for the credit or right5 and the consent is
the agree+ent of the parties to the assign+ent of the credit or right at the agreed price.
Gen-nciation 3 the abandon+ent of a right .itho-t a transfer to another.
Agency 3 involves representation, not trans+ission .herein the agent acts for the principal.
S-bstit-tion 3 the change of a ne. debtor for the previo-s debtor .ith the credit re+aining in the
sa+e creditor.
S-brogation 3 the change in the person of the creditor .ith the credit being e2ting-ished.
6n#n% effects of ass%n"ent:
1 As bet.een the parties, the assign+ent is valid altho-gh it appears only in a private
doc-+ent so long as the la. does not re/-ire a specific for+ for its validity.
) To affect third persons, the assign+ent +-st appear in a p-blic instr-+ent, and in case it
involves real property, it is indispensable that it be recorded in the Gegistry of
Ceeds [1ope; vs. Alvare;, 6 #'il. 2(].
% The assignee +erely steps into the shoes of the assignor, the for+er ac/-iring the credit
s-b4ect to defenses 'fra-d, prescription, etc.( available to the debtor against the assignor.
The assignee is dee+ed s-brogated to the rights as .ell as to the obligations of the seller.
9e cannot ac/-ire greater rights than those pertaining to the assignor. [?oa vs CA, 216
SCRA 5!1].

>. 6ARTER OR E>CHAN9E
Barter 3 a contract .hereby one person transfers the o.nership of non#f-ngible things to another .ith
the obligation on the part of the latter to give things of the sa+e kind, /-antity, and /-ality.
The contract is perfected fro+ the +o+ent there is a +eeting of the +inds -pon the things pro+ised
by each party in consideration of the other. It is cons-++ated fro+ the ti+e of +-t-al delivery by
the contracting parties of things they pro+ised.
6ffect .here the giver is not the la.f-l o.ner of the thing delivered: the aggrieved party cannot be
co+pelled to deliver the thing he has pro+ised. 9e is entitled to clai+ da+ages 'Art. 1$%A(. [0ia2tan
vs. Viuda de 9ller, &2 #'il. 6""].
Ge+edy in case of eviction: the in4-red party is given the option to recover the property he has given
in e2change .ith da+ages or only clai+ an inde+nity for da+ages. The right to recover is, ho.ever,
s-b4ect to the rights of innocent third persons 'Art. 1$<(.

>I. THE 6UL$ SALES LA7
1-rpose of the la. 'Act 0o. %A!)( is to prevent the defra-ding of creditors by the secret sale or
disposal or +ortgage in b-lk of all or s-bstantially all of a +erchant?s stock of goods.
The general sche+e is to declare s-ch b-lk sales fra-d-lent and void as to creditors of the vendor, or
pres-+ptively so, -nless specified for+alities are observed, s-ch as the de+anding and the giving of a
list of creditors, the giving of act-al and constr-ctive notice to s-ch creditors, by record or other.ise,
and the +aking of an inventory.
A sale and transfer in b-lk -nder the B-lk Sales Ha. is any sale, transfer, +ortgage, or assign+ent 3
'a( of a stock of goods, .ares, +erchandise, provisions, or +aterials other.ise than in the ordinary
co-rse of trade and the reg-lar prosec-tion of the b-siness5 or
'b( of all or s-bstantially all, of the b-siness or trade5 or
'c( of all or s-bstantially all, of the fi2t-res and e/-ip+ent -sed in the b-siness of the vendor,
+ortgagor transferor, or assignor.
Acts punshe# () the law&
1. kno.ingly or .illf-lly +aking or delivering a state+ent as re/-ired by the Act .hich does
not incl-de the na+es of all the creditors of the vendor, etc. .ith the correct a+o-nt d-e
and to beco+e d-e or .hich contains any false or -ntr-e state+ent5 and
). transferring title to a any stock of goods, .ares, +erchandise, provisions or +aterials sold
in b-lk .itho-t consideration of for a no+inal consideration only.
# 3 * 3 #