Contract of Sales

San Beda College of Law
113
MEMORY AID IN CIVIL LAW
SALES
SALE 6. Onerous.
 A nominate contract whereby one of
the contracting parties obligates * Aleatory contract: one of the parties or
himself to transfer the ownership of both reciprocally bind themselves to give
and to deliver a determinate thing or to do something in consideration of
and the other to pay therefor a price what the other shall give or do upon the
certain in money or its equivalent. happening of an event which is uncertain,
or which is to occur at an indeterminate
NOTES: Delivery and payment in a time. (Ex: Sale of sweepstakes ticket)
contract of sale are so interrelated and
intertwined with each other that without Contract to sell
delivery of the goods there is no  exclusive right and privilege to
corresponding obligation to pay. The two purchase an object.
complement each other. It is clear that  a bilateral contract whereby the
the two elements cannot be dissociated, prospective seller, while expressly
for the contract of purchase and sale is reserving the ownership of the
essentially a bilateral contract, as it gives subject property despite delivery
rise to reciprocal obligations. (Pio thereof to the prospective buyer
Barretto Sons, Inc. vs. Compania binds himself to sell the said property
Maritima, 62 SCRA 167). exclusively to the prospective buyer
 Neither is the delivery of the thing upon fulfilment of the condition
bought nor the payment of the price agreed upon, that is, full payment of
necessary for the perfection of the the purchase price.
contract of sale. Being consensual, it
is perfected by mere consent. NOTE: Absent a proviso in the contract
that the title to the property is reserved
 Elements: in the vendor until full payment of the
a. Essential elements – those without purchase price or a stipulation giving the
which, there can be no valid sale: 1. vendor the right to unilaterally rescind
Consent or meeting of minds the contract the moment the vendee fails
2. A Determinable subject matter 3. to pay within the fixed period, the
Price certain in money or its transaction is an absolute contract of sale
equivalent and not a contract to sell. (Dignos vs. CA
b. Natural elements – inherent in the [1988])
contract, and which in the absence of * The contract of sale by itself is not a
any contrary provision, are deemed to mode of acquiring ownership. The contact
exist in the contract: transfers no real rights; it merely causes
1. Warranty against eviction certain obligations to arise.
2. Warranty against hidden defects c. Contract of Contract to
Accidental elements – may be present or Sale Sell
absent depending on the stipulation of
the parties (e.g.: conditions, interest, 1. Title passes to 1. Ownership is
penalty, time or place of payment, etc.) the buyer upon reserved in the
delivery of the seller and is not
thing sold to pass until full
 Characteristics: payment of the
1. Principal purchase price
2. Consensual;
3. Bilateral; 2. Non-payment of 2. Full payment is
4. Nominate; the price is a a positive
negative resolutory suspensive
5. Commutative; In some cases, condition, the
aleatory (emptio spei); condition and the
failure of which
is
CIVIL LAW COMMITTEE
 CHAIRPERSON: Romuald Padilla  ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad  EDP: Alnaiza Hassiman, Dorothy
Gayon  SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma.
Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and
Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
114
remedy of the not a breach – CIVIL LAW COMMITTEE

seller is to exact casual or serious 1. Constructive 1. Third
fulfilment or to but simply /actual knowledge person buying
rescind the prevents the on the part of the the property
contract obligation of the 2nd buyer of the despite
vendor to defect in the fulfilment of
convey title seller’s title the suspensive
from having renders him not a condition
binding force registrant in good cannot be
faith. Such second deemed a
3. Vendor loses 3. Title remains buyer cannot buyer in bad
and cannot recover in the vendor if defeat the first faith and
ownership of the the vendee does buyer’s title. Ratio: prospective
thing sold and not comply with Fulfilment of the buyer cannot
delivered until the the condition suspensive seek the relief
contract of sale is precedent of conditions affects of
resolved and set making payment the seller’s title to reconveyance
aside at the time the property and of property.
specified in the previous delivery of Exception: If
contract the property There was no
automatically previous sale
transfers of the
ownership/title to property.
the buyer.
Conditional Sale Contract to
Sell
As to reservation of title to the

OBJECTS OF SALE
subject property
Requisites:
In both cases the seller may reserve the 1. THINGS:
title to the subject property until a) determinate or determinable (Arts.
fulfillment of the suspensive condition 1458, 1460)
i.e. full payment of the price b) lawful (Arts 1347, 1409 [1,4] c)
should not be impossible (Art. 1348)
As to effect of fulfillment of e.g. must be within the commerce of
suspensive condition man
2. RIGHTS – must be transmissible
1. Upon fulfillment 1. Upon
Exceptions:
of the suspensive fulfillment of
condition, the the suspensive -future inheritance
contract of sale is condition, - service
thereby perfected, which is the
such that if there full payment Emptio rei Emptio spei
had been previous of the speratae
delivery of the purchase
subject property to price, 1. Sale of an 1. Sale of a
the buyer, ownership will expected thing mere hope or
ownership thereto not expectancy that
automatically the thing will
automatically
transfers to the come to
transfer to the
existence; Sale
buyer by buyer of the hope
operation of law although the itself
without any further property may
act by the seller. have been
previously 2. Sale is subject to 2. Sale produces
the condition that effect even if
delivered to the thing does
the thing will exist;
him. The not come into
if it does not, there
prospective is no contract existence, unless
seller still has it is a vain hope
to convey
title to the 3. The uncertainty 3. The
prospective is with regard to the uncertainty is
buyer by quantity and quality with regard to
entering into a of the thing and not the existence of
contract of the existence of the the thing
absolute sale. thing
As to effect of sale of the 4. Object is a future 4. Object is a

subject property to 3rd persons thing present thing
which is the
hope or
expectancy
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NOTE: In case of doubt the presumption

1. Buyer receives 1. Agent receives
is in favor of emptio rei speratae which is the goods as the goods as
more in keeping with the commutative owner goods of the
character of the contract principal who
retains his
Goods which may be Object of Sale a. ownership over
Existing goods – goods owned or possessed them
by the seller.
b. Future goods – goods to be 2. Buyer pays the 2. Agent delivers
price the price which
manufactured, raised or acquired by
in turn he got
the seller after the perfection of the from his buyer
contract.
NOTES: 3. Buyer, as a 3. Agent can
 A sale of future goods is valid only as general rule, return the goods
an executory contract to be fulfilled cannot return the in case he is
by the acquisition and delivery of object sold unable to sell the
same to a third
goods specified. person
 While there can be sale of future
property, there can generally be no 4. Seller warrants 4. Agent makes
donation of future property (Article the thing sold no warranty for
751 Civil Code) which he assumes
personal liability
 Future inheritance cannot be sold.  A as long as he acts
contract of sale or purchase of goods to within his
be delivered at a future time, if entered authority and in
into without the intention of having any the name of the
goods pass from one party to another, but seller
with an understanding that at the
appointed time, the purchaser is merely 5. Buyer can deal 5. Agent in
to receive or pay the difference between with the thing dealing with the
the contract and the market prices, is sold as he pleases thing received,
being the owner must act and is
illegal. Such contract falls under the bound according
definition of “futures” in which the to the
parties merely gamble on the rise or fall instructions of
in prices and is declared null and void by the principal
law. (Art. 2018, NCC) (Onapal Phil.
Commodities, Inc. vs. CA [1993])
 Instances when the Civil Code

recognizes sale of things not actually Contract for Sale
or already owned by the seller at Piece of Work
the time of the sale:
1. Sale of a thing having potential 1.Thething 1.Thething
transferred is one transferred is one
existence (Article 1461) not in existence which would have
2. Sale of future goods (Article 1462) 3. and which never existed and would
Contract for the delivery at a certain would have have been the
price of an article which the vendor in the existed but for subject of sale to
ordinary course of the business the order of the some other
manufactures or procures for the general party desiring to person, even if
market, whether the same is on hand at acquire it the order had not
the time or not (Article 1467) been given
2. The services 2. The primary

dominate the objective of the
CIVIL LAW COMMITTEE contract even contract is a sale
though there is a of the
Sale Agency to sell sale of goods manufactured
involved item; it is a sale
of goods even order of the
though the item customer
is manufactured
by labor furnished 3. Not within the 3. Within the
by the seller and Statute of Frauds Statute of Frauds
upon previous
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Rules to determine if the contract is

3. Consideration 3. Consideration
one of Sale or Piece of work: on the part of the of the debtor is
a. If ordered in the ordinary course of seller is the price; the
business – sale on the part of the extinguishment of
b. If manufactured specially for the buyer is the the debt; on the
customer and upon his special order, acquisition of part of the
and not for the market – piece of creditor, it is
work
SCHOOLS OF THOUGHT:
a) Massachusetts rule: If specifically CIVIL LAW COMMITTEE
done at the order of another, this the object the acquisition of
is a contract for a piece of work. the object offered
(Philippine application) in lieu of the
b) New York rule: If thing already original credit
exists-SALE; if not-WORK
c) English rule: If material is more 4. Greater 4. Less Freedom in
valuable-SALE; if skill is more freedom in determining
valuable-WORK determining the
the price price
BARTER
5. Buyer still has 5. The payment is
 contract whereby one of the parties to pay the price received by
binds himself to give one thing in the
consideration of the other's promise debtor before
to give another thing. the contract is
NOTE: The only point difference perfected.
between contract of sale and barter is in
the element which is present in sale but
not in barter, namely: price certain in
money or its equivalent PRICE
 The sum stipulated as the equivalent
NOTE: If the consideration is partly in of the thing sold and also every
money and partly in another thing, incident taken into consideration for
determine: the fixing of the price, put to the
a. The manifest intention of the debit of the vendee and agreed to by
parties him.
b. If the intent is not clear, apply the
following rules:
1. If the thing is more valuable  Requisites:
than money – barter 1. Certainty or ascertainable at the
2. If the money and the thing are time of perfection
of equal value – sale 2. Real, not fictitious
3. If the thing is less valuable 3. In some cases, must not be grossly
than money – sale inferior to the value of the thing
sold.
Sale Dation in Payment 4. Paid in money or its equivalent
1. No pre-existing 1. Pre-existing credit Certainty

credit
 It is not necessary that the certainty
2. Obligations are 2. Obligations are of the price be actual or determined
created extinguished at the time of the execution of the
contract. The price is certain in the
following cases:
1. If the parties have fixed or agreed 2. If it be certain with reference to
upon a definite amount; another thing certain
NOTE: The fixing of the price can 3. If the determination of the price is
never be left to the discretion of one left to the judgment of a
of the contracting parties. However specified person or persons even
if the price fixed by one of the before such determination
parties is accepted by the other, the 4. In the cases provided under Art.
sale is perfected. 1472 NCC
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Effect when the price is fixed by the 2. Involuntary or Forced sales

third person designated: GENERAL RULE: Mere inadequacy of the
GENERAL RULE: Price fixed by a third price is not a sufficient ground for the
person designated by the parties is cancellation of the sale if property is real.
binding upon them.
EXCEPTIONS:
1. When the third person acts in bad
faith or by mistake
2. When the third person disregards CIVIL LAW COMMITTEE
the specific instructions or the EXCEPTIONS:
procedure marked out by the a. Where the price is so low as to be
parties shocking to the moral conscience,
judicial sale of personal property
Effect when the price is not fixed by the will be set aside
third person designated: b. In the event of a resale, a better
1. If the third person refuses or price can be obtained
cannot fix the price, the contract
shall become ineffective, unless NOTE: The validity of the sale is not
the parties subsequently agree necessarily affected where the law gives
upon the price to the owner the right to redeem, upon
2. If the third person is prevented the theory that the lesser the price, the
from fixing the price by the fault easier it is for the owner to effect
of the seller or buyer, the party redemption.
not in fault may obtain redress
against the party in fault Effect where price is simulated 1. If it is
shown to have been in reality a donation
Effect of Gross Inadequacy of Price: or some other act or contract
1. Voluntary sales  The sale is void but the act or
GENERAL RULE: Mere inadequacy of the contract may be valid as a
price does not affect validity of the sale. donation
 A valuable consideration, however 2. If not
small or nominal, if given or  The contract is void and inexistent
stipulated in good faith is, in the
absence of fraud, sufficient. Effect of Failure to determine price:
(Rodriguez vs. CA, 207 SCRA 553) 1. Where contract executory
 The contract is inefficacious
 Future inheritance cannot be sold.
2. Where the thing has been delivered to
and appropriated by the buyer  The
EXCEPTIONS: buyer must pay a reasonable price
a. Where low price indicates vice of
therefore
consent, sale may be annulled; or
contract is presumed to be an
Reasonable price – generally the market
equitable mortgage
price at the time and place fixed by the
b. Where the price is so low as to be
contract or by law for the delivery of the
“shocking to conscience”, sale
goods
may be set aside.
PERFECTION OF SALE rescission and fulfilment, with damages in
GENERAL RULE: It is perfected at the either case)
moment there is meeting of the minds
upon a determinate thing (object), and a NOTE: Sale is a consensual contract;
certain price (consideration), even if Hence, delivery and payment are not
neither is delivered. A choice between essential for its perfection
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EXCEPTION: When the sale is subject to  Nonpayment only creates a right to

a suspensive condition by virtue of law or demand payment or to rescind
stipulation. the contract, or to criminal
* The terms and conditions of payment prosecution in the case of
are merely accidental, not essential
elements of the contract of sale except
where the partied themselves stipulate CIVIL LAW COMMITTEE
that in addition to the subject-matter and bouncing checks. (EDCA
the price, they are essential or material Publishing and Distributing Corp.
to the contract. vs. Santos, 184 SCRA 614)
Requirements for perfection EXCEPTIONS:

a. When parties are face to face  When 1. Contrary stipulation or Pactum
an offer is accepted without conditions or reservati dominii (contractual
qualifications reservation of title) – a stipulation,
NOTES: usually in sales by installment,
 A conditional acceptance is a whereby, despite delivery of the
counter-offer property sold, ownership remains with
 when negotiated thru phone it is as the seller until full payment of the
if it is negotiated face to face b. When price is made.
contract is thru correspondence or thru 2. Contract to sell
telegram  When the offeror receives or 3. Contract of insurance – a perfected
has knowledge of the acceptance by the contract of sale, even without
offeree delivery, vests in the vendee an
NOTE: If the buyer has already equitable title, an existing interest
accepted but the seller does not know over the goods sufficient to be the
yet of the acceptance, the seller may subject of insurance
still withdraw
c. When a sale is subject to a RULES GOVERNING AUCTION SALES 1.
suspensive condition Sales of separate lots by auction are
 From the moment the condition is separate contracts of sale.
fulfilled 2. Sale is perfected by the fall of the
hammer
3. Seller has the right to bid in the
TRANSFER OF OWNERSHIP
auction, provided:
GENERAL RULE: While a contract of sale
a) such right was reserved
is consensual, ownership of the thing sold
b) notice was given that the sale was
is acquired only upon its delivery, actual
subject to a right to bid on behalf of the
or constructive, to the buyer. (Daus vs.
seller
Sps. De Leon, 16 June 2003)
c) right is not prohibited by law or by
 This is true even if the purchase stipulation
has been made on credit. 4. Advertisements for bidders are simply
Payment of the purchase price is invitations to make proposals, and the
not essential to the transfer of advertiser is not bound to accept the
ownership, as long as the property highest or lowest bidder, unless the
sold has been delivered. contrary appears.
(Sampaguita Pictures, Inc vs.
Jalwindor Manufacturers, Inc. 93 EFFECT OF PROMISE TREATED UNDER
SCRA 420)
ART. 1479 Civil Code: turn promise to buy.
1. Accepted unilateral promise to sell or  does not bind the promissor even if
buy accepted and may be withdrawn
 Only one makes the promise, this anytime.
promise is accepted by the other. NOTE: Pending notice of its withdrawal,
Example: A promises to sell to B, B the accepted promise partakes the nature
accepts the promise, but does not in of an offer to sell which if
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accepted, results in a perfected contract resulted, applying Art. 1324 of the NCC.
of sale (Sanchez vs. Rigos 45 SCRA3 68). In In view of the ruling of the Supreme
other words, if the acceptance is made Court, the only importance of the
before withdrawal, it constitutes a consideration for an option is that
binding contract of sale although the
option is given without consideration.
 if the promise is supported by a CIVIL LAW COMMITTEE
consideration distinct and separate the option cannot be withdrawn by the
from the price (option money), its grantor after acceptance.
acceptance will give rise to a * In an option to buy, the party who has
perfected contract. an option may validly and effectively
exercise his right by merely notifying the
2. Bilateral promise to buy and sell  owner of the former’s decision to buy and
One party accepts the other’s promise to expressing his readiness to pay the
buy and the latter, the former’s promise stipulated price.
to sell a determinate thing for a price
certain  it is reciprocally demandable  Right of First Refusal
It requires no consideration distinct from  It is a right of first priority all things
the selling price and conditions being equal; there
NOTE: this is as good as a perfected should be identity of the terms and
sale. No title of dominion is conditions to be offered to the
transferred as yet, the parties being optionee and all other prospective
given only the right to demand buyers, with optionee to enjoy the
fulfillment or damages. right of first priority. A deed of sale
executed in favor of a third party who
Policitation cannot be deemed a purchaser in
 An unaccepted unilateral promise to good faith, and which is in violation of
buy or sell. Even if accepted by the the of the right of first refusal
other party, it does not bind the granted to the optionee is NOT
promissor and maybe withdrawn voidable under the Statute of Frauds,
anytime. This is a mere offer, and has such contract is valid BUT rescissible
not yet been converted into a under Article 1380 to 1381(3) of the
contract. New Civil Code (Guzman Bocaling &
Co. vs. Bonnavie; Riviera Filipina, Inc
Option contract vs. CA et.al. GR No. 117355, April 5,
2002).
 A contract granting a privilege in one
person, for which he has paid a  The basis of the right of first refusal
consideration, which gives him the must be the current offer to sell of
right to buy certain merchandise, at the seller or offer to purchase of any
anytime within the agreed period, at prospective buyer. Only after the
a fixed price. optionee fails to exercise its right of
first priority under the same terms
 An option without consideration is void and within the period contemplated
and the effect is the same as if there could the owner validly offer to sell
was no option the property to a third person, again,
* However, in Sanchez vs. Rigos (1972), under the same terms as offered to
even though the option was not supported the optionee (Paranaque Kings
by a consideration, the moment it was Enterprises, Inc. vs. CA GR No.
accepted, a perfected contract of sale 111538, February 26, 1997)
 The lessee’s right of first option to buy the subject property. It was a
the leased property in case of its sale component of the consideration of
is but a part of the bigger right to the lease. The option was by no
lease the said property from the means an independent right which
lessor. The option was given to the can be exercised by the lessee. If the
lessee because she was the lessee of lessee is barred by the contract from
assigning her right to lease the
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subject property to any other party, perfection: Seller bears the loss. b. The
the lessee is similarly barred to assign thing sold is lost at the time of
her first option to buy the leased perfection: Contract is void or
property to another. (Bangayan et.al inexistent.
vs. CA and Lim GR No.123581, August c. The thing sold is lost after perfection,
29, 1997) but before delivery:
Earnest money – or “ARRAS” is something GENERAL RULE: Who bears the risk
of value to show that the buyer was really of loss is governed by the stipulations
in earnest, and given to the seller to bind in the contract
the bargain. It is considered as:  In the absence of any stipulation:
a) part of the purchase price
b) proof of perfection of the
contract CIVIL LAW COMMITTEE
*It shall be deducted from the total price. First view:
Buyer bears the loss as an exception
Earnest money Option money to the rule of res perit domino.
EXCEPTIONS:
1. Title passes 1. Ownership is 1. when object sold consists of
to the buyer reserved to the
fungible goods for a price fixed
upon delivery of seller and is not
the thing sold to pass until full according to weight, number or
payment measure
2. seller is guilty of fraud, negligence,
2. In case of 2. In case of non- default or violation of contractual
non-payment, payment, there terms
an action for can be action for 3. object sold is generic
specific specific (Civil Code of the Philippines, Paras)
performance or performance NOTE: This view conforms with
for rescission
Manresa’s view. Buyer would have
can be filed by
the injured been the one to profit from the thing
party had it not been lost or destroyed.
3. Part of the 3. Money given as Contrary view:

purchase price a distinct Where the ownership is transferred by
consideration for delivery, as in our code, the
an option contract application of the axiom res perit
domino, imposes the risk of loss upon
4. When given, 4. The would-be the vendor; hence, if the thing is lost
the buyer is buyer is not by fortuitous event before delivery,
bound to pay required to buy
the balance
the vendor suffers the loss and cannot
recover the price from the vendee
5. Given when 5. Applies to a (Commentaries and Jurisprudence on
there is already sale not yet the Civil Code of the Philippines,
a sale perfected Tolentino)
d. The thing is lost after delivery: Buyer

bears the loss.
RULES ON RISK OF LOSS AND
DETERIORATION: Question: If one does not comply, the
a. The thing sold is lost before other need not pay?
Answer: True. But this only applies when contract or demanding the remaining
the seller is able to deliver but does not. part, paying its proportionate price
EFFECT OF LOSS AT THE TIME OF SALE: Sale by description

a. Thing entirely lost at the time of  A sale where a seller sells things as
perfection: Contract is void and inexistent being of a certain kind, buyer merely
b. Thing only partially lost: Vendee may relying on the seller’s representations
elect between withdrawing from the or descriptions.
121
 There is warranty that the thing sold therein

corresponds to the representations or 3. Sale of property not to be
descriptions. performed within a year from the
date thereof
Sale by sample
 A sale where a small quantity of a
commodity is exhibited by the seller
as a fair specimen of the bulk, which CIVIL LAW COMMITTEE
is not present and as to which there is 4. “Applicable statute” requires that
no opportunity to inspect or examine. the contract of sale be in a
NOTE: The mere exhibition of the certain form
sample does not necessarily make it a NOTE: Statute of Frauds is applicable only
sale by sample. This exhibition must to executory contracts and not to
have been the sole basis or contracts which are totally or partially
inducement of the sale. performed.
 There is warranty that the bulk of the
commodity will correspond in kind,
quality, and character with the
sample exhibited. CAPACITY TO BUY OR SELL
GENERAL RULE: All persons who can
NOTE: In a sale by sample and by bind themselves also have legal capacity
description, there is a two-fold warranty. to buy and sell.
EXCEPTIONS:
RIGHTS OF BUYER: 1. Absolute incapacity (minors,
1) Return the thing and recover the demented persons, imbeciles,
money paid, or deaf and dumb, prodigals, civil
2) Retain the thing and sue for the breach interdictees) - party cannot bind
of warranty. themselves in any case.
2. Relative incapacity – incapacity
PURCHASE BY MINORS: Contract is exists only with reference to
generally voidable but in case of certain persons or a certain class
necessaries, “where necessaries are sold of property
and delivered to a minor or other person
without capacity to act, he must pay a Relative Incapacity
reasonable price therefore. Necessaries A. Husband and wife (Art. 1490):
are those in Art. 290.” Generally, a sale by one spouse to
another is void.
FORMALITIES OF CONTRACT OF SALE  The husband and wife cannot sell
GENERAL RULE: Sale is a consensual property to each other except: 1. When a
contract and is perfected by mere separation of property
consent. was agreed upon by the spouses 2.
EXCEPTIONS: In order to be enforceable When there has been a judicial
by action, the following must be in separation of property under Article
writing: 134 and 135 of the Family Code
1. Sale of personal property at a price
not less than P500 B. Incapacity by reason of relation to
2. Sale of real property or an interest property (Art. 1491)
 The following persons cannot acquire 2. agents, with respect to the
property by purchase, even at a property whose administration or
public auction, either in person or sale may have been entrusted to
through the mediation of another: them, unless the consent of the
(GAEP-JO) principal has been given;
1. the guardian, with respect to the 3. executor or administrator, with
property of his ward; respect to the property of the
estate under administration;
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4. public officers and employees, with authorizing the administrator to

respect to the properties of the sell. The sale was indubitably
government, its political illegal, irregular and fictitious,
subdivisions, or GOCCs, that are and the court’s approval of the
entrusted to them; assailed compromise agreement
5. judges, justices, prosecuting violated
attorneys, clerks of courts, etc.,
with respect to the property in
CIVIL LAW COMMITTEE
custogia legis; and
Article 1491 and cannot work to
ratify a fictitious contract which
6. any other person specially is non-existent and void from the
disqualified by law. very beginning
Examples of persons especially b) With respect to nos. 4 to 6: the
disqualified by law: sale is NULL AND VOID.
a. Aliens who are disqualified to Reason: violation of public policy
purchase agricultural lands cannot be subject to ratification
b. An unpaid seller having a right
of lien or having stopped the
OBLIGATIONS OF THE VENDOR: (WPD TT)
goods in transitu, who is
1. Transfer ownership (cannot be waived)
prohibited from buying the goods
2. Deliver the thing sold (cannot be
either directly or indirectly in the
waived)
resale of the same, at public or
3. Warrant against eviction and against
private sale which he may make
hidden defects (can be waived or
c. The officer holding the
modified since warranty is not an
execution, or his deputy.
essential element of the contract of
NOTE: While those disqualified
sale)
under Arts. 1490 and 1491 may
4. Take care of the thing, pending
not become lessees (Art. 1646),
delivery, with proper diligence
still aliens may become lessees
(Article 1163)
even if they cannot buy lands.
5. Pay for the expenses of the deed of
sale, unless there is stipulation to the
 Effect of violation: contrary
a) With respect to nos. 1 to 3: the
sale is VOIDABLE. DELIVERY
Reason: only private rights, which
are subject to ratification are  Is a mode of acquiring ownership, as a
violated consequence of certain contracts such
NOTE: In the case of Lao vs. as sale, by virtue of which, actually or
Genato, 137 SCRA 77, the constructively, the object is placed in
Supreme Court found that the sale the control and possession of the
by the administrator of certain vendee.
properties of the estate in order
to settle the existing obligations  Delivery of the thing together with
of the estate was made to the the payment of the price, marks
administrator’s son for a grossly the consummation of the contract
low price. Furthermore, the said of sale(PNB vs. Ling, 69 Phil. 611)
sale was not submitted to the  In all forms of delivery, it is
probate court for approval as necessary that the act of delivery
mandated by the order be coupled with the intention of
delivering the thing. The act  Kinds:
without the intention is 1. Actual or real – placing the thing under
insufficient. (Norkis Distributor, the control and possession of the
Inc. vs. CA, 195 SCRA 694) buyer.
123
2. Legal or constructive – delivery is in the contract

represented by other signs or acts 3. Even if a period for payment has been
indicative thereof fixed in the contract, if the
a. delivery by the execution of a
public instrument.
NOTE: Gives rise only to a prima facie CIVIL LAW COMMITTEE
vendee has lost the right to make use
presumption of delivery which is
destroyed when actual delivery is not of the same.
effected because of a legal
impediment (Ten Forty Realty vs. Sale or return
Cruz, 10 Sept. 2003)  Property is sold, but the buyer, who
b. traditio symbolica - to effect becomes the owner of the property on
delivery, the parties make use of delivery, has the option to return the
a token or symbol to represent same to the seller instead of paying
the thing delivered the price.
c. traditio longa manu – seller
pointing out to the buyer the
things which are transferred, NOTES:
which at the time must be in  It is a kind of sale with a condition
sight. subsequent.
d. traditio brevi manu – buyer simply
continues in possession of the
 The buyer must comply with the
express or implied conditions
thing but under title of
attached to the return privilege;
ownership.
otherwise, the sale becomes absolute.
e. traditio constitutum possessorium –
seller continues in possession but  Buyer, being the owner, bears the risk
under a different title other than of loss
ownership.
3. Quasi-tradition – delivery of rights, Sale on trial, approval, or satisfaction 
credits or incorporeal property, made A contract in the nature of an option to
by: purchase if the goods prove to be
a. placing titles of ownership in the satisfactory, the approval of the buyer
hands of buyer being a condition precedent.
b. allowing buyer to make use of
rights  Rules:
4. Tradition by operation of law 1. title remains in the seller
2. risk of loss remains with seller except
Constructive delivery requires three when the buyer is at fault or has
things before ownership may be agreed to bear the loss
transferred: 3. buyer must give goods a trial, except
1. The seller must have control over the where it is evident that it cannot
thing perform the work
2. The buyer must be put under control 3. 4. period within which buyer must signify
There must be the intention to deliver the his acceptance runs only when all the
thing for purposes of ownership parts essential for the operation of
the object have been delivered.
When is the vendor not bound to deliver 5. if it is stipulated that a third person
the thing sold: must satisfy approval or satisfaction,
1. If the vendee has not paid him the the provision is valid, but the third
price person must be in good faith. If
2. If no period for payment has been fixed refusal to accept is not justified,
seller may still sue. trial, or satisfaction.
6. Generally, the sale and delivery to a
buyer who is an expert on the object Sale or return Sale on Trial
purchased is not a sale on approval,
124
EXCEPTIONS: (SMERVS)
1. Owner is estopped or precluded by
1. Subject to a 1. Subject to a
resolutory suspensive condition his conduct
condition 2. When sale is made by the
registered owner or apparent
2. Depends 2. Depends on the owner in accordance with
entirely on the character or quality
will of the buyer of the goods
recording or registration laws
3. Ownership 3. Ownership CIVIL LAW COMMITTEE

passes to the remains in the seller
buyer on until buyer signifies
3. Sales sanctioned by judicial or
delivery and his approval or statutory authority
subsequent acceptance to the 4. Purchases in a merchant's store,
return reverts seller fairs or markets
ownership in the
seller
5. When a person who is not the
owner sells and delivers a thing,
4. Risk of loss or 4. Risk of loss subsequently acquires title
injury rests upon remains with the thereto (Art. 1434)
the buyer seller 6. When the seller has a voidable title
which has not been avoided at the
time of the sale (Art. 1506)
* “Unlawful deprivation” is no longer
Instances where Seller is still the Owner limited to a criminal act. There is
despite Delivery: Unlawful Deprivation where there is no
1. Sale on trial, approval or satisfaction valid transmission of ownership.
2. Contrary intention appears by the term
of the contract; Place of delivery of goods
3. Implied reservation of ownership 1. Where there is an agreement, place of
(Article 1503) delivery is that agreed upon
a. If under the bill of lading, the 2. Where there is no agreement, place of
goods are deliverable to seller or delivery determined by usage of trade
agent or their order; 3. Where there is no agreement and no
b. If the bill of lading, although prevalent usage, place of delivery is
stating that the goods are to be the seller’s place
delivered to the buyer or his 4. In any other case, place of delivery is
agent, is kept by the seller or his the seller’s residence
agent; 5. In case of specific goods, which to the
a. When the buyer, although the knowledge of the parties at the time
goods are deliverable to order of the contract was made were in some
buyer, and although the bill of other place, that place is the place of
lading is given to him, does not delivery, in the absence of agreement
honor the bill of exchange sent or usage of trade to the contrary
along with it.
Time of delivery of goods
Transfer of ownership where goods sold 1. Stipulated time
delivered to carrier 2. In the absence thereof, within a
General Rule: Delivery to the carrier is reasonable time
deemed to be delivery to the buyer
Exception: Where the right of possession NEGOTIABLE DOCUMENT OF TITLE (NDT)
or ownership of specific goods sold is
reserved  A document of title in which it is
stated that the goods referred to
SALE OF GOODS BY A NON-OWNER therein will be delivered to the
GENERAL RULE: Buyer acquires no title bearer, or to the order of any person
even if in good faith and for value under named in such document.
the maxim Nemo dat quid non habet  May be negotiated by delivery or
(“You cannot give what you do not indorsement.
have”).
The document is negotiable if: 1. The
goods are deliverable to the bearer; or
125
2. If the goods are deliverable to the CIVIL LAW COMMITTEE

order of a certain person 1. Buyer may reject; or
2. Buyer may accept what has been
Persons who may negotiate NDT: delivered, at the contract rate
1. The owner; or
2. Any person to whom the possession or RULES WHEN QUANTITY IS MORE THAN
custody thereof has been entrusted by AGREED UPON:
the owner, if by the terms of the 1. Buyer may reject all; or
document the bailee issuing the 2. Buyer may accept the goods agreed
document undertakes to deliver the upon and reject the rest; or
goods to the order of the person to 3. Buyer may accept all and must pay
whom the possession or custody of for them at the contract rate
the document has been entrusted or NOTE: Acceptance, even if not express
if at the time of such entrusting the may be implied when the buyer exercises
document in such form that it may be acts of ownership over the excess goods.
negotiated by delivery.
RULES WHEN GOODS MIXED WITH GOODS
* If the holder of a negotiable document OF DIFFERENT DESCRIPTION:  Buyer
of title (deliverable to bearer) entrusts
may accept the goods which
the document to a friend for deposit, but
are in accordance with the contract
the friend betrays the trust and
and reject the rest
negotiates the document by delivering it
to another who is in good faith, the said
NOTE: If the subject matter is indivisible,
owner cannot impugn the validity of the
in case of delivery of larger quantity of
negotiation. As between two innocent
goods or of mixed goods, the buyer may
persons, he who made the loss possible
reject the whole of the goods
shall bear the loss, without prejudice to
his right to recover from the wrongdoer.
DELIVERY TO THE CARRIER
RIGHTS OF PERSON TO WHOM GENERAL RULE: Where the seller is
DOCUMENT HAS BEEN NEGOTIATED: 1) authorized or required to send the goods
The title of the person negotiating the to the buyer, delivery to the carrier is
document, over the goods covered by the delivery to the buyer.
document; EXCEPTIONS:
2) The title of the person (depositor or 1. When a contrary intention appears
owner) to whose order by the terms of 2. Implied reservation of ownership
the document the goods were to be under pars. 1,2,3 of Art. 1503
delivered, over such goods;
3) The direct obligation of the bailee to  Kinds of Delivery to the Carrier a.
hold possession of the goods for him, as if C.I.F. (cost, insurance, freight) –
the bailee had contracted to him directly signify that the price fixed covers not
NOTE; Mere transferee does not acquire only the costs of the goods, but the
directly the obligation of the bailee (in expense of the freight and the
Art. 1513). To acquire it, he must notify insurance to be paid by the seller
the bailee. b. F.O.B. (free on board) – goods are
to be delivered free of expense to
WHO CAN DEFEAT RIGHTS OF the buyer to the point where they
TRANSFEREE: are F.O.B. The point of F.O.B.,
1. Creditor of transferor either at the point of shipment or
2. Transferor the point of destination,
3. Subsequent purchaser determines when the ownership
passes.
RULES WHEN QUANTITY IS LESS THAN
AGREED UPON:
126
NOTE: the terms C.I.F. and F.O.B. CIVIL LAW COMMITTEE

merely make rules of presumption c. area be greater or lesser, unless there
C.O.D. (collect on delivery) – the is gross mistake.
carrier acts for the seller in NOTE: The Civil Code presumes that the
collecting the purchase price, purchaser had in mind a particular piece
which the buyer must pay to of land and that he ascertained its area
obtain possession of the goods. and quality before the contract of sale
was perfected. If he did not do so, or if
SELLER’S DUTY AFTER DELIVERY TO having done so he made no objection and
CARRIER consented to the transaction, he can
1. To enter on behalf of buyer into such blame no one but himself (Teran vs.
contract reasonable under the Villanueva Viuda de Riosa 56 Phil 677).
circumstances What is important is the delivery
2. To give notice to buyer regarding of all the land included in the boundaries.
necessity of insuring the goods
DOUBLE SALE (Art. 1544)
PAYMENT OF THE PURCHASE PRICE  Requisites: VOCS
GENERAL RULE: The seller is not bound 1. two or more transactions must
to deliver the thing sold unless the constitute valid sales;
purchase price has been paid.
2. they must pertain exactly to the same
EXCEPTION: The seller is bound to
object or subject matter; 3. they must be
deliver even if the price has not been
bought from the same or immediate
paid, if a period of payment has been
seller; AND
fixed.
4. two or more buyers who are at odds
over the rightful ownership of the
Sale of Real Property by Unit
subject matter must represent
 Entire area stated in the contract must conflicting interests.
be delivered
 When entire area could not be  Rules of preference:
delivered, vendee may: 1. Personal Property
1. Enforce the contract with the a. first possessor in good faith
corresponding decrease in price 2. 2. Real Property
Rescind the sale: a. first registrant in good faith b. first
a. If the lack in area is at least possessor in good faith c. person with
1/10 than that stated or oldest title in good faith
stipulated
b. If the deficiency in quality NOTES:
specified in the contract
 Purchaser in Good Faith – one who
exceeds 1/10 of the price
buys the property of another without
agreed upon notice that some other person has a
c. If the vendee would not have right to or interest in such property
bought the immovable had and pays a full and fair price for the
he known of its smaller area same at the time of such purchase or
of inferior quality before he has notice of the claim or
irrespective of the extent of interest of some other person in the
lack of area or quality property (Veloso vs. CA).
 Registration requires actual recording;
Sale for a Lump Sum (A Cuerpo Cierto)
if the property was never really
 Vendor is obligated to deliver all the registered as when the registrar
land included within the boundaries, forgot to do so although he has been
regardless of whether the real area should handed the document, there is no
be greater or smaller registration.
 Ordinarily, there can be no rescission
or reduction or increase whether the
 CHAIRPERSON: Romuald Padilla  ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad  EDP: Alnaiza Hassiman, Dorothy Gayon 
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John
Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
127
 Possession is either actual or CIVIL LAW COMMITTEE

constructive since the law made no either to refuse or proceed with the sale
distinction (Sanchez vs. Ramos 40 or to waive the condition.
Phil614)
 Possession in Art.1544 includes not  The mere fact that the second contract
only material but also symbolic of sale was perfected in good faith is
possession (Ten Forty Realty vs. Cruz, not sufficient if, before title passes,
10 Sept. 2003.) the second vendee acquires
 Title means title because of sale, and knowledge of the first transaction.
not any other title or mode of The good faith or innocence of the
acquiring property (Lichauco vs. posterior vendee needs to continue
Berenguer 39 Phil 642) until his contract ripens into
ownership by tradition or registration.
 Hernandez vs. Katigbak Rule: When the (Palanca vs. Dir. Of Lands, 46 PHIL
property sold on execution is 149)
registered under Torrens, registration
is the operative act that gives validity
to the transfer or creates a lien on
the land, and a purchaser on EFFECT IF BUYER HAS ALREADY SOLD
execution sale is not required to go THE GOODS:
behind the registry to determine the General Rule: The unpaid seller’s right to
conditions of the property. Exception: lien or stoppage in transitu remains even
Where the purchaser had knowledge, if buyer has sold the goods. Except:
prior to or at the time of the levy, of 1) When the seller has given consent
such previous lien or encumbrance, thereto, or
his knowledge is equivalent to 2) When the buyer is a purchaser in good
registration. faith for value of a negotiable document
of title.
CONDITION
 Effect of Non-fulfillment of Condition WARRANTY
1. If the obligation of either party is  a statement or representation made
subject to any condition and such by the seller of goods,
condition is not fulfilled, such party may contemporaneously and as a part of
either: the contract of sale, having reference
a. refuse to proceed with the to the character, quality, or title of
contract the goods, and by which he promises
b. proceed with the contract , or undertakes to insure that certain
waiving the performance of facts are or shall be as he then
the condition. represents.
2. If the condition is in the nature of a
promise that it should happen,
the non-performance of such  Kinds:
condition may be treated by the 1. EXPRESS – any affirmation of fact or
other party as breach of warranty. any promise by the seller relating to
the thing if the natural tendency of
such affirmation or promise is to
NOTE: A distinction must be made
induce the buyer to purchase the
between a condition imposed on the
same and if the buyer purchases the
perfection of a contract and a condition
thing relying thereon
imposed merely on the performance of an
obligation. The failure to comply with the
first condition would prevent the juridical NOTE: A mere expression of opinion, no
relation itself from coming into existence, matter how positively asserted, does not
while failure to comply with the second import a warranty unless the seller is an
merely gives the option expert and his opinion was relied upon by
the buyer.
 CHAIRPERSON: Romuald Padilla  ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad  EDP: Alnaiza Hassiman, Dorothy Gayon 
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John
Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
128
2. IMPLIED - that which the law derives by b. Income or fruits if he has been
implication or inference from the ordered to deliver them to the
nature of the transaction or the party who won the suit;
relative situation or circumstances of c. Costs of the suit;
the parties, irrespective of any d. Expenses of the contract; AND e.
intention of the seller to create it. Damages and interests if the sale was
a. Warranty against eviction in bad faith.
b. Warranty against hidden defects c.
Warranty as to Fitness and 2. Partial eviction:
Merchantability a. to enforce vendor’s liability for
NOTE: An implied warranty is a natural, eviction (VICED); OR
not an essential element of a contract, b. to demand rescission of
and is deemed incorporated in the contract.
contract of sale. It may however, be
waived or modified by express stipulation. Question: Why is rescission not a remedy
(De Leon) in case of total eviction?
There is no implied warranty as to the Answer: Rescission contemplates that the
condition, adaptation, fitness or one demanding it is able to return
suitability or the quality of an article sold whatever he has received under the
as a second-hand article. But such articles contract. Since the vendee can no longer
might be sold under such circumstances as restore the subject-matter of the sale to
to raise an implied warranty. the vendor, rescission cannot be carried
* A certification issued by a vendor that a out.
second-hand machine was in A-1 condition
is an express warranty binding on the * The suit for the breach can be directed
vendor. (Moles vs. IAC [1989]) only against the immediate seller, not
sellers of the seller unless such sellers had
A. Warranty against eviction promised to warrant in favor of later
 Warranty in which the seller buyers or unless the immediate seller has
guarantees that he has the right to expressly assigned to the buyer his own
sell the thing sold and to transfer right to sue his own seller.
ownership to the buyer who shall not NOTE: The disturbance referred to in the
be disturbed in his legal and peaceful case of eviction is a disturbance in law
possession thereof. which requires that a person go to the
courts of justice claiming the thing sold,
or part thereof and invoking reasons.
 Elements: Mere trespass in fact does not give rise to
1. vendee is deprived, in whole or in
the application of the doctrine of
part, of the thing purchased; 2. the
eviction.
deprivation is by virtue of a final
judgment;
3. the judgment is based on a prior  Vendor’s liability is waivable but any
right to the sale or an act stipulation exempting the vendor
imputable to the vendor; from the obligation to answer for
4. the vendor was summoned in the eviction shall be void if he acted in
suit for eviction at the instance of bad faith.
the vendee; AND  Kinds of Waiver:
5. no waiver of warranty by the a. Consciente – voluntarily made
vendee. by the vendee without
the knowledge and
 Vendor's liability shall consist of: assumption of the risks of
1. Total eviction: (VICED) eviction
a. Value of the thing at the time of NOTE: vendor shall pay only the
eviction; value which the thing sold had at
the time of eviction
b. Intencionada – made by the
CIVIL LAW COMMITTEE vendee with knowledge of
129
the risks of eviction and CIVIL LAW COMMITTEE

assumption of its a. Accion redhibitoria (rescission) b.
consequences Accion quanti minoris (reduction of
EFFECT: vendor not liable the price)
NOTE: Every waiver is presumed to be NOTES:
consciente. To consider it intencionada,  Hidden faults or defects pertain only to
it must be accompanied by some those that make the object unfit for
circumstance which reveals the vendor’s the use for which it was intended at
knowledge of the risks of eviction and his the time of the sale.
intention to submit to such  This warranty in Sales is applicable in
consequences.
Lease (Yap vs. Tiaoqui 13Phil433) Effect
of loss of thing on account of hidden
WHERE IMMOVABLE SOLD ENCUMBERED defects:
WITH NON-APPARENT BURDEN 1. Right 1. If vendor was aware of hidden defects,
of vendee he shall bear the loss and vendee shall
a) recission, or have the right to recover: (PED)
b) indemnity a. the price paid
b. expenses of the contract
2. When right cannot be exercised: a) if
c. damages
the burden or servitude is apparent 2. If vendor was not aware, he shall be
b) if the non-apparent burden or obliged to return: (PIE)
servitude is registered
a. price paid
c) if vendee had knowledge of the
b. interest thereon
encumbrance, whether it is registered or
c. expenses of the contract if paid by
not
the vendee
3. When action must be brought -
within ONE YEAR from the execution of
Effect if the cause of loss was not the
the deed of sale
hidden defect
B. Warranty against hidden defects   If the thing sold had any hidden fault
at the time of the sale, and should
Warranty in which the seller guarantees
thereafter be lost by a (1) fortuitous
that the thing sold is free from any
event OR (2) through the fault of the
hidden faults or defects or any charge or
vendee:
encumbrance not declared or known to
 the vendee may demand of the
the buyer.
vendor the price which he paid
less the value of the thing at the
 Elements: (SHENPW) time of its loss.
1. defect must be Serious or NOTE: the difference between the
important; price paid and the value of the thing
2. it must be Hidden; at the time of its loss represents the
3. it must Exist at the time of the damage suffered by the vendee and
sale; the amount which the vendor
4. vendee must give Notice of the enriched himself at the expense of
defect to the vendor within a the vendee
reasonable time;  If the vendor acted in bad faith: 
5. action for rescission or reduction of
vendor shall pay damages to the
price must be brought within the
vendee
proper Period (within 6 mos. from
delivery of the thing or 40 days
C. Implied Warranties of Quality
from date of delivery in case of
Warranty of Fitness
animals); and
6. no Waiver of the warranty.  Warranty in which the seller
guarantees that the thing sold is
reasonably fit for the known
 Remedies of the Vendee:
130
particular purpose for which it was CIVIL LAW COMMITTEE

acquired by the buyer
GENERAL RULE: There is no implied 1. When two or more animals have been
warranty as to the quality or fitness for sold at the same time and the redhibitory
any particular purpose of goods under a defect is in one, or some of them but not
contract of sale in all, the general rule is that the
redhibition will not affect the others
EXCEPTIONS:
without it. It is immaterial whether the
1. Where the buyer, expressly or by
price has been fixed for a lump sum for
implication manifests to the seller
all the animals or for a separate price for
the particular purpose for which
each.
the goods are required
2. No warranty against hidden defects of
2. Where the buyer relies upon the
animals sold at fairs or at public auctions,
seller’s skill or judgment
or of livestock sold as condemned. This is
based on the assumption that the defects
Warranty of Merchantability must have been clearly known to the
 Warranty in which the seller buyer.
guarantees, where the goods were 3. Sale of animals shall be void when: a)
bought by description, that they are animals sold are suffering from contagious
reasonably fit for the general purpose disease
for which they are sold b) if the use or service for which they are
 It requires identity between what is acquired has been stated in the contract,
described in the contract AND what is and they are found to be unfit therefor
tendered, in the sense that the latter 4. Limitation of the action: 40 days from
is of such quality to have some value the date of their delivery to the vendee
5. Vendor shall be liable if the animal
Instances where implied warranties are should die within 3 days after its purchase
inapplicable: if the disease which caused the death
1. As is and where is sale - vendor makes existed at the time of the contract
no warranty as to the quality or
workable condition of the goods, and OBLIGATIONS OF THE VENDEE:
that the vendee takes them in the A. Principal Obligations:
condition in which they are found and 1. To accept delivery
from the place where they are 2. To pay the price of the thing sold in
located. legal tender unless another mode has
2. Sale of second-hand articles 3. Sale by been agreed upon
virtue of authority in fact or law NOTE: A grace period granted the vendee
in case of failure to pay the amount/s due
Caveat Venditor (“Let the seller is a right not an obligation. The grace
beware”): the vendor is liable to the period must not be likened to an
vendee for any hidden faults or defects in obligation, the non payment of which,
the thing sold, even though he was not under Article 1169 of the Civil Code,
aware thereof. would still generally require judicial or
extra-judicial demand before “default”
Caveat Emptor (“Let the buyer can be said to arise (Bricktown Dev’t Corp
beware”): requires the purchaser to be vs. Amor Tierra Dev’t Corp. 57SCRA437)
aware of the supposed title of the vendor
and one who buys without checking the B. Other Obligations
vendor’s title takes all the risks and losses 1. To take care of the goods without the
consequent to such failure. obligation to return, where the goods
are delivered to the buyer and he
RULES IN CASE OF SALE OF ANIMALS rightfully refuses to accept
NOTES:
131
 The buyer in such a case is in the 1. Express acceptance

position of a bailee who has had 2. Implied acceptance
goods thrust upon him without his a. When buyer does an act which only
assent. He has the obligation to an owner can do,
take reasonable care of the goods b. Failure to return goods after
but nothing more can be reasonable lapse of time
demanded of him.
 The goods in the buyer’s possession NOTES:
under these circumstances are at  The retention of goods is strong
the seller’s risk evidence that the buyer has accepted
2. To be liable as a depositary if he ownership of the goods.
voluntarily constituted himself as such
3. To pay interest for the period between
 Delivery and acceptance are two
delivery of the thing and the payment separate and distinct acts of different
of the price in the following cases: parties
a. Should it have been stipulated b.  Delivery is an act of the vendor and
Should the thing sold and delivered one of the vendor’s obligations;
produce fruits or income vendee has nothing to do with the
c. Should he be in default, from the act of delivery by the vendor
time of judicial or extra-judicial  Acceptance is an obligation of the
demand for the payment of the vendee; acceptance cannot be
price regarded as a condition to
complete delivery;
 Pertinent Rules:  seller must comply with the
1. The vendor is not required to deliver obligation to deliver although
the thing sold until the price is paid there is no acceptance yet by the
nor the vendee to pay the price buyer
before the thing is delivered in the  Acceptance by the buyer may precede
absence of an agreement to the actual delivery; there may be actual
contrary (Article 1524). receipt without acceptance and there
2. If stipulated, the vendee is bound to may be acceptance without receipt
accept delivery and to pay the price  Unless otherwise agreed upon,
at the time and place designated; acceptance of the goods by the buyer
3. If there is no stipulation as to the time does not discharge the seller from
and place of payment and delivery, liability for damages or other legal
the vendee is bound to pay at the remedy like for breach of any promise
time and place of delivery or warranty
4. In the absence of stipulation as to the
place of delivery, it shall be made When vendee may suspend payment of
wherever the thing might be at the the price:
moment the contract was perfected 1. If he is disturbed in the possession or
(Article 1251) ownership of the thing bought
5. If only the time for delivery has been 2. If he has well-grounded fear that his
fixed in the contract, the vendee is possession or ownership would be
required to pay even before the thing disturbed by a vindicatory action or
is delivered to him; if only the time foreclosure of mortgage
for payment has been fixed, the
vendee is entitled to delivery even NOTES:
before the price is paid by him
(Article 1524)  If the thing sold is in the possession of
the vendee and the price is already in
the hands of the vendor, the sale is a
Ways of accepting goods:
consummated contract and Article
1590 is no longer
CIVIL LAW COMMITTEE
132
applicable. Article 1590, presupposes CIVIL LAW COMMITTEE
that the price or any part thereof has delivery or, having appeared,
not yet been paid and the contract is failure to tender the price at the
not yet consummated. same time, unless, a longer
 Under Article 1590, the vendee has no period for its payment has been
cause of action for rescission before stipulated
final judgement, otherwise the  action to rescind the sale (Art.
vendor might become a victim of 1593)
machinations between the vendee b. Sale of Goods –
and the third person  action for the price (Art. 1595)
 Disturbance must be in possession and  action for damages (Art. 1596)
ownership of the thing acquired  If the 2. Unpaid Seller
disturbance is caused by the existence of  Types:
non-apparent servitude, the remedy of a. The seller of the goods who has not
the buyer is rescission, not suspension of been paid or to whom the price
payment. has not been tendered
b. The seller of the goods, in case a
bill of exchange or other
When vendee cannot suspend payment negotiable instrument has been
of the price even if there is disturbance received as conditional payment,
in the possession or ownership of the AND the condition on which it was
thing sold: received has been broken by
1. if the vendor gives security for the reason of the dishonor of the
return of the price in a proper case 2. if it instrument, insolvency of the
has been stipulated that notwithstanding buyer or otherwise.
any such contingency, the vendee must
make payment (see Article 1548 par.3) 3.  Remedies:
if the vendor has caused the disturbance 1. Possessory lien over the goods 2.
or danger to cease Right of stoppage in transitu after he
4. if the disturbance is a mere act of has parted with the possession of the
trespass goods and the buyer becomes
5. if the vendee has fully paid the price insolvent
3. Special Right of resale
REMEDIES FOR BREACH OF CONTRACT 4. Special Right to rescind the sale 5.
A. Remedies of the seller Action for the price
1. Action for payment of the price (Art. 6. Action for damages
1595)
2. Action for damages for non acceptance 3. Article 1484 or Recto Law 
of the goods (Art. 1596) 3. Action for Remedies of vendor in sale of personal
rescission (Art. 1597) B. Remedies of the property by installments  Requisites:
buyer 1. Contract of sale
1. Action for specific performance (Art. 2. Personal property
1598) 3. Payable in installments
2. Action for rescission or damages for 4. In the case of the second and third
breach of warranty (Art 1599) remedies, that there has been a
failure to pay two or more
A. REMEDIES OF THE SELLER FOR installments
BREACH OF CONTRACT NOTE: Apply likewise to contracts
 IN CASE OF MOVABLES purporting to be leases of personal
1. Ordinary Remedies property with option to buy
a. Movables in General – Failure of the  Art. 1484 does not apply to a sale: 1.
vendee to appear to receive Payable on straight terms (partly in cash
and partly in one term)
133
2. Of Real property vendee’s failure to pay

 Remedies: NOTE: Does not bar full recovery for
1. Specific performance upon judgment secured may be executed
on all personal and real properties of  When the vendor assigns his credit to
the buyer which are not exempt from another person, the latter is likewise
execution (Palma v. CA.) bound by the same law. Accordingly,
2. Rescission of the sale if vendee when the assignee forecloses on the
shall have failed to pay two or mortgage, there can be no further
more installments recovery of the deficiency and the
NOTES: vendor-mortgagee is deemed to have
 Nature of the remedy – which renounced any right thereto (Borbon II vs.
requires mutual restitution – bars Servicewide Specialist, Inc. 258SCRA658)
further action on the purchase NOTE: However, Article 1484(3) does NOT
price (Nonato vs. IAC.) bar one to whom the vendor has assigned
 GENERAL RULE: cancellation of on with a recourse basis his credit against
sale requires mutual restitution, the vendee from recovering from the
that is all partial payments of vendor the assigned credit in full
price or rents must be returned although the vendor may have no right of
recovery against the vendee for the
EXCEPTIONS: a stipulation that
deficiency (Filipinas Invest. & Finance
the installments or rents paid
Corp. vs. Vitug, Jr. 28SCRA658)
shall not be returned to the
vendee or lessee shall be valid
NOTE: Remedies are alternative and
insofar as the same may not be
exclusive
unconscionable under the
circumstan-ces (Article 1486).
3. Foreclosure of the chattel  IN CASE OF IMMOVABLES
mortgage on the thing sold if 1. Ordinary Remedies
vendee shall have failed to pay a. In case of anticipatory breach –
two or more installments. In this  rescission (Article 1591)
case, there shall be no further b. Failure to pay the purchase price –
action against the purchaser to
recover unpaid balance of the  rescission upon judicial or
price. notarial demand for
rescission (Article 1592)
NOTES:  the vendee may pay, even
 Further recovery barred only from the after the expiration of the
time of actual sale at public auction period, as long as no demand
conducted pursuant to foreclosure for rescission has been made
(Macondray vs. Tan.) upon him
NOTE: Article 1592 does not apply
 Other chattels given as security cannot to:
be foreclosed if they are not subject of 1) Sale on instalment of real
the installment sale (Ridad vs. Filipinas estate
investment and Finance Corp. GR 39806, 2) Contract to sell
Jan. 28, 1983)
3) Conditional sale
 If the vendor assigns his right to a 4) Cases covered by RA 6552:
financing company, the latter may be Realty Installment buyer
regarded as a collecting agency of the protection act
vendor and cannot therefore recover any
deficiency from the vendee (Zayas vs. 2. R.A. No. 6552 or Maceda Law  An
Luneta Motors Co.) Act to Provide Protection to buyers of
Real Estate on Installment Payments
 Law governing sale or financing of real
CIVIL LAW COMMITTEE
estate on installment payments
134
 Requisites: apartments; and

1. transactions or contracts involving 2. buyer defaults in payment of
the sale OR financing of real succeeding installments.
estate on installment payments,
including residential condominium  Rights of the buyer:
A. If Buyer has paid at least two (2) B. If Buyer has paid less than 2
years of installments years of installments
1. The buyer must pay, without 1. The seller shall give the buyer a
additional interest, the unpaid grace period of NOT less than 60
installments due within the total days from the date the
grace period earned by him. installment became due. If the
There shall be one (1) month buyer fails to pay the installments
grace period for every one (1) due at the expiration of the grace
year of installment payments period, the seller may cancel the
made contract after 30 days from
NOTE: This right shall be receipt by the buyer of the notice
exercised by the buyer ONLY once of cancellation or the demand for
in every 5 years of the life of the rescission of contract by a
contract AND its extensions. notarial act.
2. Actual cancellation can only take 2. Same No. 3 and 4 paragraph A
place after 30 days from receipt above
by the buyer of the notice of
cancellation OR demand for NOTE: Down payments, deposits or
rescission by a notarial act AND options on the contract shall be included
upon full payment of the cash in the computation of the total number of
surrender value to the buyer installment payments made
(Olympia Housing vs. Panasiatic,
16 January 2003.) Remedies of Unpaid Seller
NOTE: The seller shall refund to I. Possessory Lien
the buyer the cash surrender  When may be exercised:
value of the payments on the
1. Where the goods have been sold
property equivalent to 50% of the
without any stipulation as to
total payments made. After five
credit
(5) years of installments, there
2. When the goods have been sold on
shall be an additional 5% every
credit, but the term of credit has
year but not to exceed 90% of the
expired
total payments made
3. Where the buyer becomes insolvent
3. The buyer shall have the right to
sell his rights or assign the same  When lost:
to another person OR to reinstate 1. Delivery of the goods to a carrier
the contract by updating the or bailee for the purpose of
account during the grace period transmission to the buyer without
and before actual cancellation of reserving ownership or right of
the contract possession
4. The buyer shall have the right to 2. When the buyer lawfully obtains
pay in advance any installment or possession of the goods
the full unpaid balance of the 3. By waiver of the lien
purchase price any time without NOTE: Possessory lien is lost after the
interest and to have such full seller loses possession but his lien as an
unpaid seller remains; hence he is still an
unpaid creditor with respect to the price
CIVIL LAW COMMITTEE of specific goods sold. His preference can
payment of the purchase price only be defeated by the governments
annotated in the certificate of claim to the specific tax on
title covering the property.
135
the goods themselves (Arts. 2247 and reason that he has obtained a money
2241). judgement or decree for the price of
NOTE: The bringing of an action to goods (Art. 1529, last paragraph).
recover the purchase price is not one of
the ways of losing the possessory lien. An II. Stoppage of goods in transitu 
unpaid seller does not lose his lien by Requisites:
1. Seller must be unpaid damages.
2. Buyer must be insolvent 4. The carrier must redeliver to, or
3. Goods must be in transit according to the directions of the
4. Seller must either: seller.
a. actually take possession of the
goods sold OR WAYS OF EXERCISING THE RIGHT TO
b. give notice of his claim to the STOP:
carrier or other person in 1. By taking actual possession of the
possession goods
5. Seller must surrender the 2. By giving notice of his claim to the
negotiable document of title, if carrier or bailee
any, issued by the carrier or
bailee III. Special Right of Resale
6. Seller must bear the expenses of  May be exercised only when the unpaid
delivery of the goods after the seller has either a right of lien OR has
exercise of the right stopped the goods in transitu AND
under ANY of the following
GOODS ARE CONSIDERED IN TRANSITU: conditions:
1. after delivery to a carrier or other 1. Where the goods are perishable in
bailee and before the buyer or his agent nature
takes delivery of them; and 2. Where the right to resell is
2. If the goods are rejected by the buyer, expressly reserved in case the
and the carrier or other bailee continues buyer should make a default
in possession of them 3. Where the buyer delays in the
payment of the price for an
GOODS ARE NO LONGER CONSIDERED IN unreasonable time
TRANSITU:
1. after delivery to the buyer or his agent IV. Rescission
in that behalf;
2. if the buyer or his agent obtains
 Types:
1. Special Right to Rescind Under Art.
possession of the goods at a point before
1534 – If the seller has either the
the destination originally fixed; 3. if the
right of lien OR a right to stop the
carrier or the bailee acknowledges to hold
goods in transitu AND under
the goods on behalf of the buyer; and
either of 2 situations:
4. if the carrier or bailee wrongfully
a. Where the right to rescind on
refuses to deliver the goods to the buyer
default has been expressly
reserved
 Effects of the exercise of the right 1. b. Where the buyer has been in
The goods are no longer in transit. 2. The default for an unreasonable
contract of carriage ends; instead the time
carrier now becomes a 2. Under Art. 1597 (“technical
rescission”)
V. Action for the price

CIVIL LAW COMMITTEE
mere bailee, and will be liable as  When may be exercised:
such. 1. Where the ownership has passed to
3. The carrier should not deliver anymore the buyer AND he wrongfully
to the buyer or the latter’s agent; neglects OR refuses to pay for the
otherwise he will clearly be liable for price
136
2. Where the price is payable on a

day certain AND he wrongfully resold for a reasonable price AND
neglects OR refuses to pay for the the buyer wrongfully refuses to
price, irrespective of the delivery accept them even before the
or transfer of title ownership of the goods has
3. Where the goods cannot readily be passed, if Article 1596 is
inapplicable. 1. if the buyer accepted the goods
knowing of the breach of warranty
VI. Action for damages without protest
 When may be exercised: 2. if he fails to notify the seller within a
1. In case of wrongful neglect or reasonable time of his election to rescind
refusal by the buyer to accept or 3. if he fails to return or offer to return
pay for the thing sold (Art. 1596 the goods in substantially as good
par.1) condition as they were in at the time of
2. In an executory contract, where the transfer of ownership to him
the ownership in the goods has
not passed, and the seller cannot EXTINGUISHMENT OF SALE
maintain an action to recover the 1. Same causes as in all other obligations
price (Art 1595) 2. Conventional Redemption
3. If the goods are not yet identified 3. Legal Redemption
at the time of the contract or
subsequently CONVENTIONAL REDEMPTION
B. REMEDIES OF THE BUYER FOR BREACH  The right which the vendor reserves to
OF CONTRACT himself, to reacquire the property
sold provided he returns to the
1. Action for specific performance (Art. vendee:
1598) b. the price of the sale;
 Where the seller has broken the c. expenses of the contract;
contract to deliver specific or d. any other legitimate payments
ascertained goods made therefore and;
 The judgment or decree may be e. the necessary and useful expenses
unconditional, or upon such terms and made on the thing sold; and
conditions as to damages, payment of f. fulfills other stipulations which may
the price and otherwise as the court have been agreed upon.
may deem just
A sale with conventional redemption is
2. Remedies of buyer for breach of
deemed to be an equitable mortgage in
warranty by seller (Art. 1599): 1.
any of the following cases: (IPERTOD)
Recoupment – accept the goods and set
up the seller’s breach to reduce or 1. Unusually Inadequate purchase price;
extinguish the price 2. Possession by the vendor remains, as
2. Accept the goods and maintain an lessee or otherwise;
action for damages for breach of 3. Extension of redemption period after
warranty expiration;
3. Refuse to accept the goods and 4. Retention by the vendee of part of the
maintain an action for damages for purchase price;
breach of warranty 5. Vendor binds himself to pay the Taxes
4. Rescind the contract by returning or of the thing sold;
offering the return of the goods, and 6. Any Other case where the parties really
recover the price of any part thereof intended that the transaction should
NOTE: These are alternative remedies. secure the payment of a debt or the
performance of any obligation; or
CIVIL LAW COMMITTEE 7. When there is Doubt as to whether
When rescission by buyer not allowed: contract is contract of sale with right
137
of repurchase or an equitable subject of the contract as security

mortgage. for a debt and contains nothing
impossible or contrary to law
Equitable Mortgage (Cachola vs. CA 208SCRA496)
 One which lacks the proper
formalities, form of words, or other * When can there be presumption as to
requisites prescribed by law for a Equitable Mortgage?
mortgage, but shows the intention of 1) Parties must have entered into a
the parties to make the property contract denominated as a contract of
sale  The right to be subrogated, upon the
2) The intention of the parties was to same terms and conditions stipulated
secure an existing debt by way of in the contract, in the place of one
mortgage who acquires a thing by (1) purchase
NOTE: In the cases referred to in Arts. or (2) dation in payment, or (3) by
1602 and 1604, the apparent vendor may any other transaction whereby
ask for the reformation of the ownership is transferred by onerous
instrument. title.
Remedy of Reformation: To correct the  May be effected against movables or
instrument so as to make it express the immovables.
true intent of the parties.
 It must be exercised within thirty (30)
Redemption Period days from the notice in writing by
a. if there is an agreement: period the vendor.\
agreed upon cannot exceed 10 years b. if
no agreement as to the period: 4 years
from the date of the contract c. the NOTE: Written notice under Article 1623
vendor who fails to repurchase the is mandatory for the right of redemption
property within the period agreed upon to commence (PSC vs. Sps. Valencia 19
may, however, exercise the right to August 2003.)
repurchase within 30 days FROM the time
final judgment was rendered in a civil BASIS OF LEGAL REDEMPTION: Not on
action on the basis that the contract was any proprietary right, which after the
a true sale with right of repurchase sale of the property on execution, leaves
 This refers to cases involving a the judgment debtor and vests in the
transaction where one of the purchaser, but on a bare statutory
parties contests or denies that privilege to be exercised only by the
the true agreement is one of sale persons named in the statute.
with right to repurchase; not to
cases where the transaction is  Tender of payment is not necessary;
conclusively a pacto de retro offer to redeem is enough.
sale. Example: Where a buyer a
PRE-EMPTION REDEMPTION
retro honestly believed that he
entered merely into an Equitable 1. arises before 1. arises after sale
Mortgage, not a pacto de retro sale
transaction, and because of such
2. no rescission 2. there can be
because no sale rescission of the
CIVIL LAW COMMITTEE as yet exists original sale
belief he had not redeemed
within the proper period. 3. the action is 3. action is
directed against directed against
NOTE: Tender of payment is the prospective the buyer
sufficient to compel redemption, but seller
is not in itself a payment that
relieves the vendor from his liability
to pay the redemption price (Paez
vs. Magno.)
Instances of legal redemption:
A. Under the Civil Code (legal
LEGAL REDEMPTION redemption):
138
1. Sale of a co-owner of his share to a exceeding one hectare (Article

stranger (Article 1620) 1621)
2. When a credit or other incorporeal 5. Sale of adjacent small urban lands
right in litigation is sold (Article bought merely for speculation
1634) (Article 1622)
3. Sale of an heir of his hereditary B. Under special laws:
rights to a stranger (Article 1088) 1. An equity of redemption in cases of
4. Sale of adjacent rural lands not judicial foreclosures
2. A right of redemption in cases of not valid as against the assignee
extra-judicial foreclosures  He can be made to pay again by
3. Redemption of homesteads the assignee
4. Redemption in tax sales
5. Redemption by an agricultural Warranties of the assignor of credit: a.
tenant of land sold by the He warrants the existence of the
landowner credit
b. He warrants the legality of the
credit at the perfection of the
ASSIGNMENT OF CREDIT contract
 a contract by which the owner of a NOTE: There is no warranty as to the
credit transfers to another his rights solvency of the debtor unless it is
and actions against a third person in expressly stipulated OR unless the
consideration of a price certain in insolvency was already existing and of
money or its equivalent public knowledge at the time of the
assignment
NOTE: Transfer of rights by assignment
takes place by the perfection of the NOTE: The seller of an inheritance
contract of assignment without the warrants only the fact of his heirship but
necessity of delivering the document not the objects which make up his
evidencing the credit. inheritance.
 this rule does not apply to
negotiable documents and Liabilities of the assignor of credit for
documents of title which are violation of his warranties
governed by special laws. 1. Assignor in good faith
 Liability is limited only to the price
 Effects of Assignment: received and to the expenses of
1. transfers the right to collect the full the contract, and any other
value of the credit, even if he paid a legitimate payments by reason of
price less than such value the assignment
2. transfers all the accessory rights 3. 2. Assignor in bad faith
debtor can set up against the assignee all  Liable not only for the payment of
the defenses he could have set up against the price and all the expenses but
the assignor also for damages
Effect of payment by the debtor after Legal Redemption in Sale or Credit or

assignment of credit other incorporeal right in litigation 
1. Before Notice of the assignment Requisites:
1. There must be a sale or assignment of
credit
CIVIL LAW COMMITTEE 2. There must be a pending litigation at
the time of the assignment
3. The debtor must pay the assignee:
 Payment to the original creditor is a. price paid by him
valid and debtor shall be released b. judicial cost incurred by him; AND
from his obligation c. interest on the price from the date
2. After Notice of payment
 Payment to the original creditor is
139
4. The right must be exercised by the legal redemption in sale of credit or

debtor within 30 days from the date incorporeal rights in litigation
the assignee demands (judicially or EXCEPTIONS:
extra-judicially) payment from him a. Sale to a co-heir or co-owner
b. Sale to a co-owner
SALE OF CREDIT OR OTHER c. Sale to the possessor of property in
INCORPOREAL RIGHTS IN LITIGATION question
GENERAL RULE: Debtor has the right of
Sale or Transfer in Bulk:  Any sale,
BARTER transfer, mortgage, or assignment:
1. Of a stock of goods, wares,
BARTER merchandise, provisions, or materials
 contract whereby one of the parties otherwise than in the ordinary course
binds himself to give one thing in of trade and the regular prosecution
consideration of the other's promise of business; or
to give another thing (Article 1638) 2. Of all or substantially all, of the
business or trade; or
NOTE: Barter is similar to a sale with the 3. Of all or substantially all, of the
only difference that instead of paying a fixtures and equipment used in the
price in money, another thing is given in business of the vendor, mortgagor,
lieu of the purchase price transferor or assignor (section 2)
PERFECTION and CONSUMMATION  When sale or transfer in bulk not

covered by Bulk Sales Law:
Perfected from the moment there is a
1. If the sale or transfer is in the ordinary
meeting of minds upon the things
course of trade and the regular
promised by each party in consideration
prosecution of business of the vendor;
of the other
2. If it is made by one who produces and
delivers a written waiver of the
 Consummated from the time of mutual provisions of the Bulk Sales Act from
delivery by the contracting parties of his creditors
the things promised 3. If it is made by an executor,
administrator, receiver, assignee in
NOTES: insolvency, or public officer, acting
 Where the giver of the thing bartered under judicial process (Section 8); and
is not the lawful owner thereof, the 4. If it refers to properties exempt from
aggrieved party cannot be compelled attachment or execution (Rules of
to deliver the thing which he has Court, Rule 39, Section 12)
promised and is also entitled to
damages. Protection Accorded to Creditors by
 Where a party is evicted of the thing Bulk Sales Law:
exchanged, the injured party is given 1. It requires the vendor, mortgagor,
the option, either to recover the transferor or assignor to deliver to the
property he has given in exchange vendee, mortgagee, or to his or its
with damages or only claim an agent or representative a sworn
indemnity for damages. written statement of names and
addresses of all creditors to whom
said vendor, etc. may have been
indebted together with the amount
due or to be due (Section 3)
CIVIL LAW COMMITTEE 2. It requires the vendor, mortgagor,
 As to matters not provided for by the transferor or assignor, at least 10 days
provisions on barter, the provisions on before the sale, transfer, mortgage,
sales will apply suppletorily assignment to make a full detailed
inventory showing the quantity and
BULK SALES LAW (Act No. 3952) When the cost of price of
140
goods, and to notify every creditor of inquiry about it, he will be protected in
the price terms and conditions of the its purchase
sale, etc. (Section 5)  The remedy of the creditor is not
against the goods but to
Effects of False Statements in the prosecute the seller criminally
Schedule of Creditors: 2. With knowledge or imputed
1. Without knowledge of buyer  If the knowledge of buyer
statement is fair upon its face and the  The vendee accepts it at his peril
buyer has no knowledge of its  The sale is valid only as between
incorrectness and nothing to put him on the vendor and the vendee but
void against the creditors of the property
3. With names of certain creditors Remedies Available to creditors:  The

without notice are omitted from the proper remedy is one against the goods to
list subject them to the payment of the debt,
 The sale is void as to such such as execution, attachment,
creditors, whether the omission garnishment, or by a proceeding in equity
was fraudulent or not,  An ordinary action against the
4. With respect to an innocent purchaser to obtain money judgement
purchaser for a value from the will not lie, unless the purchaser has
original purchaser sold or otherwise disposed of, or dealt
 An innocent purchaser for value with the property, so as to become
from the original purchaser is personally liable to creditors for value
protected of it.
 However if the circumstances are Acts Punished by Bulk Sales Law: 1.
such as to bind the subsequent Knowingly or wilfully making or delivering
purchaser with constructive a statement required by the Act which
notice that the sale to the vendor does not include the names of all the
(original purchaser) was creditors of the vendor, etc. with the
fraudulent, the property will be correct amount due or to become due or
liable in his hands to creditors of which contains any false or untrue
the original vendor statement; and
Effect of violation of law on Transfer: 2. Transferring title to any stock of goods,
1. As between the parties wares, merchandise, provisions or
 The Bulk Sales Law does not in any materials sold in bulk without
way affect the validity of the consideration or for nominal
transfer as between the consideration (Section 7)
intermediate parties thereto
 A sale not in compliance with the RETAIL TRADE LIBERALIZATION ACT
Bulk Sales Law is valid against all (RA 8762)
persons other than the creditors.
Retail Trade
 Any act occupation or calling of
CIVIL LAW COMMITTEE habitually selling direct to the general
2. As against creditors public merchandise, commodities or
 A purchaser in violation of the law goods for consumption, but the
acquires no right in the property restrictions of this law shall not apply
purchased as against the creditors to the following:
of the seller 1. Sales by manufacturer, processor,
 His status is that of a trustee or laborer, or worker, to the general
receiver for the benefit of the public the products manufactured,
creditors of the seller; as such, he processed produced by him if his
is responsible for the disposition capital does not exceed P100,000;
141
2. Sales by a farmer or agriculturalist  Goods which are not necessary for life
selling the products of his farm maintenance and whose demand is
3. Sales in restaurant operations by a generated in large part by the higher
hotel owner or inn-keeper income groups
irrespective of the amount of capital;  Shall include but not limited to:
provided that the restaurant is
jewelry, branded or designer clothing
incidental to the hotel business; and
and footwear, wearing apparel,
4. Sales which are limited only to leisure and sporting goods, electronics
products manufactured, processed or and other personal effects
assembled by a manufacturer through NOTE: A natural-born citizen of the
a single outlet, irrespective of Philippines who has lost his citizenship
capitalization but who resides in the Philippines shall be
granted the same rights as Filipino
High-End or Luxury Goods
citizens NOTE: In no case shall the
investments for establishing a
Foreign Equity Participation: store in Categories B and C be
 Foreign-owned partnerships, less than the equivalent in
associations and corporations formed Philippine Peso of: US $830,000
and organized under the laws of the 4. Category D:
Philippines may, upon registration  Enterprises specializing in high end
with SEC and DTI, or in case of or luxury products with paid up
Foreign-owned single proprietorship capital of the equivalent in
with the DTI, engage or invest in Philippine Peso of: $250,000 US
retail trade business, subject to the Dollars per store
following categories:  May be wholly owned by foreigners
1. Category A:
 Paid-up capital of the equivalent in
Philippine Peso of: < $2,500,000 NOTES:
US Dollars  Foreign investor shall be required to
 Reserved exclusively for Filipino maintain in the Philippines the FULL
citizens and corporations wholly amount of the prescribed minimum
owned by citizens capital, UNLESS the foreign investor
2. Category B: has notified the SEC and the DTI of its
 Minimum paid-up capital of the intention to repatriate its capital and
equivalent in Philippine Peso of cease operations in the Philippines
$2,500,000 US Dollars, but  Failure to maintain the full amount of
<$7,500,000 the prescribed minimum capital prior
to notification of the SEC and the DTI
shall subject the foreign investors to
penalties or restrictions on any future
CIVIL LAW COMMITTEE trading activities/business in the
 May be wholly owned by foreigners Philippines
except for the first two years
after the effectivity of this Act NOTE: Foreign Investors Acquiring Shares
wherein foreign participation shall of Stock of existing retail stores whether
be limited to not > 60% of total or not publicly listed whose net worth is
equity. in excess of the Peso equivalent of US
3. Category C: $2,500,000 may purchase only up to the
 Paid-up capital of the equivalent in maximum of 60% of the equity thereof
Philippine Peso of: $7,500,000 within the first 2 years, and thereafter,
US Dollars or more they may acquire the remaining
percentage consistent with
 May be wholly owned by foreigners
142
the allowable foreign participation as Categories D

herein provided 2. 5 retailing branches or franchises in
operation anywhere around the world
NOTE: All retail Trade enterprises under unless such retailer has at least 1
categories B and C in which foreign store capitalized at a minimum of
ownership exceeds 80% of equity shall $25,000,000 US Dollars
offer a minimum of 30% of their equity to 3. 5-year track record in retailing; and 4.
the public through any stock exchange in Only nationals from, or juridical entities
the Philippines within 8 years from the formed or incorporated in Countries which
start of the operations allow to engage in retail trade in the
Philippines
Qualification of Foreign Retailers 1.
Minimum of $200,000,000 US Dollars net
worth in its parent corporation for
Categories B and C and $50,000,000 net PD 957 (SUBDIVISION AND
worth in its parent corporation for CONDOMINIUM BUYERS’ PROTECTIVE
DECREE property lies and the same shall be
acted upon subject to the conditions
Registration of Projects and in accordance with the procedure
 The registered owner of a parcel of prescribed in Section 4 of the
land who wishes to convert the same Condominium Act (R.A. No. 4726).
into a subdivision project shall submit
his subdivision plan to the HOUSING  National Housing authority (now
AND LAND-USE REGULATORY BOARD, Housing and Land Use Regulatory
which shall act upon and approve the Board) has the exclusive jurisdiction
same, upon a finding that the plan to regulate the real estate trade and
complies with the Subdivision business.
Standards' and Regulations
enforceable at the time the plan is License to sell
submitted. The same procedure shall  Such owner or dealer to whom has been
be followed in the case of a plan for a issued a registration certificate shall
condominium project except that, in not, however, be authorized to sell
addition, said Authority shall act upon any subdivision lot or condominium
and approve the plan with respect to unit in the registered project unless
the building or buildings included in he shall have first obtained a license
the condominium project in to sell the project within two weeks
accordance with the National Building from the registration of such project.
Code (R.A. No. 6541).
Exempt transactions
 A license to sell and performance bond
CIVIL LAW COMMITTEE shall not be required in any of the
 The subdivision plan, as so approved, following transactions:
shall then be submitted to the 1. Sale of a subdivision lot resulting from
Director of Lands for approval in the partition of land among co owners
accordance with the procedure and co-heirs.
prescribed in Section 44 of the Land 2. Sale or transfer of a subdivision lot by
Registration Act (Act No. 496, as the original purchaser thereof and any
amended by R.A. No. 440): Provided, subsequent sale of the same lot.
that it case of complex subdivision 3. Sale of a subdivision lot or a
plans, court approval shall no longer condominium unit by or for the
be required. The condominium plan as account of a mortgagee in the
likewise so approved, shall be ordinary course of business when
submitted to the Register of Deeds of necessary to liquidate a bona fide
the province or city in which the debt.
143
Grounds for Revocation of registration 5. Is of bad business repute; or 6. Does

certificate and license to sell of owners not conduct his business in accordance
or dealers with law or sound business principles.
1. Is insolvent; or
2. Has violated any of the provisions of
this Decree or any applicable rule or LEASE
regulation of the Authority, or any
undertaking of his/its performance LEASE
bond; or  consensual, bilateral, onerous, and
3. Has been or is engaged or is about to commutative contract by virtue of
engage in fraudulent transactions; or 4. which one person binds himself to
Has made any misrepresentation in any grant temporarily the use of the thing
prospectus, brochure, circular or other or to render some service to another
literature about the subdivision project or who undertakes to pay some rent.
condominium project that has been Kinds of Leases (From the view point of
distributed to prospective buyers; or the subject matter
1. Lease of things term under the law of obligations
2. Lease of service and contracts
3. Lease of work 10. Lessor need not be the owner
NOTE: Since lease is consensual and is not NOTE: A usufructuary may thus lease
imposed by law, only the lessor has the the premises in favor of a stranger,
right to fix the rents. However, the such lease to end at the time that the
increasing of the rent is not an absolute usufruct itself ends
right on the part of the lessor.
Rent
Characteristics or Requisites for Lease  The compensation either in money,
of Things provisions, chattels, or labor,
1. Consensual received by the lessor from the
2. Principal lessee.
3. Nominate
4. Purpose is to allow enjoyment or
use of a thing (the person to NOTES:
enjoy is the lessee; the person  When a student boards and lodges in a
allowing the enjoyment by dormitory, there is no contract of
another is the lessor lease. The contract is not designated
specifically in the Civil Code. It is an
innominate contract. It is however,
believed that the contract can be
CIVIL LAW COMMITTEE denominated as the contract of board
5. Subject matter must be within the and lodging.
commerce of man
6. Purpose to which the thing will be  There is a contract of lease when the
devoted should not be immoral use and enjoyment of a safety deposit
7. Onerous (there must rent or price box in a bank is given for a price
certain) certain. This is certainly not a
8. Period is Temporary (not contract of deposit.
perpetual, hence, the longest  A lease of personal property with
period is 99 years) option to buy (at a nominal amount)
9. Period is either definite or at the end of the lease can be
indefinite considered a sale.
 If no term is fixed, we should LEASE SALES
apply Art.1682 (for rural leases)
and Art. 1687 (for urban leases) 1. only use or 1. ownership is
 If the term is fixed but
indefinite, the court will fix the
144
Lease of Lease of Services
enjoyment is transferred Things
transferred
1. object of 1. object is some
2. transfer is 2. transfer is contract is a work or service
temporary permanent thing
3. lessor need 3. seller must 2. lessor has 2. lessor has to

not be the be the owner at to deliver the perform some
owner the time the thing leased work or service
property is
delivered 3. in case of 3. in case of
breach, there breach, no action
4. the price of 4. usually, the can be an for specific
the object, selling price is action for performance
distinguished mentioned specific
from the rent, is performance
usually not
mentioned
Lease of Contract for a

Services Piece of Work Principal Preparatory
(locatio (locatio operas) contract contract
operatum)
1. the 1. the important

important object is the
object is the Rule for Lease of Consumable Goods
work done
labor GENERAL RULE: Consumable goods
performed by cannot be the subject matter of a
the lessor contract of lease of things.
Why? To use or enjoy hem, they will have
2. the result is 2. the result is to be consumed. This cannot be done by a
generally not generally lease since ownership over them is not
important, important; transferred to him by the contract of
hence the generally, the
laborer is price is not
lease.
entitled to be payable until the EXCEPTIONS:
paid even if work is a. If they are merely exhibited b. If
there is completed, and they are accessory to an industrial
destruction of said price cannot establishment
the work be lawfully
through demanded if the RECORDING OF LEASE OF PERSONAL
fortuitous work is destroyed
event before it is
PROPERTY
finished and GENERAL RULE: Lease of real property is
accepted personal right
EXCEPTIONS: Lease partakes of the
nature of real right if:
a. Lease of real property is more than
1 year
Lease of b. Lease of real property is registered
Services
regardless of duration
NOTE: Lease of personal property cannot

be registered. To be binding against third
Agency
persons, the parties must execute a
public instrument.
* Lease may be made orally, but if the

lease of Real Property is for more
than 1 year, it must be in writing
under the Statue of Frauds.
CIVIL LAW COMMITTEE Persons Disqualified to be Lessees

It is based on It is based on Because Disqualified to Buy
employment – representation – 1. A husband and a wife cannot lease to
the lessor of agent represents each other their separate properties
services does his principal and except:
not represent enters into
his employer juridical acts.
a. if separation of property was
nor does he agreed upon
execute b. if there has been judicial
juridical acts. separation of property
145
Persons referred to in Art. 1491 are  A separate and distinct contract of

disqualified because of fiduciary lease wherein the original lessee
relationships becomes a sublessor to a sublessee.
 Allowed unless expressly prohibited.
SUBLEASE
 The sublessee is subsidiarily liable for
any rent due. The lessor has an accion CIVIL LAW COMMITTEE
directa against the sublessee for unpaid b. The sublessee is subsidiarily liable
rentals and improper use of the object. to the lessor for any rent due
from the lessee.
SUBLEASE ASSIGNMENT
NOTE: The sublessee shall not be
OF LEASE
responsible beyond the amount of rent
1. there are 1. there is only
due from him.
two leases and one juridical
two distinct relationship, that Accion Directa: direct action which the
juridical of the lessor and lessor may bring against a sublessee who
relationships the assignee, who misuses the subleased property.
although is converted into
immediately a lessee OBLIGATIONS OF THE LESSOR (DnM) a.
connected and Delivery of the object (cannot be
related to waived)
each other
b. Making of necessary repairs c.
2. the 2. the personality Maintenance in peaceful and
personality of of the lessee adequate possession
the lessee disappears
does not OBLIGATIONS OF THE LESSEE (R2EN2U)
disappear a. to pay rent
b. to use thing leased as a diligent
3.the lessee 3. the lessee father of a family, devoting it to
does not transmits the use stipulated
transmit absolutely his
c. to pay expenses for the deed of
absolutely his rights to the
rights and assignee lease
obligations to d. to notify the lessor of usurpation or
the sublessee untoward acts
e. to notify the lessor of need for
4. the 4. the assignee repairs
sublessee, has a direct f. to return the property leased upon
generally, action against the termination of the lease
does not have lessor
any direct
Effect of Destruction of the Thing
action against
the lessor Leased:
1. Total destruction by a fortuitous
event
 Lease is extinguished
RIGHTS OF LESSOR IF SUBLEASE
PROHIBITED BUT ENTERED INTO BY
LESSEE:
1) Rescission and damages, or
2) Damages only (Contract will be allowed 2. Partial destruction
to remain in force) a. Proportional reduction of the rent,
3) Ejectment or
b. Rescission of the lease
Instances when sublessee is liable to the When lessee may suspend payment of
lessor: rent:
a. All acts which refer to the use and 1. lessor fails to undertake necessary
preservation of the thing leased in repairs
the manner stipulated between 2. lessor fails to maintain the lessee in
the lessor and the lessee peaceful and adequate enjoyment of
the property leased
146
NOTE: “Suspend”- for the intervening  The lessee is obliged to tolerate the
period, the lessee does not have to pay work although it may be very
the rent. annoying to him and although during
the same time he may be deprived of
EFFECTIVITY OF THE SUSPENSION: a part of the premises
The right begins: 1. If repairs last for more than 40 days:
a) In the case of repairs, from the time he Lessee cannot act for reduction of
made the demand for said repairs, and rent or rescission
the demand went unheeded. b) In the 2. If 40 days or more: lessee can ask for
case of eviction, from the time the final proportionate reduction
judgment for eviction becomes effective. NOTE: In either case, rescission may be
availed of if the main purpose is to
Alternative remedies of Aggrieved party provide a dwelling place and the property
(Lessor/Lessee) in case of Non becomes uninhabitable.
fulfillment of duties:
1. Rescission and damages Effects if Lessor fails to make Urgent
2. Damages only, allowing the contract to Repairs
remain in force – Specific 1. Lessee may order repairs at the
Performance lessor’s cost
NOTE: Damages Recoverable in ejectment 2. Lessee may sue for damages 3. Lessee
cases are the rents or the fair rental value may suspend the payment of the rent
of the premises. The following cannot be 4. Lessee may ask for rescission, in case
successfully claimed: of substantial damage to him
1. Profits plaintiff could have earned
were it not for the possible entry TRESPASS IN LEASE:
or unlawful detainer 1. Trespass in fact (perturbacion de
2. Material injury to the premises 3. mere hecho):
Actual, moral, or exemplary damages
 physical enjoyment is reduced 
Lessor will not be held liable. 2. Trespass
Immediate termination of lease under
in law (perturbacion de derecho):
Art. 1660 applies:
 A third person claims legal right to
1. only to dwelling place or any other enjoy the premises
building intended for human
habitation
 Lessor will be held liable
2. even if at the time the contract was
NOTE: While the Japanese Occupation
perfected, the lessee knew of the
was a fortuitous event, the lessor is still
dangerous condition or waived the
not excused from his obligation to
right to rescind on account of this
warrant peaceful legal possession. Lease
condition
is a contract that calls for prestations
Rules on Alteration of the Form of the
both reciprocal and repetitive; and the
Lease
obligations of either party are not
 The Lessor can alter provided there is discharged at any given moment, but
no impairment of the use to which the must be fulfilled all throughout the term
thing is devoted under the terms of of the contract. (Villaruel vs. Manila
the lease Motor Co.)
 Alteration can also be made by the
Lessee so long as the value of the Duration of Lease
property is not substantially impaired 1. Lease made for a determinate time
or fixed Period
Rules in case of Urgent Repairs  Lease will be for the said period
and it ends on the day fixed
CIVIL LAW COMMITTEE without need of a demand
147
IMPLIED NEW LEASE (Tacita

2. If there is no fixed period A. For be for all time necessary
Rural Lands (Article 1680)  it shall for the gathering of fruits which
the whole estate may yield in 1 CIVIL LAW COMMITTEE
year, or which it may yield once Reconducion)
B. For Urban Lands (Article 1687) a.  lease which arises if at the end of the
If rent is paid daily: lease is from day contract the lessee should continue
to day enjoying the thing leased for 15 days
b. If rent is paid weekly: lease is from with the acquiescence of the lessor,
week to week unless a notice to the contrary had
c. If rent is paid monthly: lease is previously been given by either party.
from month to month
d. If rent is paid yearly: lease is from
year to year  Requisites:
a. the term of the original contract
RULES ON EXTENSION OF THE LEASE has expired
PERIOD: b. the lessor has not given the lessee
1) If a lease contract for a definite term a notice to vacate
allows lessee to extend the term, there is c. the lessee continued enjoying the
no necessity for lessee to notify lessor of thing leased for at least 15 days
his desire to so extend the term, unless with the acquiescence of the
the contrary is stipulated. lessor
2) “May be extended” as stipulation:
lessee can extend without lessor’s  When there is no implied new lease:
consent but lessee must notify lessor. 3) 1. When before or after the expiration
“May be extended for 6 years agreed upon of the term, there is a notice to
by both parties” as stipulation: This must vacate given by either party.
be interpreted in favor of the lessee. 2. When there is no definite fixed
Hence, ordinarily the lessee at the end of period in the original lease contract
the original period may either: as in the case of successive renewals.
a) leave the premises; or
b) remain in possession  Effects:
4) In co-ownership, assent of all is a. The period of the new lease is not
needed; otherwise, it is void or that stated in the original
ineffective as against non-consenting co contract but the time in Articles
owners. 1682 and 1687.
5) Where according to the terms of the b. Other terms of the original
contract, the lease can be extended only contract are revived.
by the written consent of the parties
thereto, no right of extension can rise NOTE: Terms that are revived are only
without such written consent. those which are germane to the
enjoyment of possession, but not those
Rule if Lessor Objects to the Lessee’s with respect to special agreements
continued Possession:
 Requisites: which are by nature foreign to the right of
1. Contract has expired occupancy or enjoyment inherent in a
2. Lessee continued enjoying the thing 3. contract of lease – such as an option to
Lessor Objected to this enjoyment  If purchase the leased premises (Dizon vs.
the three requisites are present, Magsaysay GR No. 23399, May 31,1974)
the lessee shall be considered a
possessor in bad faith Perpetual Lease
 A lease contract providing that the
lessee can stay in the premises for as
long as he wants and for as long as
148
he can pay the rentals and its of leasehold rights to the sole and
increases. exclusive will of the lessee
 This is not permissible; it is a purely
potestative condition because it NOTE: In Jespajo Realty vs. CA, 27 Sept.
leaves the effectivity and enjoyment 2002, the SC upheld a lease contract,
which provides that “the lease contract without prejudice to pre existing
shall continue for an indefinite period contracts.
provided that the lessee is up-to date in
the payment of his monthly rentals” for  Grounds for judicial ejectment:
the contract is one with a period subject SANORE
to a resolutory condition. 1. Assignment of lease or subleasing of
residential units including the
PURCHASE OF THE LEASED PROPERTY acceptance of boarders or bedspacers
GENERAL RULE: Purchaser of thing without written consent of the owner
leased can terminate lease. or lessor;
EXCEPTIONS: 2. Arrears in payment of rent for a total
a. lease is recorded in Registry of of 3 months;
Property 3. Legitimate needs of the owner or lessor
b. there is stipulation in the contract to repossess for his own use or for the
of sale that purchaser shall use of any immediate member of his
respect the lease family as a residential unit, provided:
c. purchaser knows the existence of a. owner or immediate member not
the lease being owner of any other available
d. sale is fictitious residential unit within the same city
e. sale is made with right of or municipality;
repurchase b. lease for a definite period has
expired;
GROUNDS FOR EJECTMENT UNDER ART. c. lessor has given lessee formal
1673: (ELVU) notice 3 months in advance; and d.
1. Expiration of the period agreed upon owner or lessor is prohibited from
or the period under Arts. 1682 and leasing the residential unit or allowing
1687; its use by a third person for at least 1
2. Lack of payment of the price year.
stipulated; 4. Absolute ownership by the lessee of
3. Violation of any of the conditions another dwelling unit in the same city
agreed upon in the contract; and 4. or municipality which may be lawfully
Unauthorized use or service by the lessee used as his residence provided lessee
of the thing leased. is with formal notice 3 months in
advance;
5. Need of the lessor to make necessary
repairs in the leased premises which
RENTAL REFORM ACT OF 2002 is the subject of an existing order of
(R.A. No. 9161) condemnation by appropriate
authorities concerned in order to
 Effectivity: January 1, 2002. make said premises safe and
 Coverage: habitable; and
a. All residential units of NCR and other 6. Expiration of period of the lease
highly urbanized cities, the total contract.
monthly rental for each of which does
not exceed P7,500; NOTE:
 Except when the lease is for a definite
period, the provisions of Art. 1673(1)
CIVIL LAW COMMITTEE of the Civil Code (CC), insofar as they
b. All residential units in other areas the refer to residential units, shall be
total monthly rental for each of which suspended during the effectivity of
does not exceed P4,000 as of 1/1/02, R.A. 9161, but other
149
provisions of the CC and the Rules of  No increase in monthly rental by more

Court on lease contracts insofar as than 10% is allowed.
they are not in conflict with the
provisions of R.A. No. 9161 shall TERMINATION OF THE LEASE
apply.
 If made for a determinate time, it
ceases upon the day fixed without the Special Provisions for Urban Lands 
need of a demand. Repairs for which urban lessor is liable:
1) By the expiration of the period 2) By 1. special stipulation
the total loss of the thing 3) By the 2. if none, custom of the place 3. in case
resolution of the right of the lessor of doubt, the repairs are chargeable
4) By the will of the purchaser or against him
transferee of the thing
5) By rescission due to non-performance
of the obligation of one of the parties
 Lease duration:
1. If there is a fixed period, lease will be
Special Provisions for Rural Lands  for said period.
Effect of loss due to fortuitous event: 2. If no fixed period, apply the following
1. Ordinary fortuitous event – no rules:
reduction a. If rent is paid daily: day to day
2. Extraordinary fortuitous event a. if
more than ½ of the fruits were lost,
there shall be a reduction, unless CIVIL LAW COMMITTEE
there is a stipulation to the contrary
b. if ½ or less, there shall be no
reduction b. If rent is paid weekly: week to
 Lease duration: If not fixed, it shall be week
for all time necessary for the c. If rent is paid monthly: month to
gathering of fruits which the whole month
estate may yield in 1 year, or which it d. If rent is paid yearly: year to year
may yield once.

Contract of Sales

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San Beda College of Law

remedy of the not a breach – CIVIL LAW COMMITTEE

As to reservation of title to the

As to effect of sale of the 4. Object is a future 4. Object is a

NOTE: In case of doubt the presumption

 Instances when the Civil Code

2. The services 2. The primary

Rules to determine if the contract is

1. No pre-existing 1. Pre-existing credit Certainty

Effect when the price is fixed by the 2. Involuntary or Forced sales

EXCEPTION: When the sale is subject to  Nonpayment only creates a right to

Requirements for perfection EXCEPTIONS:

3. Part of the 3. Money given as Contrary view:

d. The thing is lost after delivery: Buyer

EFFECT OF LOSS AT THE TIME OF SALE: Sale by description

 There is warranty that the thing sold therein

4. public officers and employees, with authorizing the administrator to

2. Legal or constructive – delivery is in the contract

3. Ownership 3. Ownership CIVIL LAW COMMITTEE

2. If the goods are deliverable to the CIVIL LAW COMMITTEE

NOTE: the terms C.I.F. and F.O.B. CIVIL LAW COMMITTEE

 Possession is either actual or CIVIL LAW COMMITTEE

the risks of eviction and CIVIL LAW COMMITTEE

particular purpose for which it was CIVIL LAW COMMITTEE

 The buyer in such a case is in the 1. Express acceptance

2. Of Real property vendee’s failure to pay

 Requisites: apartments; and

V. Action for the price

2. Where the price is payable on a

of repurchase or an equitable subject of the contract as security

1. Sale of a co-owner of his share to a exceeding one hectare (Article

Effect of payment by the debtor after Legal Redemption in Sale or Credit or

4. The right must be exercised by the legal redemption in sale of credit or

PERFECTION and CONSUMMATION  When sale or transfer in bulk not

3. With names of certain creditors Remedies Available to creditors:  The

the allowable foreign participation as Categories D

Grounds for Revocation of registration 5. Is of bad business repute; or 6. Does

3. lessor need 3. seller must 2. lessor has 2. lessor has to

Lease of Contract for a

1. the 1. the important

NOTE: Lease of personal property cannot

* Lease may be made orally, but if the

CIVIL LAW COMMITTEE Persons Disqualified to be Lessees

Persons referred to in Art. 1491 are  A separate and distinct contract of

IMPLIED NEW LEASE (Tacita

provisions of the CC and the Rules of  No increase in monthly rental by more

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