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I. INTRODUCTION

A. Definition of sale

Art. 1458. By the contract of sale one of the

contracting parties obligates himself to transfer theownership and to deliver a determinate thing, and theother to pay therefor a price certain in money or itsequivalent.

A contract of sale may be absolute or conditional.(144a!

"he definition in Art 14# brings about the creation oftwo sets of obligations$ for the seller, (1! to transferownership and (%! deliver possession of the sub&ectmatter' for the buyer$ to pay the price. bligations,as referred to in the Article, are obligations to give'thus it may be the sub&ect of actions for specificperformance. (Villanueva)

B. )haracteristics of a contract of sale

1. Nominate* it has a peculiar name and form asprescribed in the law

%. Consensual* it is founded upon and completedby mere consent of the contracting parties1 (SeeArticle 1475)

Art. 1475."he contract of sale is perfected at themoment there is a meeting of minds upon the thingwhich is the ob&ect of the contract and upon the price.

+rom that moment, the parties may reciprocallydemand performance, sub&ect to the provisions of thelaw governing the form of contracts. (14a!

-. Commutative* it is a contract in which each ofthe contracting parties gives a thing of value andreceives an equivalent

4. Bilateral * it is a contract in which both thecontracting parties are bound to fulfill the obligationsreciprocally towards each other (i.e. the vendorbecomes bound to deliver the thing sold and thevendee to pay the price for it!

1 QUIJADA V. CA: Sale being a consensual contract, is

perfected by mere consent, which is manifested the momentthere is a meeting of the minds as to the offer and acceptancethereof on 3 elements: price, subject matter and terms ofpayment. Ownership by the seller on the thing sold at the time ofperfection of the contract of sale is not an element for itsperfection. What the law requires is that the seller has the right totransfer ownership at the time the thing sold is delivered.

. Onerous* as opposed to gratuitous, becausethe thing is sold in consideration of a price andvice versa

. Princial* it can stand on its own' unli/e anaccessory contract

). 0inds of a contract of sale

1. A!solute* where the sale is not sub&ect toany condition whatsoever and where title passesto the buyer upon the delivery of the thing sold.

%. Con"itional* where the sale contemplates acontingency and in general, where the contract issub&ect to certain conditions (usually the fullpayment of the purchase price!. )onditions areattached to the contract' the title will only passonce the conditions have been fulfilled.

D. ale as distinguished from other contracts

1. sale vs. contract #or a iece o# $or%&

Art. 14'7. A contract for the delivery at acertain price of an article which the vendor in theordinary course of his business manufactures orprocures for the general mar/et, whether thesame is on hand at the time or not, is a contractof sale, but if the goods are to be manufacturedspecially for the customer and upon his specialorder, and not for the general mar/et, it is acontract for a piece of wor/. (n!

Art. 171(. By the contract for a piece of wor/the contractor binds himself to e2ecute a piece ofwor/ for the employer, in consideration of acertain price or compensation. "he contractormay either employ only his labor or s/ill, or alsofurnish the material. (1##a!

Art. 1714. 3f the contractor agrees to producethe wor/ from material furnished by him, heshall deliver the thing produced to the employerand transfer dominion over the thing. "hiscontract shall be governed by the followingarticles as well as by the pertinent provisions on

2CELESTINO V. COLLECTOR: factory which habituallyma!es sash, windows and doors, and sells the goods to thepublic is a manufacturer. "he fact that the windows anddoors are made by it only when customers place theirorders and according to such form or combination as suitthe fancy of the purchasers does not alter the nature of theestablishment#COMMISSIONER V. ENGINEERING: "he test of acontractor is that he renders service in the course of anindependent occupation, representing the will of hisemployer only as to the result of his wor!, and not as to themeans by which it is accomplished.

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Law on Sales

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warranty of title and against hidden defects and thepayment of price in a contract of sale. (n!

Art. 1715. "he contract shall e2ecute the wor/ insuch a manner that it has the qualities agreed uponand has no defects which destroy or lessen its valueor fitness for its ordinary or stipulated use. hould the

wor/ be not of such quality, the employer mayrequire that the contractor remove the defect ore2ecute another wor/. 3f the contract fails or refusesto comply with this obligation, the employer mayhave the defect removed or another wor/ e2ecuted,at the contractors cost. (n!

a! 3n a contract for wor/, labor or materials or for apiece of wor/, the thing transferred is one not ine2istence and which never would have e2isted but forthe order of the party desiring to acquire it' while in acontract of sale, the thing transferred is one whichwould have e2isted and been the sub&ect of sale tosome other person, even if the order had not been

given.(De Leon)

b! "his follows the 5assachusetts 6ule$ a contract forthe delivery at a certain price of an article which thevendor, in the ordinary course of his business,manufactures or procures for the general mar/et,whether the same is on hand at the time or not, is acontract of sale. But if the goods are to bemanufactured specially for the customer and upon hisspecial order and not for the general mar/et, it is acontract for a piece of wor/. (Baviera)

&. sale vs. a)enc* to !u* an" sell(

Art. 14''. 3n construing a contract containing

provisions characteristic of both the contract of saleand of the contract of agency to sell, the essentialclauses of the whole instrument shall be considered.(n!

(. sale vs. !arter or e+c,an)e

Art. 14'8. 3f the consideration of the contractconsists partly in money, and partly in another thing,the transaction shall be characteri7ed by the manifestintention of the parties. 3f such intention does notclearly appear, it shall be considered a barter if thevalue of the thing given as a part of the consideration

3QUIROGA V. PARSONS: $n the contract in the instant case,

what was essential, constituting its cause and subject matter, wasthat the plaintiff was to furnish the defendant with the beds whichthe latter might order, at the stipulated price, and that thedefendant was to pay this price in the manner agreed upon."hese are precisely the essential features of a contract ofpurchase and sale. "here was the obligation on the part of theplaintiff to supply the beds, and, on that of the defendant, to paytheir price. "hese features e%clude the legal conception of anagency or older to sell whereby the mandatory or agent receivesthe thing to sell it, and does not pay its price, but delivers to theprincipal the price he obtains from the sale of the thing to a thirdperson, and if he does not succeed in selling it, he returns it,

e2ceeds the amount of the money or itsequivalent' otherwise, it is a sale. (144a!

Art. 1'(8. By the contract of barter or e2changeone of the parties binds himself to give one thingin consideration of the others promise to giveanother thing. (1-#a!

Art. 1'(-. 3f one of the contracting parties,having received the thing promised him inbarter, should prove that it did not belong to theperson who gave it, he cannot be compelled todeliver that which he offered in e2change, but heshall be entitled to damages. (1-8a!

Art. 1'4. ne who loses by eviction the thingreceived in barter may recover that which hegave in e2change with a right to damages, or hemay only demand an indemnity for damages.9owever, he can only ma/e use of the right torecover the thing which he has delivered while

the same remains in the possession of the otherparty, and without pre&udice to the rightsacquired in good faith in the meantime by a thirdperson. (14a!

Art. 1'41. As to all matters not specificallyprovided for in this "itle, barter shall begoverned by the provisions of the preceding "itlerelating to sales. (141a!

4. sale vs. "acion en a)o

Art. 1&45. Dation in payment, whereby propertyis alienated to the creditor in satisfaction of a

debt in money, shall be governed by the law ofsales. (n!

Dacion /n Pa)o 0ale

:resupposes apree2isting debt ;e2tinguishes the debt

bligations arecreated from theperfection of thecontract

:rice is the value of thething given

+i2ing of the price ismore freely agreedupon

(Manresa)

5. sale vs. "onation

Art. 7&5. Donation is an act of liberalitywhereby a person disposes gratuitously of athing or right in favor of another, who accepts it.

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determine what rule applies (law on sales or law ondonations! (Villanueva)

'. summation tests to "etermine t,e nature o#

t,e contract

4 Tests 0ale 2 o!3ect

trans#er o#o$ners,i

Piece o#

or% 2o!3ectservice

mental6,*sical

la!or

1. >ature ofbusiness

rdinary ?2tra@ordinary

%. ?2istenceof thing

Does not Depends onorder

-. 5ar/et eneral pecific)lientele

4. tatute offrauds

)overed >ot covered

4 Tests !ut

t,e ultimatetest is

intention o#t,e arties

0ale A)enc* to 0ell

1. 6is/ of oss Borne byseller

Borne byprincipal, notagent

%. :ayment Buyer :rincipal, notagent

-. ?2clusiveDealership

6emittance test

4. 6eturn ofunsold goods

>one 5andatory

0ale Barter

1. 3ntention ofparties

%. Calue ofthing vs. Calueof money

5oney thing

"hing 5oney

& Tests 0ale Dacion /n Pa)o

1. Debt >one :re@e2isting

%. tage ofcontract

:erfection ?2tinguishment

II. PARTI/0 TO A CONTRACT O 0A9/

A. )apacity of parties

Art. 148-. All persons who are authori7ed in this)ode to obligate themselves, may enter into acontract of sale, saving the modifications contained inthe following articles.

Ehere necessaries are those sold and deliveredto a minor or other person without capacity toact, he must pay a reasonable price therefor.>ecessaries are those referred to in Article %8.(14=a!

Art. 14-. "he husband and the wife cannot

sell property to each other, e2cept$

(1! Ehen a separation of property was agreedupon in the marriage settlements' or(%! Ehen there has been a &udicial separation orproperty under Article 181. (14#a!

Art. 14-1. "he following persons cannot acquireby purchase, even at a public or &udicial auction,either in person or through the mediation ofanother$

(1! "he guardian, the property of the person orpersons who may be under his guardianship'

(%! Agents, the property whose administration orsale may have been entrusted to them, unlessthe consent of the principal has been given'

(-! ?2ecutors and administrators, the property ofthe estate under administration'

(4! :ublic officers and employees, the propertyof the tate or of any subdivision thereof, or ofany government@owned or controlledcorporation, or institution, the administration ofwhich has been intrusted to them' this provisionshall apply to &udges and government e2pertswho, in any manner whatsoever, ta/e part in the

sale'

(! Fustices, &udges, prosecuting attorneys,cler/s of superior and inferior courts, and otherofficers and employees connected with theadministration of &ustice, the property and rightsin litigation or levied upon an e2ecution beforethe court within whose &urisdiction or territorythey e2ercise their respective functions' thisprohibition includes the act of acquiring byassignment and shall apply to lawyers, withrespect to the property and rights which may bethe ob&ect of any litigation in which they mayta/e part by virtue of their profession.

(! Any others specially disqualified by law.(148a!

Art. 14-&. "he prohibitions in the two precedingarticles are applicable to sales in legalredemption, compromises and renunciations. (n!

1. a!solute incaacit*

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"hose who have the legal capacity to give consent tocontracts may validly enter into a contract of sale,unless specifically prohibited by law. 9owever, whennecessaries are sold and delivered to a minor or otherincapacitated person, the latter must pay areasonable price therefore. >ecessaries are thoseindispensable for sustenance, clothing, dwelling,

education, and medical treatment.

&. relative incaacit*

a) married persons (as regards contracts wit tird

parties)

Art. 7(. ?ither spouse may e2ercise any legitimateprofession, occupation, business or activity withoutthe consent of the other. "he latter may ob&ect onlyon valid, serious, and moral grounds.

3n case of disagreement, the court shall decidewhether or not$

(1! "he ob&ection is proper' and(%! Benefit has occurred to the family prior to theob&ection or thereafter. 3f the benefit accrued prior tothe ob&ection, the resulting obligation shall beenforced against the separate property of the spousewho has not obtained consent.

"he foregoing provisions shall not pre&udice the rightsof creditors who acted in good faith. (11=a!

Art. -'. "he administration and en&oyment of thecommunity property shall belong to both spouses&ointly. 3n case of disagreement, the husbandsdecision shall prevail, sub&ect to recourse to the court

by the wife for proper remedy, which must be availedof within five years from the date of the contractimplementing such decision.

3n the event that one spouse is incapacitated orotherwise unable to participate in the administrationof the common properties, the other spouse mayassume sole powers of administration. "hese powersdo not include disposition or encumbrance withoutauthority of the court or the written consent of theother spouse. 3n the absence of such authority orconsent, the disposition or encumbrance shall bevoid. 9owever, the transaction shall be construed asa continuing offer on the part of the consentingspouse and the third person, and may be perfected as

a binding contract upon the acceptance by the otherspouse or authori7ation by the court before the offeris withdrawn by either or both offerors. (%a!

Art. 1&4. "he administration and en&oyment of thecon&ugal partnership shall belong to both spouses&ointly. 3n case of disagreement, the husbandsdecision shall prevail, sub&ect to recourse to the courtby the wife for proper remedy, which must be availed

of within five years from the date of the contractimplementing such decision.

3n the event that one spouse is incapacitated orotherwise unable to participate in theadministration of the con&ugal properties, theother spouse may assume sole powers of

administration. "hese powers do not includedisposition or encumbrance without authority ofthe court or the written consent of the otherspouse. 3n the absence of such authority orconsent, the disposition or encumbrance shall bevoid. 9owever, the transaction shall beconstrued as a continuing offer on the part of theconsenting spouse and the third person, andmay be perfected as a binding contract upon theacceptance by the other spouse or authori7ationby the court before the offer is withdrawn byeither or both offerors. (1a!

!) married persons (as regards contracts!etween spouses)

Art. 87. ?very donation or grant of gratuitousadvantage, direct or indirect, between thespouses during the marriage shall be void,e2cept moderate gifts which the spouses maygive each other on the occasion of any familyre&oicing. "he prohibition shall also apply topersons living together as husband and wifewithout a valid marriage. (1--a!

Art. 14-. "he husband and the wife cannot sellproperty to each other, e2cept$

(1! Ehen a separation of property was agreed

upon in the marriage settlements' or(%! Ehen there has been a &udicial separation orproperty under Article 181. (14#a!

"here is a potential circumvention of the policyof the law if sales between spouses are allowed ifthere was a &udicial separation of property, sinceundue influence is not completely erased by theseparation of property. "his prohibition alsoapplies to common@law unions4.(Villanueva)

c) special dis"uali#ications(see Articles 1481 and148% in the previous page!

1! 3t is immaterial that no damage is

suffered by the owner. "he contract is

4 CALIMLIM-CANULLAS V. FORTUN: &if transfers or

conveyances between spouses were allowed duringmarriage, that would destroy the system of conjugalpartnership. $t was also designed to prevent the e%ercise ofundue influence by one spouse over the other, as well as toprotect the institution of marriage, which is the cornerstoneof family law. "he prohibitions apply to a couple living ashusband and wife without benefit of marriage, otherwise,'the condition of those who incurred guilt would turn out tobe better than those in legal union.'

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void as the law see/s to prevent said personsfrom being tempted to ta/e advantage oftheir position. "hey occupy a position oftrust and confidence in relation to theproperty under their administration or&urisdiction.

%! Agents can not buy the property of theirprincipal& without the consent of the latter.B60?6, however, do not come within theprohibition, as their authority consists merelyin loo/ing for a buyer or seller, and to bringthe latter and his principal together toconsummate the transaction. f course,after the agency is terminated, the agent canbuy the property of the principal, which wasformerly under his administration.

-! Although e2ecutors and administrators cannot buy the property under theiradministration, an e2ecutor may buy thehereditary rights of an heir to the estate

under his administration, because the buyer,in such case, can not get the share of theheir in the estate until after theadministration is ended.4! Eith regard to the lawyers, the prohibitiondoes not apply to other properties of theclient, nor to assignments of the propertyformerly in litigation when such assignmentwill ta/e effect only after final &udgment(compensation of lawyers payable on acontingent basis, unless unconscionable!.

! ?2amples of other persons especiallydisqualified by law are$ (1! aliens purchasing

private agricultural lands (Art G33, ecs - ;=, )onsti!' (%! an unpaid seller having a rightof lienH(Art 1-- par ! (Baviera)

III. 0UB:/CT ;ATT/R

A. 6equisites of a valid sub&ect matter

1. must !e e+istin)6 #uture6 or contin)ent

Art. 1(48. 3mpossible things or services cannot bethe ob&ect of contracts. (1%=%!

Art. 14'&. "he goods which form the sub&ect of acontract of sale may be either e2isting goods, ownedor possessed by the seller, or goods to be

5 RUBIAS V. BATILLER: the purchase by a lawyer of the

property in litigation from his client is categorically prohibited byrt. ()*(, paragraph +- of the ivil ode, and that consequently,plaintiff/s purchase of the property in litigation from his client wasvoid and could produce no legal effect

manufactured, raised, or acquired by the sellerafter the perfection of the contract of sale, in this"itle called Ifuture goods.I

"here may be a contract of sale of goods, whoseacquisition by the seller depends upon acontingency which may or may not happen. (n!

Art. 1(47. All things which are not outside thecommerce of men, including future things, maybe the ob&ect of a contract. All rights which arenot intransmissible may also be the ob&ect ofcontracts.

>o contract may be entered into upon futureinheritance e2cept in cases e2pressly authori7edby law.

All services which are not contrary to law,morals, good customs, public order or publicpolicy may li/ewise be the ob&ect of a contract.(1%=1a!

?mption rei speratai * 3f the parties ma/e thecontract depend upon the e2istence of a thing,so that if the thing does not come into e2istencethe contract is considered as not made ad thereis no obligation to pay the price, such contract isvalid under JArt. 141 (%!, ))' it is what the6oman law designates as emptio rei speratae(purchase of an e2pected thing!.?mptio spei * 3f the parties intend the contract

to e2ist at all events, so that the buyer will haveto pay the price even if the thing does notactually came into e2istence . . . it is called

emtio spei (purchase of hope or e2pectancyK."his contract is, however, void under Art. 141.($olentino)

Art. 14'1. "hings having a potential e2istencemay be the ob&ect of the contract of sale.

"he efficacy of the sale of a mere hope ore2pectancy is deemed sub&ect to the conditionthat the thing will come into e2istence.

"he sale of a vain hope or e2pectancy is void.(n!

Art. 1(47. All things which are not outside thecommerce of men, including future things, maybe the ob&ect of a contract. All rights which arenot intransmissible may also be the ob&ect ofcontracts.

>o contract may be entered into upon futureinheritance e2cept in cases e2pressly authori7edby law.

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All services which are not contrary to law, morals,good customs, public order or public policy mayli/ewise be the ob&ect of a contract. (1%=1a!

a! aw prohibits sale of future inheritance. "he rightsto succession are transmitted from the moment of thedeath of the decedent so one cannot sell or promise

to sell what he e2pects to inherit from a living person.But the law allows an heir to sell his interests in aninheritance

b! "he ob&ect of the contract of sale must be licit,meaning within the commerce of man, anddeterminate. Determinate has been e2panded tocover generic things, future things and things inpotential e2istence.c! "hings sub&ect to a resolutory condition may be theob&ect of the contract of sale.(Article 14!

&. must !e licit

Art. 1(47. All things which are not outside thecommerce of men, including future things, may bethe ob&ect of a contract. All rights which are notintransmissible may also be the ob&ect of contracts.

>o contract may be entered into upon futureinheritance e2cept in cases e2pressly authori7ed bylaw.

All services which are not contrary to law, morals,good customs, public order or public policy mayli/ewise be the ob&ect of a contract. (1%=1a!

Art. 145-. "he thing must be licit and the vendormust have a right to transfer the ownership thereof at

the time it is delivered. (n!

Art. 1575. "he sale of animals suffering fromcontagious diseases shall be void.

A contract of sale of animals shall also be void if theuse or service for which they are acquired has beenstated in the contract, and they are found to be unfittherefor. (1484a!

a! "he sale of narcotics or dangerous drugs e2ceptupon prescription, or any wild bird or mammal, orrare wild plants protected by law or of tubli or otherpoisonous plants or fruits, dynamited fish or other

aquatic animals, gunpowder, dynamite, e2plosives orblasting supplies, firearms or ammunitions areprohibited by law therefore are illicit.

6PICHEL V. ALONO: "he subject matter of the contract of sale

in question are the fruits of the coconut trees on the land duringthe years from September (, (*01 up to 2anuary (, (*0, whichsubject matter is a determinate thing. 4nder rt. ()0( of the 5ewivil ode, things having a potential e%istence may be the objectof the contract of sale#SIBAL VS. VALDE: pending crops which have potentiale%istence may bethe subject matter of sale.

b! :roperties belonging to the tate or itspolitical subdivision which are intended for publicuse or public service or for the development ofnatural wealth are outside the commerce ofman.

c! )hurches are also outside the commerce ofman.

d! But public property when no longer intendedfor public use or service form part of thepatrimonial property of the tate and thereforecan be leased or sold.

(. must !e "eterminate

Art. 14'. A thing is determinate when it isparticularly designated or physical segregatedfrom all other of the same class.

"he requisite that a thing be determinate is

satisfied if at the time the contract is enteredinto, the thing is capable of being madedeterminate without the necessity of a new orfurther agreement between the parties. (n!

a! Determinate v. determinable=$ a thing isdeterminate if it can be physically segregated,particularly designated' capable of being madedeterminate without need of another agreement.3t is determinable if it is capable of beingdetermined via another agreement.

4. articular %in"s

a) generic tings

Art. 1&4'. Ehen the obligation consists in thedelivery of an indeterminate or generic thing,whose quality and circumstances have not beenstated, the creditor cannot demand a thing ofsuperior quality. >either can the debtor deliver athing of inferior quality. "he purpose of theobligation and other circumstances shall beta/en into consideration. (11=a!

Art. 14-. "he following contracts are ine2istentand void from the beginning$

(! "hose where the intention of the parties

relative to the principal ob&ect of the contractcannot be ascertained'

7MELLIA V. CIT! OF ILOILO: "he requirement of the law

that a sale must have for its object a determinate thing, isfulfilled as long as, at the time the contract is entered into,the object of the sale is capable of being made determinatewithout the necessity of a new or further agreementbetween the parties

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eneric things could also become sub&ect matters of acontract of sale provided (1! they have beenphysically segregated# L particularly designated, and(%! they are capable of substitution

!) #uture goods

Art. 14'&. "he goods which form the sub&ect of acontract of sale may be either e2isting goods, ownedor possessed by the seller, or goods to bemanufactured, raised, or acquired by the seller afterthe perfection of the contract of sale, in this "itlecalled Ifuture goods.I

"here may be a contract of sale of goods, whoseacquisition by the seller depends upon a contingencywhich may or may not happen. (n!

c) sale o# undivided interest or sare

Art. 14'(. "he sole owner of a thing may sell anundivided interest therein. (n!

Art. 14'4. 3n the case of fungible goods, there maybe a sale of an undivided share of a specific mass,though the seller purports to sell and the buyer tobuy a definite number, weight or measure of thegoods in the mass, and though the number, weight ormeasure of the goods in the mass is undetermined.By such a sale the buyer becomes owner in commonof such a share of the mass as the number, weight ormeasure bought bears to the number, weight ormeasure of the mass. 3f the mass contains less thanthe number, weight or measure bought, the buyerbecomes the owner of the whole mass and the selleris bound to ma/e good the deficiency from goods

d) sale o# tings in litigation

Art. 1(81. "he following contracts are rescissible$(4! "hose which refer to things under litigation if theyhave been entered into by the defendant without the/nowledge and approval of the litigants or ofcompetent &udicial authority'

Art. 1(85. (%! >either shall rescission ta/e placewhen the things which are the ob&ect of the contractare legally in the possession of third persons who didnot act in bad faith.

8!U TE" V. GONALE: "his court has consistently held that

there is a perfected sale with regard to the 'thing' whenever thearticle of sale has been physically segregated from all otherarticles. $n the case at bar the underta!ing of the defendant wasto sell to the plaintiff 066 piculs of sugar of the first and secondclasses. "here was no delivery under the contract. 5ow, if calledupon to designate the article sold, it is clear that the defendantcould only say that it was 'sugar.' 7e could only use this genericname for the thing sold. We conclude that the contract in the caseat bar was merely an e%ecutory agreement# a promise of sale andnot a sale.

1! ales of things under litigation entered into bydefendants without the /nowledge ; approvalof the litigants or of the court are rescissible.

%! 9owever, rescission cannot ta/e place whenthe things are legally in the possession of - rd

persons who did not act in bad faith (;without /nowledge of defect!

-! 3n an action affecting the title or the right ofpossession of real property, the plaintiff mayrecord in the office of the 6egistrar of Deedsof the :rovince which the property is situated,a notice of the pendency of the action.

4! +rom the moment of the filing of such notice,-rd persons are charged with notice of thelitigation ; ta/e the property sub&ect to theoutcome of the litigation. (Baviera and DeLeon)

e% tings su!&ect to a resolutor' condition

Art. 14'5. "hings sub&ect to a resolutorycondition may be the ob&ect of the contract ofsale. (n!

5. ATION O T?/ 0/99/R TO

TRAN0/R ON/R0?IP

A. ale by a person not the owner

Art. 1'('. 3n the preceding articles in this "itlegoverning the sale of goods, unless the conte2tor sub&ect matter otherwise requires$

(1! IDocument of title to goodsI includes any billof lading, doc/ warrant, Iquedan,I or warehousereceipt or order for the delivery of goods, or any

other document used in the ordinary course ofbusiness in the sale or transfer of goods, asproof of the possession or control of the goods,

9SCHUBAC" V. CA: lthough the quantity to be ordered

was made determinate only on 8ecember 9*, (*1(,quantity is immaterial in the perfection of a sales contract.What is of importance is the meeting of the minds as to theobject and cause, which from the facts disclosed, show thatas of 8ecember 9), (*1(, these essential elements hadalready concurred.

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or authori7ing or purporting to authori7e thepossessor of the document to transfer or receive,either by endorsement or by delivery, goodsrepresented by such document.

IoodsI includes all chattels personal but not thingsin action or money of legal tender in the :hilippines.

"he term includes growing fruits or crops.

IrderI relating to documents of title means an orderby endorsement on the documents.

IMuality of goodsI includes their state or condition.

Ipecific goodsI means goods identified and agreedupon at the time a contract of sale is made.

An antecedent or pre@e2isting claim, whether formoney or not, constitutes IvalueI where goods ordocuments of title are ta/en either in satisfactionthereof or as security therefor.

(%! A person is insolvent within the meaning of this"itle who either has ceased to pay his debts in theordinary course of business or cannot pay his debtsas they become due, whether insolvency proceedingshave been commenced or not.

(-! oods are in a Ideliverable stateI within themeaning of this "itle when they are in such a statethat the buyer would, under the contract, be bound tota/e delivery of them. (n!

Art. 55-. "he possession of movable propertyacquired in good faith is equivalent to a title.>evertheless, one who has lost any movable or has

been unlawfully deprived thereof may recover it fromthe person in possession of the same.

3f the possessor of a movable lost or which the ownerhas been unlawfully deprived, has acquired it in goodfaith at a public sale, the owner cannot obtain itsreturn without reimbursing the price paid therefor.(44a!

Art. 155. ub&ect to the provisions of this "itle,where goods are sold by a person who is not theowner thereof, and who does not sell them underauthority or with the consent of the owner, the buyeracquires no better title to the goods than the sellerhad, unless the owner of the goods is by his conduct

precluded from denying the sellers authority to sell.

>othing in this "itle, however, shall affect$

(1! "he provisions of any factors act, recording laws,or any other provision of law enabling the apparentowner of goods to dispose of them as if he were thetrue owner thereof'

(%! "he validity of any contract of sale understatutory power of sale or under the order of acourt of competent &urisdiction'

(-! :urchases made in a merchants store, or infairs, or mar/ets, in accordance with the )ode of)ommerce and special laws. (n!

Art. 14(1. "hrough estoppel an admission orrepresentation is rendered conclusive upon theperson ma/ing it, and cannot be denied ordisproved as against the person relying thereon.

eneral ule*

>o one can transfer a better title than what hehas over the property sold. nly the owner ofthe goods or one authori7ed by the owner to sellcan transfer title thereto to the buyer1.

+,ceptions*

1. /stoel Art 155

?ven if the person who sold the thing was notthe owner, if he should subsequently acquireownership thereof, his conveyance is deemedvalid ; his title passes by operation of law to thebuyer11

3f the owner of the goods is precluded by hisconduct from denying the sellerNs authority tosell, buyer may acquire a better title, althoughthe seller had neither the title nor the authorityto sell the goods.

&. Recor"in) 9a$s@ Torrens 0*stem PD

15&-

10ANAR V. !APDIANGCO: $n the case on hand, the car

in question was never delivered to the vendee by thevendor as to complete or consummate the transfer ofownership by virtue of the contract. $t should be recalledthat while there was indeed a contract of sale betweenicente ;arella and "eodoro Santos, the former, asvendee, too! possession of the subject matter thereof bystealing the same while it was in the custody of the latter/sson. rt. (9 above contemplates that the act be coupledwith the intent of delivering the thing.11SI! CONG BIEN V. HSBC: Since plaintiff had voluntarily

clothed the person who negotiated the quedans with all theattributes of ownership and upon which the ban! relied, it isestopped to deny that the ban! had a valid title to thequedans#JALBUENA V. LIARRAGA:

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>one in the :hils. But >)) relies on the generalprinciple of law that one deals with an agent at hisown ris/.

(. Court or"ers

"he general principle that the vendor must be the

owner or the one authori7ed by the owner to sell thegoods in order to pass title over them to the buyerdoes not apply when the sale ta/es place by virtue ofa power granted by law or by a court. "hus a sale bythe sheriff, or by other e2ecution or sub&ect offoreclosure, is valid even if the owner did notauthori7e or consent to the sale (Baviera).

Calidity of sale under statutory power (legal sale *e.g. law authori7ing sale of patrimonial property to aspecific person at auction! or of court to sell (&udicialsale e.g. writ of e2ecution levying upon the debtorNsproperty at auction!

4. Purc,ase at a merc,ants store6 mar%et or

#air1&

:urpose of the e2ception$ (1! to protect innocentpurchasers who buy at merchant stores, mar/et orfair (%! "o facilitate commercial sales in movables (-!"o give stability to business transactions

B. ale by one having a voidable title

Art. 15'. Ehere the seller of goods has a voidabletitle thereto, but his title has not been avoided at thetime of the sale, the buyer acquires a good title to thegoods, provided he buys them in good faith, forvalue, and without notice of the sellers defect of title.(n!

Art. 55-. "he possession of movable propertyacquired in good faith is equivalent to a title.>evertheless, one who has lost any movable or hasbeen unlawfully deprived thereof may recover it fromthe person in possession of the same.

3f the possessor of a movable lost or which the ownerhas been unlawfully deprived, has acquired it in goodfaith at a public sale, the owner cannot obtain itsreturn without reimbursing the price paid therefor.(44a!

12 SUN BROTHERS V. VELASCO: "he policy of the law has

always been that, where the rights and interests of a vendorcome into clash with that of an innocent buyer for value, the lattermust be protected. "he ruleappears to be a wise and necessary rule not only to facilitatecommercial sales on movables but to give stabilityto businesstransactions.MASICLAT V. CENTENO: "he transaction between Aamon;asiclat and his un!nown seller too! place on ;iranda Streetand not in the public mar!et and this is . . . conclusive. 7ence,

rt. (6 , invo!ed by the petitioners, has no application.

1. eller can transfer a valid title to an innocentpurchaser for value, unless title was annulled.

%. o long as the goods are still in thepossession of the 1st buyer, they may still berecovered by the vendor in an action forannulment.

3. But once it has been transferred to an

innocent purchaser for value before thecontract is annulled, the latter acquired avalid title1-.

4. An antecedent or pre@e2isting claim, E> formoney constitutes OvalueK where goods ordocument of titloe are ta/en in satisfactionthereof or as security therefore

=. PRIC/14

Art 14'-. hould such person or persons beunable or unwilling to fi2 it, the contract shall beinefficacious, unless the parties subsequentlyagree upon the price.3f the third person or persons acted in bad faith orby mista/e, the courts may fi2 the price.

Ehere such third person or persons areprevented from fi2ing the price or terms by faultof the seller or the buyer, the party not in faultmay have such remedies against the party in faultas are allowed the seller or the buyer, as the casemay be. (144=a!

Art. 147. ross inadequacy of price does notaffect a contract of sale, e2cept as it may indicatea defect in the consent, or that the parties reallyintended a donation or some other act orcontract. (n!

13DE GARCIA V. CA: Aespondent ngelina 8. Buevara,

having been unlawfully deprived of the diamond ring inquestion, was entitled to recover it from petitioner onsueloS. de Barcia who was found in possession of the same."he only e%ception the law allows is when there isacquisition in good faith of the possessor at a public sale, inwhich case the owner cannot obtain its return withoutreimbursing the price. +ru@ v. Cahati# @nar v.Dapdiangco-#REBULLIDA V. BUSTAMANTE: $t appearing that the ringin question was lost or was stolen from the place where the

lawful owner deposited it, the case squarely falls under rt.)0) of the ivil ode, which provides that the Eone who haslost personal property or who has been unlawfully deprivedof it may recover it from whoever is possessing it.F "hemere fact that the possessor, even in good faith, adpurchased the ring from another person would not bar theright of the owner to recover it once the identity and theownerGs deprivation are established.14INCHAUSTI V. CROM#ELL: Crice is the sum stipulated

as the equivalent of the thing sold and also every incidentta!en into consideration for the fi%ing of the price put to thedebit of the buyer and agreed to by him

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Art. 1471. 3f the price is simulated, the sale is void,but the act may be shown to have been in reality adonation, or some other act or contract. (n!

Art. 147&. "he price of securities, grain, liquids, andother things shall also be considered certain, when theprice fi2ed is that which the thing sold would have on

a definite day, or in a particular e2change or mar/et,or when an amount is fi2ed above or below the priceon such day, or in such e2change or mar/et, providedsaid amount be certain. (144#!

Art. 147(. "he fi2ing of the price can never be left tothe discretion of one of the contracting parties.9owever, if the price fi2ed by one of the parties isaccepted by the other, the sale is perfected. (1448a!

Art. 1474. Ehere the price cannot be determined inaccordance with the preceding articles, or in any othermanner, the contract is inefficacious. 9owever, if thething or any part thereof has been delivered to and

appropriated by the buyer he must pay a reasonableprice therefor. Ehat is a reasonable price is a questionof fact dependent on the circumstances of eachparticular case. (n!

1. A contract of sale is null ; void and produces noeffect whatsoever if the same is without cause orconsideration or that the price which appears tohave been paid has in fact never been paid.

%. "he e2istence of a contract is permanent ;incurable.

-. "he statement of a false cause in contracts shallrender them void if it should not be proven thatwere founded upon another cause which is true ;lawful (14=1, 1--!

4. 3f the price is simulated, the sale is void but the actmay be shown to have been in reality a donation, orsome other act or contract (14=1!

A. 6equisites of a valid price

1. must !e real

Art. 1471. 3f the price is simulated, the sale is void,but the act may be shown to have been in reality adonation, or some other act or contract. (n!

Art. 1(8'. 6escission referred to in >os. 1 and % ofArticle 1-#1 shall not ta/e place with respect to

contracts approved by the courts. (1%8a!

Art. 1(5(. "he statement of a false cause incontracts shall render them void, if it should not beproved that they were founded upon another causewhich is true and lawful. (1%=!

Art. 1(54. Although the cause is not stated in thecontract, it is presumed that it e2ists and is lawful,unless the debtor proves the contrary. (1%==!

Art. 147. ross inadequacy of price does notaffect a contract of sale, e2cept as it mayindicate a defect in the consent, or that theparties really intended a donation or some otheract or contract. (n!

Art. 1(81. "he following contracts arerescissible$

(1! "hose which are entered into by guardianswhenever the wards whom they represent sufferlesion by more than one@fourth of the value ofthe things which are the ob&ect thereof'

(%! "hose agreed upon in representation ofabsentees, if the latter suffer the lesion stated inthe preceding number'

(-! "hose underta/en in fraud of creditors whenthe latter cannot in any other manner collect theclaims due them'

(4! "hose which refer to things under litigation ifthey have been entered into by the defendantwithout the /nowledge and approval of thelitigants or of competent &udicial authority'

(! All other contracts specially declared by lawto be sub&ect to rescission. (1%81a!

1. +alse :rice * there is a true price but it wasnot written down or stipulated in the contract."here was a consideration although it was notfound in the contract (6eal consideration notstated!

2. imulated :rice1* "here was no price paid.

"he parties merely said there was a price andOcreatedK their own price (no considerationbut stated!

&. must !e in mone* or its e

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the ownership and to deliver a determinate thing, andthe other to pay therefor a price certain in money orits equivalent.

A contract of sale may be absolute or conditional.(144a!

Art. 14'8. 3f the consideration of the contractconsists partly in money, and partly in another thing,the transaction shall be characteri7ed by the manifestintention of the parties. 3f such intention does notclearly appear, it shall be considered a barter if thevalue of the thing given as a part of the consideratione2ceeds the amount of the money or its equivalent'otherwise, it is a sale. (144a!

1. "he price should be in money or its

equivalent1 (e.g. letters of credit ; othernegotiable instruments!. therwise, thetransaction might be barter or an innominatecontract.

%.:roperty given to the creditor in satisfaction of adebt in money with the :63)? :A3D 3> ADCA>)? isa sale.

DA"3> 3> :AP5?>" A?

:resupposes a priore2isting credit ;e2tinguishes theobligation

bligations arecreated from theperfection of thecontract

-. +i2ing of the price is more or less arrived at withample

contractual freedom than the value of the thinggiven in

dation.

(. ;ust !e certain or ascertaina!le at time o#er#ection17

16REPUBLIC V. PHIL. RESOURCES: lthough rt. ()1 of the

new ivil ode provides that price . . . is always paid in terms ofmoney and the supposed payment being in !ind it is no paymentat all,' yet the same article provides that the purchaser may pay'a price certain in money or its equivalent' which means thatpayment of the price need not be money.17TO!OTA SHA# V. CA: rticle ()1 of the ivil ode defines

a contract of sale and rt. () specifically provides when it isdeemed perfected. "he document +in =%hibit EF, see case-,e%ecuted and signed by the petitioner/s sales representative, isnot a contract of sale. 5o obligation on the part of "oyota totransfer ownership of a determinate thing to Sosa and nocorrelative obligation on the part of the latter to pay therefor aprice certain appears therein. "he provision on the downpaymentof C(66,666 made no specific reference to a sale of a vehicle. $f itwas intended for a contract of sale, it could only refer to a sale oninstallment basis, as the SC e%ecuted the following dayconfirmed.

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4. ;anner o# Pa*ment must !e a)ree" uon18

5. ?o$ rice is "etermine"

Art. 14'-. 3n order that the price may be consideredcertain, it shall be sufficient that it be so with

reference to another thing certain, or that thedetermination thereof be left to the &udgment of aspecial person or persons.

hould such person or persons be unable or unwillingto fi2 it, the contract shall be inefficacious, unless theparties subsequently agree upon the price.

3f the third person or persons acted in bad faith or bymista/e, the courts may fi2 the price.

Ehere such third person or persons are preventedfrom fi2ing the price or terms by fault of the seller orthe buyer, the party not in fault may have suchremedies against the party in fault as are allowed the

seller or the buyer, as the case may be. (144=a!

a) !' a tird person1-

!) !' te courts

Art. 14'-. (-! 3f the third person or persons acted inbad faith or by mista/e, the courts may fi2 the price.

c) !' re#erence to de#inite da'. particular e,cange

mar/et0

18 VELASCO V. CA: $t is not difficult to glean from theaforequoted averments that the petitioners themselves admit thatthey and the respondent still had to meet and agree on how andwhen the downIpayment and the installment payments were tobe paid. Such being the situation, it cannot, therefore, be saidthat a definite and firm sales agreement between the parties hadbeen perfected over the lot in question. $ndeed, this ourt hasalready ruled before that a definite agreement on the manner ofpayment of the purchase price is an essential element in theformation of a binding and enforceable contract of sale. "he fact,therefore, that the petitioners delivered to the respondent the sumof C(6,666 as part of the downIpayment that they had to paycannot be considered as sufficient proof of the perfection of anypurchase and sale agreement between the parties under rt.()19 of the new ivil ode#NAVARRO V. SUGAR$S PRODUCERS: When the manner of

payment of purchase price is discussed after acceptance,, thensuch acceptance did not produce a binding and enforceablecontract of sale. "here was no complete meeting of the minds19 BARRETTO V. SANTA MARINA: $t is necessary to a

perfected sale that the parties agree upon the thing sold and thatthe price be fi%ed, it being sufficient for the latter purpose that theprice be left to the judgment of a specified person.20 Crice is certain at the point of perfection by reference to

another thing certain, such as to certain invoices then ine%istence and clearly identified by the agreement+MCCOLLOUGH V. AENLLE- or !nown factors or stipulatedformula +MITSUI V. MANILA-

Art. 147&. "he price of securities, grain, liquids,and other things shall also be considered certain,when the price fi2ed is that which the thing soldwould have on a definite day, or in a particulare2change or mar/et, or when an amount is fi2edabove or below the price on such day, or in such

e2change or mar/et, provided said amount becertain. (144#!

d) !' re#erence to anoter ting certain

e) never !' one part'

Art. 147(. "he fi2ing of the price can never beleft to the discretion of one of the contractingparties. 9owever, if the price fi2ed by one of theparties is accepted by the other, the sale isperfected. (1448a!

'. Ina"e

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1! Ehen the price of a sale with right to repurchase isunusually inadequate'(%! Ehen the vendor remains in possession as lesseeor otherwise'(-! Ehen upon or after the e2piration of the right torepurchase another instrument e2tending the period

of redemption or granting a new period is e2ecuted'(4! Ehen the purchaser retains for himself a part ofthe purchase price'(! Ehen the vendor binds himself to pay the ta2eson the thing sold'(! 3n any other case where it may be fairly inferredthat the real intention of the parties is that thetransaction shall secure the payment of a debt or theperformance of any other obligation.

3n any of the foregoing cases, any money, fruits, orother benefit to be received by the vendee as rent orotherwise shall be considered as interest which shallbe sub&ect to the usury laws. (n!

=I. OR;ATION O T?/ CONTRACT O 0A9/

:6?:A6A"6P "A?

1. o##er

Art. 1475. "he contract of sale is perfected at themoment there is a meeting of minds upon the thingwhich is the ob&ect of the contract and upon the price.

+rom that moment, the parties may reciprocallydemand performance, sub&ect to the provisions of the

law governing the form of contracts. (14a!

a) #orm o# o##er00

"he offer must be certain. BusinessadvertisementsLadvertisements for bidders are mereinvitations to ma/e an offer, unless otherwise stated.

Art. 1(1-. )onsent is manifested by the meeting ofthe offer and the acceptance upon the thing and thecause which are to constitute the contract. "he offermust be certain and the acceptance absolute. Aqualified acceptance constitutes a counter@offer.

Acceptance made by letter or telegram does not bind

the offerer e2cept from the time it came to his

22 VILLONCO V. BORMAHECO: $t is true that an acceptance

may contain a request for certain changes in the terms of theoffer and yet be a binding acceptance. /So long as it is clear thatthe meaning of the acceptance is positively and unequivocally toacceptIthe offer, whether such request is granted or not, acontract is formed./F "hus, it was held that the vendor/s change ina phrase of the offer to purchase, which change does notessentially change the terms of the offer, does not amount to arejection of the offer and the tender of a counterIoffer

/nowledge. "he contract, in such a case, ispresumed to have been entered into in the placewhere the offer was made. (1%%a!

Art. 1(&5.

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Art. 147-. A promise to buy and sell a determinatething for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell adeterminate thing for a price certain is binding uponthe promissor if the promise is supported by aconsideration distinct from the price. (141a!

Art. 1(&4. Ehen the offerer has allowed the offereea certain period to accept, the offer may bewithdrawn at any time before acceptance bycommunicating such withdrawal, e2cept when theoption is founded upon a consideration, as somethingpaid or promised. (n!

?lements of a valid option contract

1. )>?>"%.

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(%! A sale by auction is perfected when the auctioneerannounces its perfection by the fall of the hammer, orin other customary manner. o. %, and14'

(%! "he cession, repudiation or renunciation ofhereditary rights or of those of the con&ugalpartnership of gains'

(-! "he power to administer property, or anyother power which has for its ob&ect an actappearing or which should appear in a publicdocument, or should pre&udice a third person'

(4! "he cession of actions or rights proceedingfrom an act appearing in a public document.

&. /+cetions

a) Statute o# 2rauds

Art. 14(. "he following contracts areunenforceable, unless they are ratified$

(%! "hose that do not comply with the tatute of+rauds as set forth in this number. 3n thefollowing cases an agreement hereafter madeshall be unenforceable by action, unless thesame, or some note or memorandum, thereof,be in writing, and subscribed by the partycharged, or by his agent' evidence, therefore, ofthe agreement cannot be received without thewriting, or a secondary evidence of its contents$

(a! An agreement that by its terms is not to beperformed within a year from the ma/ingthereof'

(d! An agreement for the sale of goods, chattelsor things in action, at a price not less than fivehundred pesos, unless the buyer accept andreceive part of such goods and chattels, or the

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evidences, or some of them, of such things in actionor pay at the time some part of the purchase money'but when a sale is made by auction and entry is madeby the auctioneer in his sales boo/, at the time of thesale, of the amount and /ind of property sold, termsof sale, price, names of the purchasers and person onwhose account the sale is made, it is a sufficient

memorandum'

(e! An agreement of the leasing for a longer periodthan one year, or for the sale of real property or of aninterest therein'

Art. 145. )ontracts infringing the tatute of +rauds,referred to in >o. % of Article 14-, are ratified by thefailure to ob&ect to the presentation of oral evidenceto prove the same, or by the acceptance of benefitunder them.

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from the time when it was first generatedin its final from' and

ii. "hat document is capable of beingdisplayed to the person to whom it is tobe presented$ :rovided, "hat noprovision of this Act shall apply to varyany and all requirements of e2isting lawson formalities required in the e2ecutionof documents for their validity.

+or evidentiary purposes, an electronic documentshall be the functional equivalent of a writtendocument under e2isting laws.

"his Act does not modify any statutory any statutoryrule relating to admissibility of electronic datamassages or electronic documents, e2cept the rulesrelating to authentication and best evidence.

Sec. 8. Legal ecognition o# +lectronic Signatures.@An electronic signature on the electronic documentshall be equivalent to the signature of a person on a

written document if the signature is an electronicsignature and proved by showing that a prescribedprocedure, not alterable by the parties interested inthe electronic document, e2isted under which@

(a! A method is used to identify the partysought to be bound and to indicate saidpartys access to the electronic documentnecessary for his consent or approval throughthe electronic signature'

(b! aid method is reliable and appropriatefor the purpose for which the electronicdocument was generated or communicated,in the light of all circumstances, including anyrelevant agreement'

(c! 3t is necessary for the party sought to bebound, in or order to proceed further with thetransaction to have e2ecuted or provided theelectronic signature' and

(d! "he other party is authori7ed and enableto verify the electronic signature and to ma/ethe decision to proceed with the transactionauthenticated by the same.

Sec. 11.Autentication o# +lectronic Data Messagesand +lectronic Documents%

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proceedings who is adverse in interest to theparty using it' or

c.! By showing that the electronic data message orelectronic document was recorded or stored in theusual and ordinary course of business by a personwho is not a party to the proceedings and who did not

act under the control of the party using the record.

=II. TRAN0/R O ON/R0?IP

A. 5anner of transfer

Art. 1477. "he ownership of the thing sold shall betransferred to the vendee upon the actual orconstructive delivery thereof. (n!

Art. 14-'. "he ownership of the thing sold isacquired by the vendee from the moment it isdelivered to him in any of the ways specified in

Articles 148= to 11, or in any other mannersignifying an agreement that the possession istransferred from the vendor to the vendee. (n!

1. >eneral rule

wnership of thing shall transfer to the vendee uponthe A)""6 of E>?693:b. Delivery is the method of accomplishing this

right

&. /+cetions

a) sale on approval. trial. or satis#action

Art. 15&. Ehen goods are delivered to the buyerIon sale or returnI to give the buyer an option toreturn the goods instead of paying the price, theownership passes to the buyer of delivery, but hemay revest the ownership in the seller by returning ortendering the goods within the time fi2ed in thecontract, or, if no time has been fi2ed, within a

reasonable time. (n!

Ehen goods are delivered to the buyer on approval oron trial or on satisfaction, or other similar terms, theownership therein passes to the buyer$

30 "UENIE V. MAC"E ' CHANDLER: the ownership of

personal property can not be transferred to the prejudice of thirdpersons e%cept by delivery of the property itself# and that a salewithout delivery gives the wouldIbe purchaser no rights in saidproperty e%cept those of a creditor

(1! Ehen he signifies his approval or acceptanceto the seller or does any other act adopting thetransaction'

(%! 3f he does not signify his approval oracceptance to the seller, but retains the goods

without giving notice of re&ection, then if a timehas been fi2ed for the return of the goods, onthe e2piration of such time, and, if no time hasbeen fi2ed, on the e2piration of a reasonabletime. Ehat is a reasonable time is a question offact.

a%a) sale on return

i. wnership passes on delivery but buyermay revest such ownership to the sellerby returning or tendering goods withinthe time fi2ed or within a reasonabletime

ii. As opposed to a )onditional ale (where

title passes upon full payment orsatisfaction of condition passing of legaltitle!, in sale on return, title passes ondelivery

a%!) sale on approval

i. "itle passes * in case of goods sent tothe buyer on the hope that the latter willfind them satisfactory and order thattype of goods * when the goods areused or when they were retained beyonda reasonable time

a.c! e2ecutory sales

i. wnership of the thing shall not passuntil the price is fully paid

ii. eller may reserve the right ofpossession or ownership in the goodsuntil certain conditions have beenfulfilled

!) e,press reservation

Art. 1478. "he parties may stipulate thatownership in the thing shall not pass to thepurchaser until he has fully paid the price. (n!

c) implied reservation

Art. 15(. Ehen there is a contract of sale ofspecific goods, the seller may, by the terms ofthe contract, reserve the right of possession orownership in the goods until certain conditionshave been fulfilled. "he right of possession orownership may be thus reserved notwithstandingthe delivery of the goods to the buyer or to acarrier or other bailee for the purpose oftransmission to the buyer.

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(. in"s o# "eliver*

a) real deliver'

Art. 14-7. "he thing sold shall be understood asdelivered, when it is placed in the control and

possession of the vendee. (14%a!

ODeliveredK * when placed in the control andpossession of the vendee' conveyance of ownershipwithout pre&udice to the right of vendor to claimpayment of the price-1

b! constructive delivery

b.a! symbolic

Art. 14-8. Ehen the sale is made through a publicinstrument, the e2ecution thereof shall be equivalentto the delivery of the thing which is the ob&ect of thecontract, if from the deed the contrary does notappear or cannot clearly be inferred.

Eith regard to movable property, its delivery mayalso be made by the delivery of the /eys of the placeor depository where it is stored or /ept. (14-a!

i! delivery by public instrument-%

Ehen sale is made through a publicinstrument, the ?G?)"6

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3n traditio constitutum possessorium, the

vendor remains in possession of the propertysold, by virtue of a lease agreement with thevendee-4.

Cendee became as lessor, the legal possessor

while the vendor is in material possession ofthe property in the name and representation

of the vendee.

v! delivery to common carrier

Art. 15(. Ehen there is a contract of sale of specificgoods, the seller may, by the terms of the contract,reserve the right of possession or ownership in thegoods until certain conditions have been fulfilled. "heright of possession or ownership may be thusreserved notwithstanding the delivery of the goods tothe buyer or to a carrier or other bailee for thepurpose of transmission to the buyer.

Ehere goods are shipped, and by the bill of lading thegoods are deliverable to the seller or his agent, or tothe order of the seller or of his agent, the sellerthereby reserves the ownership in the goods. But, ife2cept for the form of the bill of lading, the ownershipwould have passed to the buyer on shipment of thegoods, the sellers property in the goods shall bedeemed to be only for the purpose of securingperformance by the buyer of his obligations under thecontract.

Ehere goods are shipped, and by the bill of lading thegoods are deliverable to order of the buyer or of hisagent, but possession of the bill of lading is retainedby the seller or his agent, the seller thereby reserves

a right to the possession of the goods as against thebuyer.

Ehere the seller of goods draws on the buyer for theprice and transmits the bill of e2change and bill oflading together to the buyer to secure acceptance orpayment of the bill of e2change, the buyer is boundto return the bill of lading if he does not honor the billof e2change, and if he wrongfully retains the bill of

34BAUTISTA V SIOSON: =ven if the vendor sells the property

again to another, the second purchaser cannot acquire ownershipas he bought the property from a mere tenant. $n a case whichfrequently occurs, where the vendor, on the same date on whichthe deed of sale is e%ecuted, by means of a constitutumpossessorium agreement converts himself into a tenant or lesseeof the property that he sold, and continues in possession thereofas such tenant, the purchaser who acquired the property throughdelivery or symbolic tradition, with all the consequent effects of adeed of conveyance, is deemed to be in possession thereof bythe e%press will of the contracting parties, and therefore, it mustbe recogni@ed that, through such constitutum possessoriumagreement, the purchaser, who by that covenant becomes thelessor, is in lawful possession of the leased property, and that thevendor, by the same covenant, converted himself into the lesseeand is in material possession of the leased property in the nameand representation of the purchaser, its lawful owner.

lading he acquires no added right thereby. 3f,however, the bill of lading provides that thegoods are deliverable to the buyer or to theorder of the buyer, or is indorsed in blan/, or tothe buyer by the consignee named therein, onewho purchases in good faith, for value, the bill oflading, or goods from the buyer will obtain the

ownership in the goods, although the bill ofe2change has not been honored, provided thatsuch purchaser has received delivery of the billof lading indorsed by the consignee namedtherein, or of the goods, without notice of thefacts ma/ing the transfer wrongful. (n!

Art. 15&(.Ehere, in pursuance of a contract ofsale, the seller is authori7ed or required to sendthe goods to the buyer, delivery of the goods toa carrier, whether named by the buyer or not,for the purpose of/N/RA9 RU9/ Delivery of goods tocarrier is considered delivery to thebuyer, and hence, title passed to thebuyer at the point of shipment

/EC/PTION eller may reserve title bythe form of the bill of lading with intentto remain the owner for all purposes and

not merely for the sole purpose ofsecuring payment, or unless contraryintent appears in the contract of sale

a. Terms6 F#.o.!.G@ Fc.i.#.G@ F#.a.s.G

i. f.o.b.@ Ofree on boardK means thatthe seller bears e2penses oftransportation up to the #%o%!% point.

ii. c.i.f. @ Ocost, insurance, freightKsignifies that the price quotedincludes the costs of the goods,insurance, and freight charges onthe goods up to the place ofdestination

iii. f.a.s.* Ofree alongsideK means thatthe seller bears the e2penses oftransportation until he delivers thegoods alongside a vessel at a namedpost.

"hese terms may be used only inconnection with fi2ing the price and willnot be construed as fi2ing the place ofdelivery to the buyer

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Best indication of the intention of parties asto the place of delivery is the manner andplace of payment agreed upon by the parties

o Ehere price is payable upon proof of

shipment, then the buyer agrees to

accept delivery at the point of shipmento Ehere the price is payable only upon

arrival of the goods at the point ofdestination, then that is the place ofdelivery to the buyer

vi! effect of form of bill of lading

wnership is retained$ "he seller may

consign the goods to himself or to his agentand thus prevent title from passing to thebuyer until the latter pays the price

5ere possession is retained$ "he seller may

consign the goods to the order of the buyeron the latterNs agent but by retaining the bill

of lading, he thereby prevents the buyer fromobtaining the goods from the carrier untilprice is paid

4. Dou!le 0ales

Art. 1544. 3f the same thing should have been soldto different vendees, the ownership shall betransferred to the person who may have first ta/enpossession thereof in good faith, if it should bemovable property.

hould it be immovable property, the ownership shallbelong to the person acquiring it who in good faith

first recorded it in the 6egistry of :roperty.

hould there be no inscription, the ownership shallpertain to the person who in good faith was first inthe possession' and, in the absence thereof, to theperson who presents the oldest title, provided there isgood faith. (14=-!

3f the same thing should have been sold by the ownerto different buyers, the question as to who of thelatter acquired ownership depends on the nature ofthe thing sold.

a) eneral ule 8 9rior tempore. prior &ure:5

35CARBONELL V CA: 2ose Concio sold his lot to arbonell on

9 2an (* and ) days later sold the same property to $nfante. formal deed of sale was e%ecuted in favor of $nfante. arbonell,upon seeing $nfante building a wall around the lot, registered anadverse claim on the property. "he deed of sale in favor of$nfante was later registered and the latter was thereafter inpossession of the lot. Hel()"he second sale was not valid. sthere in inscription, prior registration in good faith is preIconditionto a superior title. arbonell registered her adverse claim fourdays before the registration of the property by $nfante.

!) sale o# mova!les:;

Art. 1544 1.3f the same thing should havebeen sold to different vendees, the ownershipshall be transferred to the person who may havefirst ta/en possession thereof in good faith, if itshould be movable property.

c) sale o# immova!les

Art. 1544 &. hould it be immovableproperty, the ownership shall belong to theperson acquiring it who in good faith firstrecorded it in the 6egistry of :roperty.

"o be entitled to priority, the secondbuyer must not only show priorrecording of his deed but must haveacted in good faith, without /nowledgeof the e2istence of another alienation bythe vendor to another

:?6 3> D +A3"9$ one whois not aware that there e2ists in his titleor mode of acquisition any flaw whichinvalidates it

o good faith is always

presumed' burden of proof is onperson alleging bad faith

o good faith of second

buyer must continue until hiscontract ripens into ownership bytradition or recording

o as to "orrens title$ it is

enough that purchaser e2amines thelatest certificate of title issued in thename of his vendor and he need nottrace its origin to prior certificates oftitle

d) Sale !' virtue o# e,ecution or attacment

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&udgment debtor, and is preferred only over claimscontracted subsequent to its recording

-. ?G)?:"3> " "9? ?G)?:"3>$ Above rule doesnot apply to lands registered under Act 48 whichprovides that registration of instruments shall bethe Ooperative act to convey and affect the landK'hence, prior unrecorded sale cannot pre&udice

e2ecution sales i# no tirdpart' claim waspresented !e#ore te e,ecution sale too/ place.J"hird persons are not required to go beyond theregister and determine the condition of theproperty.Q

e) o deed,conveyance, mortgage, lease, or other voluntaryinstrument affecting land not registered under the"orrens system shall be valid, e2cept as between theparties thereto, unless such instrument shall havebeen recorded in the manner herein prescribed in the

office of the 6egister of Deeds for the province or citywhere the land lies.

(a! "he 6egister of Deeds for each province or cityshall /eep a :rimary ?ntry Boo/ and a 6egistrationBoo/. "he :rimary ?ntry Boo/ shall contain, amongother particulars, the entry number, the names of theparties, the nature of the document, the date, hourand minute it was presented and received. "herecording of the deed and other instruments relatingto unregistered lands shall be effected by any ofannotation on the space provided therefor in the6egistration Boo/, after the same shall have beenentered in the :rimary ?ntry Boo/.

(b! 3f, on the face of the instrument, it appears that itis sufficient in law, the 6egister of Deeds shallforthwith record the instrument in the mannerprovided herein. 3n case the 6egister of Deedsrefuses its administration to record, said official shalladvise the party in interest in writing of the ground orgrounds for his refusal, and the latter may appeal thematter to the )ommissioner of and 6egistration inaccordance with the provisions of ection 11= of thisDecree. 3t shall be understood that any recordingmade under this section shall be without pre&udice toa third party with a better right.

(c! After recording on the 6ecord Boo/, the 6egister

of Deeds shall endorse among other things, upon theoriginal of the recorded instruments, the file numberand the date as well as the hour and minute when thedocument was received for recording as shown in the:rimary ?ntry Boo/, returning to the registrant orperson in interest the duplicate of the instrument,with appropriate annotation, certifying that he hasrecorded the instrument after reserving one copythereof to be furnished the provincial or city assessoras required by e2isting law.

(d! "a2 sale, attachment and levy, notice of lispendens, adverse claim and other instruments inthe nature of involuntary dealings with respect tounregistered lands, if made in the form sufficientin law, shall li/ewise be admissible to recordunder this section.

(e! +or the services to be rendered by the6egister of Deeds under this section, he shallcollect the same amount of fees prescribed forsimilar services for the registration of deeds orinstruments concerning registered lands.

6egistration requirement is understood to be

without pre&udice to third party with a betterright-=

5ere registration of sale in oneNs favor doesnot give him any right over the land$

o if the vendor was not the owner of the

lando if the vendor has already parted with his

ownership before such sale in favor ofthird party who had previously ta/enpossession of the land, even though theprior sale was unrecorded

A person having a Obetter rightK would be one

who had previously acquired ownershipthereof through the modes of acquiringownership under the )ivil )ode$ tradition as aresult of sale, donation, succession andprescription-#

#) 2irst in possession in good #ait

3f neither vendee registered the sale in his favoror registration was done in bad faith, the vendeewho was first in possession in good faithacquired ownership of the land-8

37NAA#AN RURAL BAN" V. CA: $t is a wellI!nown rule

in this jurisdiction that persons dealing with registered landhave the legal right to rely on the face of the "orrensertificate of "itle and to dispense with the need to inquirefurther, e%cept when the party concerned has actual!nowledge of facts and circumstances that would impel areasonably cautious man to ma!e such inquiry.38 HANOPOL V PILAPIL: better right which is

unrecorded and which would prevail over a recorded sale isone which was gained independently of the sale, as title byprescription.39 SANCHE V RAMOS: 8elivery may be actual or

constructive. "hus, if the first sale is evidenced in a publicinstrument, there is delivery of the thing sold, if the contrarydoes not appear in the deed.QUIMSON V ROSETE: Cossession includes not onlymaterial but also symbolic possession which is acquiredthrough the e%ecution of a public instrument. s the landwas considered delivered by the e%ecution of the publicinstrument, the vendor remained in possession by meretolerance of the first vendee. 7ence, when the land wassold again to defendant, the vendor did not transmitanything to him, and the possession of the latter was amere detainer. "he first vendee acquired ownership by

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g) 3ldest title

1. 3f neither of the vendees registered their deeds ofsale nor acquired possession of the land sold, theone who can present the oldest title providedthere is good faith, has the better right.

%. Older titleK means any document showingacquisition of the land in good faith, li/e a deed ofsale or a receipt for the price'

-. :ublic document is not included as there isdelivery thru a public instrument, unless thecontrary can be clearly inferred therefrom

=III. RI0 O 9O00 OR D/T/RIORATION

A. eneral rule

Art. 1&'(. 3n an obligation to deliver a generic thing,the loss or destruction of anything of the same /ind

does not e2tinguish the obligation. (n!

An obligation to deliver a generic thing is note2tinguished by loss because genus never perishes.

>"? that the ne2t - situations contemplate loss ofspecific things

1. ,en loss occurs !e#ore er#ection

Ehen loss occurred before perfection, it is borne bythe seller. "his is because ownership is still withhim4.

&. ,en loss occurs at t,e time o# er#ection

Art. 14-(. 3f at the time the contract of sale isperfected, the thing which is the ob&ect of thecontract has been entirely lost, the contract shall bewithout any effect.

But if the thing should have been lost in part only, thevendee may choose between withdrawing from thecontract and demanding the remaining part, payingits price in proportion to the total sum agreed upon.(14a!

Art. 14-4. Ehere the parties purport a sale ofspecific goods, and the goods without the /nowledge

of the seller have perished in part or have wholly or ina material part so deteriorated in quality as to besubstantially changed in character, the buyer may athis option treat the sale$

delivery thru the e%ecution of a public instrument.40ROMAN V GRIMALT: "he sale was not perfected as the buyer

agreed to buy the vessel, provided that the title was in properform. s the vendor failed to perfect his title, the loss was borneby him

(1! As avoided' or

(%! As valid in all of the e2isting goods or in somuch thereof as have not deteriorated, and asbinding the buyer to pay the agreed price for thegoods in which the ownership will pass, if thesale was divisible. (n!

a! 3f at the time the sale is perfected, thething had been lost entirely, the contractshall be ineffective. "his is becausethere can be no contract without anob&ect.

b! "he loss must have occurred before thecontract was entered into, without the/nowledge of both parties.

c! ptions of buyer when there is partialloss and a loss which results insubstantial change in character

Eithdraw from the contract Buy the remainder at a proportionate

price

(. ,en loss occurs a#ter er#ection !ut!e#ore "eliver*

Art. 14-'. "he ownership of the thing sold isacquired by the vendee from the moment it isdelivered to him in any of the ways specified inArticles 148= to 11, or in any other mannersignifying an agreement that the possession istransferred from the vendor to the vendee. (n!

Art. 154.

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efficacy of an obligation to give, the following rulesshall be observed in case of the improvement, loss ordeterioration of the thing during the pendency of thecondition$

(1! 3f the thing is lost without the fault of the debtor,the obligation shall be e2tinguished'

(%! 3f the thing is lost through the fault of the debtor,he shall be obliged to pay damages' it is understoodthat the thing is lost when it perishes, or goes out ofcommerce, or disappears in such a way that itse2istence is un/nown or it cannot be recovered'

(-! Ehen the thing deteriorates without the fault ofthe debtor, the impairment is to be borne by thecreditor'

(4! 3f it deteriorates through the fault of the debtor,the creditor may choose between the rescission of theobligation and its fulfillment, with indemnity fordamages in either case'

(! 3f the thing is improved by its nature, or by time,the improvement shall inure to the benefit of thecreditor'

(! 3f it is improved at the e2pense of the debtor, heshall have no other right than that granted to theusufructuary. (11%%!

Art. 15(8. 3n case of loss, deterioration orimprovement of the thing before its delivery, therules in Article 11#8 shall be observed, the vendorbeing considered the debtor. (n!

Ehen loss occurs after perfection but before delivery,the seller bears the ris/ of loss. "he buyer does notbear the ris/ of loss until the goods are delivered,actually or constructively. "his is because the rule is acombination of the common@law rule that the ownerbears the ris/ of loss (res perit domino!, and the6oman law requiring delivery to transfer ownership.

B. Ehen ownership is transferred

?>?6A 6$

1. )ontrary stipulation41

41 SUN BROS. APPLIANCES V PERE: "he law allows an

agreement which stipulates that +(- where goods are sold anddelivered to the buyer, the title is to remain in the seller until fullpayment, >but? +9- the loss or destruction of the property while inthe possession of the buyer before payment, does not relieve himfrom the obligation to pay the price# in which case, the buyersuffers the loss. "he reasons for its validity are: Jirst, theabsolute and unconditional nature of the vendeeGs promise to pay

%. ecurity title4%

-. Delay through the fault of the buyer or theseller4-* at the ris/ of the party at fault

IE. DOCU;/NT0 O TIT9/

Document of title * a document used in theordinary course of business in the sale ortransfer of goods, as proof of the possession orcontrol of the goods, or authori7ing or purportingto authori7e the possessor of the document totransfer or receive, either by endorsement or bydelivery, goods represented by such document.(Art. 1-!44

"he functions of documents of title are (1!?vidence of the possession or control of thegoods described therein (%! 5edium oftransferring title and possession over the goodsdescribed therein without having to effect actual

delivery thereof (Villanueva)

Art. 1511. A document of title which is not insuch form that it can be negotiated by deliverymay be transferred by the holder by delivery to apurchaser or donee. A non@negotiable documentcannot be negotiated and the endorsement ofsuch a document gives the transferee noadditional right. (n!

for the goods. Second, the vendor has fully performed hiscontract and the vendee received what he bargained for."hird, the policy of providing an incentive to care properlyfor the goods, which is under the control and dominion ofthe vendee.42LA#!ER$S COOP. V TABORA: 8espite the loss of theboo!s in a fire, the ris! of loss would be borne by the buyeralthough he was not the owner yet. "his is because thestipulation Eownership shall only be transferred upon fullpaymentF was agreed merely to secure the performance bythe buyer of his obligation. ;oreover, in the contract, it wasagreed that loss or damage to the boo!s after delivery tothe buyer shall be borne by the buyer.While under the rule, an obligor should be e%empt fromliability when the loss occurs in a fortuitous event, thiscannot be used by the buyer as a defense to e%empthimself from paying. 7is obligation does not pertain to thedelivery of the subject matter, but to the payment of thepurchase price. "he ability to pay in money or legal tenderis never lost through a fortuitous event.43 NORTH NEGROS SUGAR CO. V CIA. GEN DE

TABACOS: $f there was delay in accepting delivery butthere was segregation of goods, such that place of deliverywas at the sellerGs warehouse, the buyer bears the ris! ofloss. "his is because the seller becomes merely adepositary.44PHIL. TRUST CO. V NATIONAL BAN": "he purpose of

documents of title is that the seller is allowed by fiction oflaw to deal with the goods described therein as though hehad physically delivered them to the buyer# and the buyermay ta!e the document of title as though he had actuallyta!en possession and control over the goods describedtherein

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1. Ne)otia!le "ocuments o# title

Art. 1=. A document of title in which it is statedthat the goods referred to therein will be delivered tothe bearer, or to the order of any person named insuch document is a negotiable document of title. (n!

>egotiable document of title * a document of title inwhich it is stated that the goods referred to thereinwill be delivered to the bearer, or to the order of anyperson named in such document.

a) ow negotiated

Art. 158. A negotiable document of title may benegotiated by delivery$

(1! Ehere by the terms of the document the carrier,warehouseman or other bailee issuing the sameunderta/es to deliver the goods to the bearer' or(%! Ehere by the terms of the document the carrier,warehouseman or other bailee issuing the sameunderta/es to deliver the goods to the order of aspecified person, and such person or a subsequentendorsee of the document has indorsed it in blan/ orto the bearer.

Ehere by the terms of a negotiable document of titlethe goods are deliverable to bearer or where anegotiable document of title has been indorsed inblan/ or to bearer, any holder may indorse the sameto himself or to any specified person, and in suchcase the document shall thereafter be negotiated onlyby the endorsement of such endorsee. (n!

Art. 15-. A negotiable document of title may benegotiated by the endorsement of the person towhose order the goods are by the terms of thedocument deliverable. uch endorsement may be inblan/, to bearer or to a specified person. 3f indorsedto a specified person, it may be again negotiated bythe endorsement of such person in blan/, to bearer orto another specified person. ubsequent negotiationsmay be made in li/e manner. (n!

Art. 151. 3f a document of title which contains anunderta/ing by a carrier, warehouseman or otherbailee to deliver the goods to bearer, to a specifiedperson or order of a specified person or whichcontains words of li/e import, has placed upon it thewords Inot negotiable,I Inon@negotiableI or the li/e,such document may nevertheless be negotiated bythe holder and is a negotiable document of title withinthe meaning of this "itle. But nothing in this "itlecontained shall be construed as limiting or definingthe effect upon the obligations of the carrier,warehouseman, or other bailee issuing a document oftitle or placing thereon the words Inot negotiable,IInon@negotiable,I or the li/e. (n!

T/R;0 O T?/

DOCU;/NT

?O

N/>OTIAT/D

oods are deliverable tobearer

?ndorsed in blan/ by theperson to whose order the

goods were deliverable

By delivery of thedocument toanother

oods are deliverable to theorder of a specified person

By indorsement ofsuch person

!) wo ma' negotiate it

Art. 151&. A negotiable document of title maybe negotiated$(1! By the owner therefor' or

(%! By any person to whom the possession orcustody of the document has been entrusted bythe owner, if, by the terms of the document thebailee issuing the document underta/es to

deliver the goods to the order of the person towhom the possession or custody of thedocument has been entrusted, or if at the timeof such entrusting the document is in such formthat it may be negotiated by delivery. (n!

c) rigts ac"uired !' negotiation

Art. 151(. A person to whom a negotiabledocument of title has been duly negotiatedacquires thereby$(1! uch title to the goods as the personnegotiating the document to him had or hadability to convey to a purchaser in good faith forvalue and also such title to the goods as the

person to whose order the goods were to bedelivered by the terms of the document had orhad ability to convey to a purchaser in good faithfor value' and

(%! "he direct obligation of the bailee issuing thedocument to hold possession of the goods forhim according to the terms of the document asfully as if such bailee had contracted directly withhim. (n!

A person to whom a document has beennegotiated acquires

1. rights of the vendor%. rights of the original consignee

"hus, a buyer of a document of title may acquirea better title than his vendor, since he acquiresthe rights of the original consignee.

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the fact that the negotiation was a breach of duty onthe part of the person ma/ing the negotiation, or bythe fact that the owner of the document was deprivedof the possession of the same by loss, theft, fraud,accident, mista/e, duress, or conversion, if theperson to whom the document was negotiated or aperson to whom the document was subsequently

negotiated paid value therefor in good faith withoutnotice of the breach of duty, or loss, theft, fraud,accident, mista/e, duress or conversion. (n!

"here is a conflict between Art. 11% and Art. 11#since under Art. 11%, only the owner of thedocument or one to whom possession of thedocument has been entrusted may negotiate it.9owever, under Art. 11#, the validity of thenegotiation of a negotiable document of title is notimpaired by the fact that the negotiation was abreach of duty on the part of the person ma/ing thenegotiation, or by the fact that the owner of thedocument was deprived of the possession of the sameby loss, theft, fraud, accident, mista/e, duress, or

conversion. (Baviera)

e) implied warranties

Art. 151'. A person who for value negotiates ortransfers a document of title by endorsement ordelivery, including one wh