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: vendor the right to unilaterally rescind
1. Consent or meeting of minds the contract the moment the vendee fails
2. A Determinable subject matter to pay within the fixed period, the
3. 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 mode of acquiring ownership. The
to exist in the contract:` contact transfers no real rights; it merely
1. Warranty against eviction causes certain obligations to arise.
2. Warranty against hidden defects
c. Accidental elements may be present Contract of Contract to
or absent depending on the Sale Sell
stipulation of the parties (e.g.: 1. Title passes to the 1. Ownership is
conditions, interest, penalty, time or buyer upon delivery reserved in the
place of payment, etc.) of the thing sold seller and is not to
pass until full
Characteristics: payment of the
purchase price
1. Principal
2. Non-payment of 2. Full payment is a
2. Consensual; the price is a negative positive suspensive
3. Bilateral; resolutory condition condition, the
4. Nominate; and the remedy of the failure of which is
5. Commutative; In some cases, seller is to exact not a breach
aleatory (emptio spei); casual or serious
but simply

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)
 San Beda College of Law 114

MEMORY AID IN CIVIL LAW

fulfilment or to prevents the 1. Constructive 1. Third person

rescind the contract obligation of the /actual knowledge on buying the
vendor to convey the part of the 2nd property despite
title from having buyer of the defect in fulfilment of the
binding force the sellers title suspensive
3. Vendor loses and 3. Title remains in renders him not a condition cannot
cannot recover the vendor if the registrant in good be deemed a
ownership of the thing vendee does not faith. Such second buyer in bad faith
sold and delivered comply with the buyer cannot defeat and prospective
until the contract of condition the first buyers title. buyer cannot
sale is resolved and precedent of Ratio: Fulfilment of seek the relief of
set aside making payment at the suspensive reconveyance of
the time specified conditions affects the property.
in the contract sellers title to the Exception: If
property and previous There was no
delivery of the previous sale of
Conditional Sale Contract to property the property.
Sell automatically
As to reservation of title to the subject transfers
property ownership/title to the
In both cases the seller may reserve the buyer.
title to the subject property until
fulfillment of the suspensive condition i.e.
OBJECTS OF SALE
full payment of the price
Requisites:
As to effect of fulfillment of suspensive
1. THINGS:
condition
a) determinate or determinable
1. Upon fulfillment of 1. Upon
(Arts. 1458, 1460)
the suspensive fulfillment of the
condition, the suspensive b) lawful (Arts 1347, 1409 [1,4]
contract of sale is condition, which c) should not be impossible (Art.
thereby perfected, is the full 1348) e.g. must be within the
such that if there had payment of the commerce of man
been previous delivery purchase price, 2. RIGHTS must be transmissible
of the subject ownership will Exceptions:
property to the buyer, not -future inheritance
ownership thereto automatically - service
automatically transfer to the
transfers to the buyer although
buyer by operation the property may Emptio rei Emptio spei
of law without any have been speratae
further act by the previously 1. Sale of an expected 1. Sale of a mere
seller. delivered to him. thing hope or expectancy
The prospective that the thing will
seller still has come to existence;
to convey title Sale of the hope
to the itself
prospective 2. Sale is subject to 2. Sale produces
buyer by the condition that the effect even if the
entering into a thing will exist; if it thing does not
contract of does not, there is no come into
contract existence, unless it
absolute sale.
is a vain hope
As to effect of sale of the subject 3. The uncertainty is 3. The uncertainty
property to 3rd persons with regard to the is with regard to
quantity and quality of the existence of the
the thing and not the thing
existence of the thing
4. Object is a future 4. Object is a
thing present thing which
is the hope or
expectancy

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)
 San Beda College of Law 115

MEMORY AID IN CIVIL LAW

NOTE: In case of doubt the presumption 1. Buyer receives the 1. Agent receives
is in favor of emptio rei speratae which is goods as owner the goods as goods
more in keeping with the commutative of the principal who
character of the contract retains his
ownership over
them
Goods which may be Object of Sale
2. Buyer pays the 2. Agent delivers
a. Existing goods goods owned or price the price which in
possessed by the seller. turn he got from his
b. Future goods goods to be buyer
manufactured, raised or acquired by 3. Buyer, as a 3. Agent can return
the seller after the perfection of the general rule, cannot the goods in case he
contract. return the object is unable to sell the
NOTES: sold same to a third
person
A sale of future goods is valid only as
4. Seller warrants 4. Agent makes no
an executory contract to be fulfilled
the thing sold warranty for which
by the acquisition and delivery of he assumes personal
goods specified. liability as long as he
While there can be sale of future acts within his
property, there can generally be no authority and in the
donation of future property (Article name of the seller
751 Civil Code) 5. Buyer can deal 5. Agent in dealing
with the thing sold with the thing
Future inheritance cannot be sold. as he pleases being received, must act
A contract of sale or purchase of the owner and is bound
goods to be delivered at a future according to the
time, if entered into without the instructions of the
intention of having any goods pass principal
from one party to another, but with
an understanding that at the Contract for
appointed time, the purchaser is Sale
Piece of Work
merely to receive or pay the 1. The thing 1. The thing
difference between the contract and transferred is one transferred is one
the market prices, is illegal. Such not in existence and which would have
contract falls under the definition of which never would existed and would
futures in which the parties merely have existed but for have been the
gamble on the rise or fall in prices and the order of the subject of sale to
is declared null and void by law. (Art. party desiring to some other person,
acquire it even if the order had
2018, NCC) (Onapal Phil. not been given
Commodities, Inc. vs. CA [1993]) 2. The services 2. The primary
dominate the objective of the
Instances when the Civil Code contract even contract is a sale of
recognizes sale of things not though there is a the manufactured
actually or already owned by the sale of goods item; it is a sale of
seller at the time of the sale: involved goods even though
the item is
1. Sale of a thing having potential manufactured by
existence (Article 1461) labor furnished by
2. Sale of future goods (Article 1462) the seller and upon
3. Contract for the delivery at a certain previous order of
price of an article which the vendor the customer
in the ordinary course of the business 3. Not within the 3. Within the
manufactures or procures for the Statute of Frauds Statute of Frauds
general market, whether the same is
on hand at the time or not (Article
1467)

Sale Agency to sell

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)
 San Beda College of Law 116

MEMORY AID IN CIVIL LAW

Rules to determine if the contract is one object offered in lieu

of Sale or Piece of work: of the original credit
a. If ordered in the ordinary course of 4. Greater freedom 4. Less Freedom in
business sale in determining determining the
b. If manufactured specially for the the price price
customer and upon his special order,
5. Buyer still has to 5. The payment is
and not for the market piece of received by the
pay the price
work debtor before
the contract is
SCHOOLS OF THOUGHT: perfected.
a) Massachusetts rule: If specifically
done at the order of another, this PRICE
is a contract for a piece of work.
The sum stipulated as the equivalent
(Philippine application)
of the thing sold and also every
b) New York rule: If thing already
incident taken into consideration for
exists-SALE; if not-WORK
the fixing of the price, put to the
c) English rule: If material is more
debit of the vendee and agreed to by
valuable-SALE; if skill is more
him.
valuable-WORK

BARTER Requisites:
1. Certainty or ascertainable at the
contract whereby one of the parties time of perfection
binds himself to give one thing in
2. Real, not fictitious
consideration of the other's promise
3. In some cases, must not be
to give another thing.
grossly inferior to the value of the
NOTE: The only point difference
thing sold.
between contract of sale and barter is in
4. Paid in money or its equivalent
the element which is present in sale but
not in barter, namely: price certain in
Certainty
money or its equivalent
It is not necessary that the certainty
NOTE: If the consideration is partly in of the price be actual or determined
money and partly in another thing, at the time of the execution of the
determine: contract. The price is certain in the
a. The manifest intention of the following cases:
parties 1. If the parties have fixed or agreed
b. If the intent is not clear, apply upon a definite amount;
the following rules: NOTE: The fixing of the price can
1. If the thing is more valuable never be left to the discretion of one
than money barter of the contracting parties. However
2. If the money and the thing if the price fixed by one of the parties
are of equal value sale is accepted by the other, the sale is
3. If the thing is less valuable perfected.
than money sale 2. If it be certain with reference to
another thing certain
3. If the determination of the price
Sale Dation in Payment is left to the judgment of a
1. No pre-existing 1. Pre-existing credit specified person or persons even
credit
before such determination
2. Obligations are 2. Obligations are
created extinguished
4. In the cases provided under Art.
3. Consideration on 3. Consideration of 1472 NCC
the part of the seller the debtor is the
is the price; on the extinguishment of
part of the buyer is the debt; on the part
the acquisition of the of the creditor, it is Effect when the price is fixed by the
object the acquisition of the third person designated:

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)
 San Beda College of Law 117

MEMORY AID IN CIVIL LAW

GENERAL RULE: Price fixed by a third b. In the event of a resale, a better

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

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)
 San Beda College of Law 118

MEMORY AID IN CIVIL LAW

with the seller until full payment of

Requirements for perfection the price is made.
a. When parties are face to face 2. Contract to sell
When an offer is accepted without 3. Contract of insurance a perfected
conditions or qualifications contract of sale, even without
NOTES: delivery, vests in the vendee an
A conditional acceptance is a equitable title, an existing interest
counter-offer over the goods sufficient to be the
when negotiated thru phone it is subject of insurance
as if it is negotiated face to face
b. When contract is thru RULES GOVERNING AUCTION SALES
correspondence or thru telegram 1. Sales of separate lots by auction are
When the offeror receives or has separate contracts of sale.
knowledge of the acceptance by the 2. Sale is perfected by the fall of the
offeree hammer
NOTE: If the buyer has already 3. Seller has the right to bid in the
accepted but the seller does not know auction, provided:
yet of the acceptance, the seller may a) such right was reserved
still withdraw b) notice was given that the sale was
c. When a sale is subject to a subject to a right to bid on behalf of the
suspensive condition seller
From the moment the condition is c) right is not prohibited by law or by
fulfilled stipulation
4. Advertisements for bidders are simply
TRANSFER OF OWNERSHIP invitations to make proposals, and the
GENERAL RULE: While a contract of sale advertiser is not bound to accept the
is consensual, ownership of the thing sold highest or lowest bidder, unless the
is acquired only upon its delivery, actual contrary appears.
or constructive, to the buyer. (Daus vs.
Sps. De Leon, 16 June 2003) EFFECT OF PROMISE TREATED UNDER
This is true even if the purchase ART. 1479 Civil Code:
has been made on credit. 1. Accepted unilateral promise to sell
Payment of the purchase price is or buy
not essential to the transfer of Only one makes the promise, this
ownership, as long as the promise is accepted by the other.
property sold has been delivered. Example: A promises to sell to B, B
(Sampaguita Pictures, Inc vs. accepts the promise, but does not in
Jalwindor Manufacturers, Inc. 93 turn promise to buy.
SCRA 420) does not bind the promissor even if
Nonpayment only creates a right accepted and may be withdrawn
to demand payment or to rescind anytime.
the contract, or to criminal NOTE: Pending notice of its withdrawal,
prosecution in the case of the accepted promise partakes the nature
bouncing checks. (EDCA of an offer to sell which if accepted,
Publishing and Distributing Corp. results in a perfected contract of sale
vs. Santos, 184 SCRA 614) (Sanchez vs. Rigos 45 SCRA3 68). In other
words, if the acceptance is made before
EXCEPTIONS: withdrawal, it constitutes a binding
1. Contrary stipulation or Pactum contract of sale although the option is
reservati dominii (contractual given without consideration.
reservation of title) a stipulation, if the promise is supported by a
usually in sales by installment, consideration distinct and separate
whereby, despite delivery of the from the price (option money), its
property sold, ownership remains acceptance will give rise to a
perfected contract.

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)
 San Beda College of Law 119

MEMORY AID IN CIVIL LAW

2. Bilateral promise to buy and sell optionee and all other prospective
One party accepts the others buyers, with optionee to enjoy the
promise to buy and the latter, the right of first priority. A deed of sale
formers promise to sell a executed in favor of a third party who
determinate thing for a price certain cannot be deemed a purchaser in
it is reciprocally demandable good faith, and which is in violation
It requires no consideration distinct of the of the right of first refusal
from the selling price granted to the optionee is NOT
NOTE: this is as good as a perfected voidable under the Statute of Frauds,
sale. No title of dominion is such contract is valid BUT rescissible
transferred as yet, the parties being under Article 1380 to 1381(3) of the
given only the right to demand New Civil Code (Guzman Bocaling &
fulfillment or damages. Co. vs. Bonnavie; Riviera Filipina, Inc
vs. CA et.al. GR No. 117355, April 5,
Policitation 2002).
An unaccepted unilateral promise to The basis of the right of first refusal
buy or sell. Even if accepted by the must be the current offer to sell of
other party, it does not bind the the seller or offer to purchase of any
promissor and maybe withdrawn prospective buyer. Only after the
anytime. This is a mere offer, and has optionee fails to exercise its right of
not yet been converted into a first priority under the same terms
contract. and within the period contemplated
could the owner validly offer to sell
Option contract the property to a third person, again,
under the same terms as offered to
A contract granting a privilege in one the optionee (Paranaque Kings
person, for which he has paid a
Enterprises, Inc. vs. CA GR No.
consideration, which gives him the
111538, February 26, 1997)
right to buy certain merchandise, at
anytime within the agreed period, at The lessees right of first option to
a fixed price. buy the leased property in case of its
sale is but a part of the bigger right
An option without consideration is to lease the said property from the
void and the effect is the same as if
lessor. The option was given to the
there was no option
lessee because she was the lessee of
* However, in Sanchez vs. Rigos (1972),
the subject property. It was a
even though the option was not supported
component of the consideration of
by a consideration, the moment it was
the lease. The option was by no
accepted, a perfected contract of sale
means an independent right which
resulted, applying Art. 1324 of the NCC.
can be exercised by the lessee. If the
In view of the ruling of the Supreme
lessee is barred by the contract from
Court, the only importance of the
assigning her right to lease the
consideration for an option is that the
subject property to any other party,
option cannot be withdrawn by the
the lessee is similarly barred to assign
grantor after acceptance.
her first option to buy the leased
* In an option to buy, the party who has
property to another. (Bangayan et.al
an option may validly and effectively
vs. CA and Lim GR No.123581, August
exercise his right by merely notifying the
29, 1997)
owner of the formers decision to buy and
expressing his readiness to pay the
Earnest money or ARRAS is something
stipulated price.
of value to show that the buyer was really
in earnest, and given to the seller to bind
Right of First Refusal
the bargain. It is considered as:
It is a right of first priority all things a) part of the purchase price
and conditions being equal; there b) proof of perfection of the
should be identity of the terms and contract
conditions to be offered to the *It shall be deducted from the total price.

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)
 San Beda College of Law 120

MEMORY AID IN CIVIL LAW

Contrary view:
Earnest money Option money Where the ownership is transferred
1. Title passes to 1. Ownership is by delivery, as in our code, the
the buyer upon reserved to the seller application of the axiom res perit
delivery of the and is not to pass domino, imposes the risk of loss upon
thing sold until full payment the vendor; hence, if the thing is lost
2. In case of 2. In case of by fortuitous event before delivery,
non-payment, an non-payment, there the vendor suffers the loss and cannot
action for specific can be action for recover the price from the vendee
performance or for specific performance (Commentaries and Jurisprudence on
rescission can be the Civil Code of the Philippines,
filed by the Tolentino)
injured party
3. Part of the 3. Money given as a d. The thing is lost after delivery:
purchase price distinct
Buyer bears the loss.
consideration for an
option contract
4. When given, the 4. The would-be Question: If one does not comply, the
buyer is bound to buyer is not required other need not pay?
pay the balance to buy Answer: True. But this only applies when
5. Given when 5. Applies to a sale the seller is able to deliver but does not.
there is already a not yet perfected
sale
EFFECT OF LOSS AT THE TIME OF SALE:
a. Thing entirely lost at the time of
RULES ON RISK OF LOSS AND perfection: Contract is void and
DETERIORATION: inexistent
a. The thing sold is lost before b. Thing only partially lost: Vendee
perfection: Seller bears the loss. may elect between withdrawing from
b. The thing sold is lost at the time of the contract or demanding the
perfection: Contract is void or remaining part, paying its
inexistent. proportionate price
c. The thing sold is lost after
perfection, but before delivery: Sale by description
A sale where a seller sells things as
GENERAL RULE: Who bears the risk being of a certain kind, buyer merely
of loss is governed by the stipulations relying on the sellers representations
in the contract or descriptions.
In the absence of any
There is warranty that the thing sold
stipulation:
corresponds to the representations or
First view:
descriptions.
Buyer bears the loss as an exception
to the rule of res perit domino.
Sale by sample
EXCEPTIONS:
1. when object sold consists of A sale where a small quantity of a
fungible goods for a price fixed commodity is exhibited by the seller
according to weight, number or as a fair specimen of the bulk, which
measure is not present and as to which there
2. seller is guilty of fraud, is no opportunity to inspect or
negligence, default or violation examine.
of contractual terms NOTE: The mere exhibition of the
3. object sold is generic sample does not necessarily make it a
(Civil Code of the Philippines, Paras) sale by sample. This exhibition must
NOTE: This view conforms with have been the sole basis or
Manresas view. Buyer would have inducement of the sale.
been the one to profit from the thing There is warranty that the bulk of the
had it not been lost or destroyed. commodity will correspond in kind,

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)
 San Beda College of Law 121

MEMORY AID IN CIVIL LAW

quality, and character with the certain persons or a certain class

sample exhibited. of property

NOTE: In a sale by sample and by Relative Incapacity

description, there is a two-fold warranty. A. Husband and wife (Art. 1490):
Generally, a sale by one spouse to
RIGHTS OF BUYER: another is void.
1) Return the thing and recover the The husband and wife cannot sell
money paid, or property to each other except:
2) Retain the thing and sue for the breach 1. When a separation of property
of warranty. was agreed upon by the spouses
2. When there has been a judicial
PURCHASE BY MINORS: Contract is separation of property under
generally voidable but in case of Article 134 and 135 of the Family
necessaries, where necessaries are sold Code
and delivered to a minor or other person
without capacity to act, he must pay a B. Incapacity by reason of relation to
reasonable price therefore. Necessaries property (Art. 1491)
are those in Art. 290. The following persons cannot acquire
property by purchase, even at a
FORMALITIES OF CONTRACT OF SALE public auction, either in person or
GENERAL RULE: Sale is a consensual through the mediation of another:
contract and is perfected by mere (GAEP-JO)
consent. 1. the guardian, with respect to the
EXCEPTIONS: In order to be enforceable property of his ward;
by action, the following must be in 2. agents, with respect to the
writing: property whose administration or
1. Sale of personal property at a sale may have been entrusted to
price not less than P500 them, unless the consent of the
2. Sale of real property or an principal has been given;
interest therein 3. executor or administrator, with
3. Sale of property not to be respect to the property of the
performed within a year from the estate under administration;
date thereof 4. public officers and employees,
4. Applicable statute requires with respect to the properties of
that the contract of sale be in a the government, its political
certain form subdivisions, or GOCCs, that are
NOTE: Statute of Frauds is applicable entrusted to them;
only to executory contracts and not to 5. judges, justices, prosecuting
contracts which are totally or partially attorneys, clerks of courts, etc.,
performed. with respect to the property in
custogia legis; and

6. any other person specially

CAPACITY TO BUY OR SELL disqualified by law.
GENERAL RULE: All persons who can Examples of persons especially
bind themselves also have legal capacity disqualified by law:
to buy and sell. a. Aliens who are disqualified to
EXCEPTIONS: purchase agricultural lands
1. Absolute incapacity (minors, b. An unpaid seller having a right
demented persons, imbeciles, of lien or having stopped the
deaf and dumb, prodigals, civil goods in transitu, who is
interdictees) - party cannot bind prohibited from buying the goods
themselves in any case. either directly or indirectly in the
2. Relative incapacity incapacity resale of the same, at public or
exists only with reference to private sale which he may make

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)
 San Beda College of Law 122

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c. The officer holding the 5. Pay for the expenses of the deed of
execution, or his deputy. sale, unless there is stipulation to the
NOTE: While those disqualified contrary
under Arts. 1490 and 1491 may
not become lessees (Art. 1646), DELIVERY
still aliens may become lessees Is a mode of acquiring ownership, as
even if they cannot buy lands. a consequence of certain contracts
such as sale, by virtue of which,
Effect of violation: actually or constructively, the object
a) With respect to nos. 1 to 3: the is placed in the control and possession
sale is VOIDABLE. of the vendee.
Reason: only private rights,
which are subject to ratification Delivery of the thing together
are violated with the payment of the price,
NOTE: In the case of Lao vs. marks the consummation of the
Genato, 137 SCRA 77, the contract of sale(PNB vs. Ling, 69
Supreme Court found that the Phil. 611)
sale by the administrator of In all forms of delivery, it is
certain properties of the estate in necessary that the act of delivery
order to settle the existing be coupled with the intention of
obligations of the estate was delivering the thing. The act
made to the administrators son without the intention is
for a grossly low price. insufficient. (Norkis Distributor,
Furthermore, the said sale was Inc. vs. CA, 195 SCRA 694)
not submitted to the probate
court for approval as mandated
Kinds:
by the order authorizing the
1. Actual or real placing the thing
administrator to sell. The sale
under the control and possession of
was indubitably illegal, irregular
the buyer.
and fictitious, and the courts
2. Legal or constructive delivery is
approval of the assailed
represented by other signs or acts
compromise agreement violated
indicative thereof
Article 1491 and cannot work to
a. delivery by the execution of a
ratify a fictitious contract which
public instrument.
is non-existent and void from
NOTE: Gives rise only to a prima facie
the very beginning
presumption of delivery which is
b) With respect to nos. 4 to 6: the
destroyed when actual delivery is not
sale is NULL AND VOID.
effected because of a legal
Reason: violation of public policy
impediment (Ten Forty Realty vs.
cannot be subject to ratification
Cruz, 10 Sept. 2003)
b. traditio symbolica - to effect
OBLIGATIONS OF THE VENDOR: (WPD-
delivery, the parties make use of
TT)
a token or symbol to represent
1. Transfer ownership (cannot be
the thing delivered
waived)
c. traditio longa manu seller
2. Deliver the thing sold (cannot be
pointing out to the buyer the
waived)
things which are transferred,
3. Warrant against eviction and against
which at the time must be in
hidden defects (can be waived or
sight.
modified since warranty is not an
d. traditio brevi manu buyer
essential element of the contract of
simply continues in possession of
sale)
the thing but under title of
4. Take care of the thing, pending
ownership.
delivery, with proper diligence
e. traditio constitutum
(Article 1163)
possessorium seller continues in

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)
 San Beda College of Law 123

MEMORY AID IN CIVIL LAW

possession but under a different satisfactory, the approval of the

title other than ownership. buyer being a condition precedent.
3. Quasi-tradition delivery of rights,
credits or incorporeal property, made Rules:
by: 1. title remains in the seller
a. placing titles of ownership in the 2. risk of loss remains with seller except
hands of buyer when the buyer is at fault or has
b. allowing buyer to make use of agreed to bear the loss
rights 3. buyer must give goods a trial, except
4. Tradition by operation of law where it is evident that it cannot
perform the work
Constructive delivery requires three 4. period within which buyer must
things before ownership may be signify his acceptance runs only when
transferred: all the parts essential for the
1. The seller must have control over the operation of the object have been
thing delivered.
2. The buyer must be put under control 5. if it is stipulated that a third person
3. There must be the intention to must satisfy approval or satisfaction,
deliver the thing for purposes of the provision is valid, but the third
ownership person must be in good faith. If
refusal to accept is not justified,
When is the vendor not bound to deliver seller may still sue.
the thing sold: 6. Generally, the sale and delivery to a
1. If the vendee has not paid him the buyer who is an expert on the object
price purchased is not a sale on approval,
2. If no period for payment has been trial, or satisfaction.
fixed in the contract
3. Even if a period for payment has been Sale or return Sale on Trial
fixed in the contract, if the vendee 1. Subject to a 1. Subject to a
has lost the right to make use of the resolutory condition suspensive condition
same. 2. Depends entirely 2. Depends on the
on the will of the character or quality of
buyer the goods
Sale or return
3. Ownership passes 3. Ownership remains
Property is sold, but the buyer, who to the buyer on in the seller until buyer
becomes the owner of the property delivery and signifies his approval or
on delivery, has the option to return subsequent return acceptance to the
the same to the seller instead of reverts ownership in seller
the seller
paying the price.
4. Risk of loss or 4. Risk of loss remains
injury rests upon with the seller
NOTES: the buyer
It is a kind of sale with a condition Instances where Seller is still the Owner
subsequent. despite Delivery:
The buyer must comply with the 1. Sale on trial, approval or satisfaction
express or implied conditions 2. Contrary intention appears by the
attached to the return privilege; term of the contract;
otherwise, the sale becomes 3. Implied reservation of ownership
absolute. (Article 1503)
Buyer, being the owner, bears the risk a. If under the bill of lading, the
of loss goods are deliverable to seller or
agent or their order;
Sale on trial, approval, or satisfaction b. If the bill of lading, although
A contract in the nature of an option stating that the goods are to be
to purchase if the goods prove to be delivered to the buyer or his

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)
 San Beda College of Law 124

MEMORY AID IN CIVIL LAW

agent, is kept by the seller or his 4. In any other case, place of delivery is
agent; the sellers residence
c. When the buyer, although the 5. In case of specific goods, which to the
goods are deliverable to order of knowledge of the parties at the time
buyer, and although the bill of the contract was made were in some
lading is given to him, does not other place, that place is the place of
honor the bill of exchange sent delivery, in the absence of agreement
along with it. or usage of trade to the contrary

Transfer of ownership where goods sold Time of delivery of goods

delivered to carrier 1. Stipulated time
General Rule: Delivery to the carrier is 2. In the absence thereof, within a
deemed to be delivery to the buyer reasonable time
Exception: Where the right of possession
or ownership of specific goods sold is NEGOTIABLE DOCUMENT OF TITLE (NDT)
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).
EXCEPTIONS: (SMERVS) The document is negotiable if:
1. Owner is estopped or precluded 1. The goods are deliverable to the
by his conduct bearer; or
2. When sale is made by the 2. If the goods are deliverable to the
registered owner or apparent order of a certain person
owner in accordance with
recording or registration laws Persons who may negotiate NDT:
3. Sales sanctioned by judicial or 1. The owner; or
statutory authority 2. Any person to whom the possession or
4. Purchases in a merchant's store, custody thereof has been entrusted
fairs or markets by the owner, if by the terms of the
5. When a person who is not the document the bailee issuing the
owner sells and delivers a thing, document undertakes to deliver the
subsequently acquires title goods to the order of the person to
thereto (Art. 1434) whom the possession or custody of
6. When the seller has a voidable the document has been entrusted or
title which has not been avoided if at the time of such entrusting the
at the time of the sale (Art. 1506) document in such form that it may be
* Unlawful deprivation is no longer negotiated by delivery.
limited to a criminal act. There is
Unlawful Deprivation where there is no * If the holder of a negotiable document
valid transmission of ownership. of title (deliverable to bearer) entrusts
the document to a friend for deposit, but
Place of delivery of goods the friend betrays the trust and
1. Where there is an agreement, place negotiates the document by delivering it
of delivery is that agreed upon to another who is in good faith, the said
2. Where there is no agreement, place owner cannot impugn the validity of the
of delivery determined by usage of negotiation. As between two innocent
trade persons, he who made the loss possible
3. Where there is no agreement and no shall bear the loss, without prejudice to
prevalent usage, place of delivery is his right to recover from the wrongdoer.
the sellers place

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)
 San Beda College of Law 125

MEMORY AID IN CIVIL LAW

RIGHTS OF PERSON TO WHOM to the buyer, delivery to the carrier is

DOCUMENT HAS BEEN NEGOTIATED: delivery to the buyer.
1) The title of the person negotiating the EXCEPTIONS:
document, over the goods covered by the 1. When a contrary intention
document; appears
2) The title of the person (depositor or 2. Implied reservation of ownership
owner) to whose order by the terms of the under pars. 1,2,3 of Art. 1503
document the goods were to be
delivered, over such goods; Kinds of Delivery to the Carrier
3) The direct obligation of the bailee to a. C.I.F. (cost, insurance, freight)
hold possession of the goods for him, as if signify that the price fixed covers
the bailee had contracted to him directly not only the costs of the goods,
NOTE; Mere transferee does not acquire but the expense of the freight
directly the obligation of the bailee (in and the insurance to be paid by
Art. 1513). To acquire it, he must notify 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 NOTE: the terms C.I.F. and F.O.B.
AGREED UPON: merely make rules of presumption
1. Buyer may reject; or c. C.O.D. (collect on delivery) the
2. Buyer may accept what has been carrier acts for the seller in
delivered, at the contract rate collecting the purchase price,
which the buyer must pay to
RULES WHEN QUANTITY IS MORE THAN obtain possession of the goods.
AGREED UPON:
1. Buyer may reject all; or SELLERS DUTY AFTER DELIVERY TO
2. Buyer may accept the goods CARRIER
agreed upon and reject the rest; 1. To enter on behalf of buyer into such
or contract reasonable under the
3. Buyer may accept all and must circumstances
pay for them at the contract rate 2. To give notice to buyer regarding
NOTE: Acceptance, even if not express necessity of insuring the goods
may be implied when the buyer exercises
acts of ownership over the excess goods. PAYMENT OF THE PURCHASE PRICE
GENERAL RULE: The seller is not bound
RULES WHEN GOODS MIXED WITH to deliver the thing sold unless the
GOODS OF DIFFERENT DESCRIPTION: purchase price has been paid.
Buyer may accept the goods which EXCEPTION: The seller is bound to
are in accordance with the contract deliver even if the price has not been
and reject the rest paid, if a period of payment has been
fixed.
NOTE: If the subject matter is indivisible,
in case of delivery of larger quantity of Sale of Real Property by Unit
goods or of mixed goods, the buyer may Entire area stated in the contract
reject the whole of the goods must be delivered
When entire area could not be
DELIVERY TO THE CARRIER delivered, vendee may:
GENERAL RULE: Where the seller is 1. Enforce the contract with the
authorized or required to send the goods corresponding decrease in price
2. Rescind the sale:

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)
 San Beda College of Law 126

MEMORY AID IN CIVIL LAW

a. If the lack in area is at least c. person with oldest title in good

1/10 than that stated or 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 he and pays a full and fair price for the
known of its smaller area of same at the time of such purchase or
inferior quality irrespective before he has notice of the claim or
of the extent of lack of area interest of some other person in the
or quality property (Veloso vs. CA).
Registration requires actual
Sale for a Lump Sum (A Cuerpo Cierto) recording; if the property was never
Vendor is obligated to deliver all the really registered as when the
land included within the boundaries, registrar forgot to do so although he
regardless of whether the real area has been handed the document, there
should be greater or smaller is no registration.
Ordinarily, there can be no rescission Possession is either actual or
or reduction or increase whether the constructive since the law made no
area be greater or lesser, unless there distinction (Sanchez vs. Ramos 40
is gross mistake. Phil614)
NOTE: The Civil Code presumes that the Possession in Art.1544 includes not
purchaser had in mind a particular piece only material but also symbolic
of land and that he ascertained its area possession (Ten Forty Realty vs. Cruz,
and quality before the contract of sale 10 Sept. 2003.)
was perfected. If he did not do so, or if Title means title because of sale, and
having done so he made no objection and not any other title or mode of
consented to the transaction, he can acquiring property (Lichauco vs.
blame no one but himself (Teran vs. Berenguer 39 Phil 642)
Villanueva Viuda de Riosa 56 Phil 677).
Hernandez vs. Katigbak Rule: When
What is important is the delivery
the property sold on execution is
of all the land included in the boundaries.
registered under Torrens, registration
is the operative act that gives validity
DOUBLE SALE (Art. 1544)
to the transfer or creates a lien on the
Requisites: VOCS land, and a purchaser on execution
1. two or more transactions must sale is not required to go behind the
constitute valid sales; registry to determine the conditions
2. they must pertain exactly to the same of the property. Exception: Where
object or subject matter; the purchaser had knowledge, prior
3. they must be bought from the same to or at the time of the levy, of such
or immediate seller; AND previous lien or encumbrance, his
4. two or more buyers who are at odds knowledge is equivalent to
over the rightful ownership of the registration.
subject matter must represent
conflicting interests. CONDITION
Effect of Non-fulfillment of Condition
Rules of preference: 1. If the obligation of either party is
1. Personal Property subject to any condition and such
a. first possessor in good faith condition is not fulfilled, such
2. Real Property party may either:
a. first registrant in good faith a. refuse to proceed with the
b. first possessor in good faith contract

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)
 San Beda College of Law 127

MEMORY AID IN CIVIL LAW

b. proceed with the contract , facts are or shall be as he then

waiving the performance of represents.
the condition.
2. If the condition is in the nature of Kinds:
a promise that it should happen, 1. EXPRESS any affirmation of fact or
the non-performance of such any promise by the seller relating to
condition may be treated by the the thing if the natural tendency of
other party as breach of such affirmation or promise is to
warranty. induce the buyer to purchase the
same and if the buyer purchases the
NOTE: A distinction must be made thing relying thereon
between a condition imposed on the
perfection of a contract and a condition NOTE: A mere expression of opinion, no
imposed merely on the performance of an matter how positively asserted, does not
obligation. The failure to comply with the import a warranty unless the seller is an
first condition would prevent the juridical expert and his opinion was relied upon by
relation itself from coming into the buyer.
existence, while failure to comply with
the second merely gives the option either 2. IMPLIED - that which the law derives
to refuse or proceed with the sale or to by implication or inference from the
waive the condition. nature of the transaction or the
relative situation or circumstances of
The mere fact that the second the parties, irrespective of any
contract of sale was perfected in intention of the seller to create it.
good faith is not sufficient if, before a. Warranty against eviction
title passes, the second vendee b. Warranty against hidden defects
acquires knowledge of the first c. Warranty as to Fitness and
transaction. The good faith or Merchantability
innocence of the posterior vendee NOTE: An implied warranty is a natural,
needs to continue until his contract not an essential element of a contract,
ripens into ownership by tradition or and is deemed incorporated in the
registration. (Palanca vs. Dir. Of contract of sale. It may however, be
Lands, 46 PHIL 149) waived or modified by express
stipulation. (De Leon)
There is no implied warranty as to the
EFFECT IF BUYER HAS ALREADY SOLD condition, adaptation, fitness or
THE GOODS: suitability or the quality of an article sold
General Rule: The unpaid sellers right to as a second-hand article. But such articles
lien or stoppage in transitu remains even might be sold under such circumstances
if buyer has sold the goods. as to raise an implied warranty.
Except: * A certification issued by a vendor that a
1) When the seller has given consent second-hand machine was in A-1
thereto, or condition is an express warranty binding
2) When the buyer is a purchaser in good on the vendor. (Moles vs. IAC [1989])
faith for value of a negotiable document
of title. A. Warranty against eviction
Warranty in which the seller
WARRANTY guarantees that he has the right to
a statement or representation made sell the thing sold and to transfer
by the seller of goods, ownership to the buyer who shall not
contemporaneously and as a part of be disturbed in his legal and peaceful
the contract of sale, having reference possession thereof.
to the character, quality, or title of
the goods, and by which he promises Elements:
or undertakes to insure that certain

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)
 San Beda College of Law 128

MEMORY AID IN CIVIL LAW

1. vendee is deprived, in whole or in

part, of the thing purchased; Vendors liability is waivable but any
2. the deprivation is by virtue of a stipulation exempting the vendor
final judgment; from the obligation to answer for
3. the judgment is based on a prior eviction shall be void if he acted in
right to the sale or an act bad faith.
imputable to the vendor; Kinds of Waiver:
4. the vendor was summoned in the a. Consciente voluntarily
suit for eviction at the instance of made by the vendee without
the vendee; AND the knowledge and
5. no waiver of warranty by the assumption of the risks of
vendee. eviction
NOTE: vendor shall pay only the
Vendor's liability shall consist of: value which the thing sold had at
1. Total eviction: (VICED) the time of eviction
a. Value of the thing at the time of b. Intencionada made by the
eviction; vendee with knowledge of
b. Income or fruits if he has been the risks of eviction and
ordered to deliver them to the assumption of its
party who won the suit; consequences
c. Costs of the suit; EFFECT: vendor not liable
d. Expenses of the contract; AND NOTE: Every waiver is presumed to be
e. Damages and interests if the sale consciente. To consider it intencionada,
was in bad faith. it must be accompanied by some
circumstance which reveals the vendors
2. Partial eviction: knowledge of the risks of eviction and his
a. to enforce vendors liability intention to submit to such
for eviction (VICED); OR consequences.
b. to demand rescission of
contract. WHERE IMMOVABLE SOLD ENCUMBERED
WITH NON-APPARENT BURDEN
Question: Why is rescission not a remedy 1. Right of vendee
in case of total eviction? a) recission, or
Answer: Rescission contemplates that the b) indemnity
one demanding it is able to return
whatever he has received under the 2. When right cannot be exercised:
contract. Since the vendee can no longer a) if the burden or servitude is
restore the subject-matter of the sale to apparent
the vendor, rescission cannot be carried b) if the non-apparent burden or
out. servitude is registered
c) if vendee had knowledge of the
* The suit for the breach can be directed encumbrance, whether it is registered or
only against the immediate seller, not not
sellers of the seller unless such sellers had 3. When action must be brought
promised to warrant in favor of later - within ONE YEAR from the execution
buyers or unless the immediate seller has of the deed of sale
expressly assigned to the buyer his own
right to sue his own seller. B. Warranty against hidden defects
NOTE: The disturbance referred to in the Warranty in which the seller
case of eviction is a disturbance in law guarantees that the thing sold is free
which requires that a person go to the from any hidden faults or defects or
courts of justice claiming the thing sold, any charge or encumbrance not
or part thereof and invoking reasons. declared or known to the buyer.
Mere trespass in fact does not give rise to
the application of the doctrine of Elements: (SHENPW)
eviction.

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)
 San Beda College of Law 129

MEMORY AID IN CIVIL LAW

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 vendor shall pay damages to the
of price must be brought within vendee
the proper Period (within 6 mos.
from delivery of the thing or 40 C. Implied Warranties of Quality
days from date of delivery in case Warranty of Fitness
of animals); and Warranty in which the seller
6. no Waiver of the warranty. guarantees that the thing sold is
reasonably fit for the known
Remedies of the Vendee: particular purpose for which it was
a. Accion redhibitoria (rescission) acquired by the buyer
b. Accion quanti minoris (reduction
of the price) GENERAL RULE: There is no implied
NOTES: warranty as to the quality or fitness for
Hidden faults or defects pertain only any particular purpose of goods under a
to those that make the object unfit contract of sale
for the use for which it was intended EXCEPTIONS:
at the time of the sale. 1. Where the buyer, expressly or by
This warranty in Sales is applicable in implication manifests to the
Lease (Yap vs. Tiaoqui 13Phil433) seller the particular purpose for
Effect of loss of thing on account of which the goods are required
hidden defects: 2. Where the buyer relies upon the
1. If vendor was aware of hidden sellers skill or judgment
defects, he shall bear the loss and
vendee shall have the right to Warranty of Merchantability
recover: (PED) Warranty in which the seller
a. the price paid guarantees, where the goods were
b. expenses of the contract bought by description, that they are
c. damages reasonably fit for the general purpose
2. If vendor was not aware, he shall be for which they are sold
obliged to return: (PIE) It requires identity between what is
a. price paid described in the contract AND what is
b. interest thereon tendered, in the sense that the latter
c. expenses of the contract if paid is of such quality to have some value
by the vendee
Instances where implied warranties are
Effect if the cause of loss was not the inapplicable:
hidden defect 1. As is and where is sale - vendor makes
If the thing sold had any hidden fault no warranty as to the quality or
at the time of the sale, and should workable condition of the goods, and
thereafter be lost by a (1) fortuitous that the vendee takes them in the
event OR (2) through the fault of the condition in which they are found and
vendee: from the place where they are
the vendee may demand of the located.
vendor the price which he paid 2. Sale of second-hand articles
less the value of the thing at the 3. Sale by virtue of authority in fact or
time of its loss. law

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)
 San Beda College of Law 130

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Caveat Venditor (Let the seller extra-judicial demand before default

beware): the vendor is liable to the can be said to arise (Bricktown Devt Corp
vendee for any hidden faults or defects in vs. Amor Tierra Devt Corp. 57SCRA437)
the thing sold, even though he was not
aware thereof. B. Other Obligations
1. To take care of the goods without the
Caveat Emptor (Let the buyer obligation to return, where the goods
beware): requires the purchaser to be are delivered to the buyer and he
aware of the supposed title of the vendor rightfully refuses to accept
and one who buys without checking the
vendors title takes all the risks and losses NOTES:
consequent to such failure. The buyer in such a case is in the
position of a bailee who has had
RULES IN CASE OF SALE OF ANIMALS goods thrust upon him without his
1. When two or more animals have been assent. He has the obligation to
sold at the same time and the redhibitory take reasonable care of the goods
defect is in one, or some of them but not but nothing more can be
in all, the general rule is that the demanded of him.
redhibition will not affect the others The goods in the buyers
without it. It is immaterial whether the possession under these
price has been fixed for a lump sum for circumstances are at the sellers
all the animals or for a separate price for risk
each. 2. To be liable as a depositary if he
2. No warranty against hidden defects of voluntarily constituted himself as
animals sold at fairs or at public auctions, such
or of livestock sold as condemned. This is 3. To pay interest for the period
based on the assumption that the defects between delivery of the thing and the
must have been clearly known to the payment of the price in the following
buyer. cases:
3. Sale of animals shall be void when: a. Should it have been stipulated
a) animals sold are suffering from b. Should the thing sold and
contagious disease delivered produce fruits or
b) if the use or service for which they income
are acquired has been stated in the c. Should he be in default, from the
contract, and they are found to be unfit time of judicial or extra-judicial
therefor demand for the payment of the
4. Limitation of the action: 40 days from price
the date of their delivery to the vendee
5. Vendor shall be liable if the animal Pertinent Rules:
should die within 3 days after its purchase 1. The vendor is not required to deliver
if the disease which caused the death the thing sold until the price is paid
existed at the time of the contract nor the vendee to pay the price
before the thing is delivered in the
OBLIGATIONS OF THE VENDEE: absence of an agreement to the
A. Principal Obligations: contrary (Article 1524).
1. To accept delivery 2. If stipulated, the vendee is bound to
2. To pay the price of the thing sold in accept delivery and to pay the price
legal tender unless another mode has at the time and place designated;
been agreed upon 3. If there is no stipulation as to the
NOTE: A grace period granted the vendee time and place of payment and
in case of failure to pay the amount/s due delivery, the vendee is bound to pay
is a right not an obligation. The grace at the time and place of delivery
period must not be likened to an 4. In the absence of stipulation as to the
obligation, the non-payment of which, place of delivery, it shall be made
under Article 1169 of the Civil Code, wherever the thing might be at the
would still generally require judicial or

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)
 San Beda College of Law 131

MEMORY AID IN CIVIL LAW

moment the contract was perfected 2. If he has well-grounded fear that his
(Article 1251) possession or ownership would be
5. If only the time for delivery has been disturbed by a vindicatory action or
fixed in the contract, the vendee is foreclosure of mortgage
required to pay even before the thing
is delivered to him; if only the time NOTES:
for payment has been fixed, the If the thing sold is in the possession of
vendee is entitled to delivery even the vendee and the price is already in
before the price is paid by him the hands of the vendor, the sale is a
(Article 1524) consummated contract and Article
1590 is no longer applicable. Article
Ways of accepting goods: 1590, presupposes that the price or
1. Express acceptance any part thereof has not yet been
2. Implied acceptance paid and the contract is not yet
a. When buyer does an act which consummated.
only an owner can do, Under Article 1590, the vendee has no
b. Failure to return goods after cause of action for rescission before
reasonable lapse of time final judgement, otherwise the
vendor might become a victim of
NOTES: machinations between the vendee
The retention of goods is strong and the third person
evidence that the buyer has accepted Disturbance must be in possession and
ownership of the goods. ownership of the thing acquired
Delivery and acceptance are two If the disturbance is caused by the
separate and distinct acts of different existence of non-apparent servitude,
parties the remedy of the buyer is rescission,
Delivery is an act of the vendor not suspension of payment.
and one of the vendors
obligations; vendee has nothing
to do with the act of delivery by When vendee cannot suspend payment
the vendor of the price even if there is disturbance
Acceptance is an obligation of in the possession or ownership of the
the vendee; acceptance cannot thing sold:
be regarded as a condition to 1. if the vendor gives security for the
complete delivery; return of the price in a proper case
seller must comply with the 2. if it has been stipulated that
obligation to deliver although notwithstanding any such
there is no acceptance yet by the contingency, the vendee must make
buyer payment (see Article 1548 par.3)
Acceptance by the buyer may 3. if the vendor has caused the
precede actual delivery; there may disturbance or danger to cease
be actual receipt without acceptance 4. if the disturbance is a mere act of
and there may be acceptance without trespass
receipt 5. if the vendee has fully paid the price
Unless otherwise agreed upon,
acceptance of the goods by the buyer REMEDIES FOR BREACH OF CONTRACT
does not discharge the seller from A. Remedies of the seller
liability for damages or other legal 1. Action for payment of the price (Art.
remedy like for breach of any promise 1595)
or warranty 2. Action for damages for non-
acceptance of the goods (Art. 1596)
When vendee may suspend payment of 3. Action for rescission (Art. 1597)
the price: B. Remedies of the buyer
1. If he is disturbed in the possession or 1. Action for specific performance (Art.
ownership of the thing bought 1598)

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)
 San Beda College of Law 132

MEMORY AID IN CIVIL LAW

2. Action for rescission or damages for been a failure to pay two or more
breach of warranty (Art 1599) installments
NOTE: Apply likewise to contracts
A. REMEDIES OF THE SELLER FOR purporting to be leases of personal
BREACH OF CONTRACT property with option to buy
IN CASE OF MOVABLES Art. 1484 does not apply to a sale:
1. Ordinary Remedies 1. Payable on straight terms (partly
a. Movables in General Failure of in cash and partly in one term)
the vendee to appear to receive 2. Of Real property
delivery or, having appeared, Remedies:
failure to tender the price at the 1. Specific performance upon
same time, unless, a longer vendees failure to pay
period for its payment has been NOTE: Does not bar full recovery for
stipulated judgment secured may be executed
action to rescind the sale on all personal and real properties of
(Art. 1593) the buyer which are not exempt from
b. Sale of Goods execution (Palma v. CA.)
action for the price (Art. 2. Rescission of the sale if vendee
1595) shall have failed to pay two or
action for damages (Art. more installments
1596) NOTES:
2. Unpaid Seller Nature of the remedy which
Types: requires mutual restitution bars
a. The seller of the goods who has further action on the purchase
not been paid or to whom the price (Nonato vs. IAC.)
price has not been tendered GENERAL RULE: cancellation of
b. The seller of the goods, in case a sale requires mutual restitution,
bill of exchange or other that is all partial payments of
negotiable instrument has been price or rents must be returned
received as conditional payment, EXCEPTIONS: a stipulation that
AND the condition on which it was the installments or rents paid
received has been broken by shall not be returned to the
reason of the dishonor of the vendee or lessee shall be valid
instrument, insolvency of the insofar as the same may not be
buyer or otherwise. unconscionable under the
Remedies: circumstan-ces (Article 1486).
1. Possessory lien over the goods 3. Foreclosure of the chattel
2. Right of stoppage in transitu mortgage on the thing sold if
after he has parted with the vendee shall have failed to pay
possession of the goods and the two or more installments. In this
buyer becomes insolvent case, there shall be no further
3. Special Right of resale action against the purchaser to
4. Special Right to rescind the sale recover unpaid balance of the
5. Action for the price price.
6. Action for damages
NOTES:
3. Article 1484 or Recto Law Further recovery barred only from the
Remedies of vendor in sale of time of actual sale at public auction
personal property by installments conducted pursuant to foreclosure
Requisites: (Macondray vs. Tan.)
1. Contract of sale Other chattels given as security
2. Personal property cannot be foreclosed if they are not
3. Payable in installments subject of the installment sale (Ridad vs.
4. In the case of the second and Filipinas investment and Finance Corp.
third remedies, that there has GR 39806, Jan. 28, 1983)

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)
 San Beda College of Law 133

MEMORY AID IN CIVIL LAW

If the vendor assigns his right to a An Act to Provide Protection to

financing company, the latter may be buyers of Real Estate on Installment
regarded as a collecting agency of the Payments
vendor and cannot therefore recover any Law governing sale or financing of
deficiency from the vendee (Zayas vs. real estate on installment payments
Luneta Motors Co.) Requisites:
When the vendor assigns his credit to 1. transactions or contracts
another person, the latter is likewise involving the sale OR financing of
bound by the same law. Accordingly, real estate on installment
when the assignee forecloses on the payments, including residential
mortgage, there can be no further condominium apartments; and
recovery of the deficiency and the 2. buyer defaults in payment of
vendor-mortgagee is deemed to have succeeding installments.
renounced any right thereto (Borbon II vs.
Servicewide Specialist, Inc. 258SCRA658) Rights of the buyer:
NOTE: However, Article 1484(3) does A. If Buyer has paid at least two
NOT bar one to whom the vendor has (2) years of installments
assigned on with a recourse basis his 1. The buyer must pay, without
credit against the vendee from additional interest, the unpaid
recovering from the vendor the installments due within the total
assigned credit in full although the grace period earned by him.
vendor may have no right of recovery There shall be one (1) month
against the vendee for the deficiency grace period for every one (1)
(Filipinas Invest. & Finance Corp. vs. year of installment payments
Vitug, Jr. 28SCRA658) made
NOTE: This right shall be
NOTE: Remedies are alternative and exercised by the buyer ONLY once
exclusive in every 5 years of the life of the
contract AND its extensions.
IN CASE OF IMMOVABLES 2. Actual cancellation can only take
1. Ordinary Remedies place after 30 days from receipt
a. In case of anticipatory breach by the buyer of the notice of
rescission (Article 1591) cancellation OR demand for
b. Failure to pay the purchase price rescission by a notarial act AND
upon full payment of the cash
rescission upon judicial or surrender value to the buyer
notarial demand for (Olympia Housing vs. Panasiatic,
rescission (Article 1592) 16 January 2003.)
NOTE: The seller shall refund to
the vendee may pay, even the buyer the cash surrender
after the expiration of the
value of the payments on the
period, as long as no demand
property equivalent to 50% of the
for rescission has been made
total payments made. After five
upon him
(5) years of installments, there
NOTE: Article 1592 does not
shall be an additional 5% every
apply to:
year but not to exceed 90% of the
1) Sale on instalment of real
total payments made
estate
3. The buyer shall have the right to
2) Contract to sell
sell his rights or assign the same
3) Conditional sale
to another person OR to reinstate
4) Cases covered by RA 6552:
the contract by updating the
Realty Installment buyer
account during the grace period
protection act
and before actual cancellation of
the contract
2. R.A. No. 6552 or Maceda Law
4. The buyer shall have the right to
pay in advance any installment or

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)
 San Beda College of Law 134

MEMORY AID IN CIVIL LAW

the full unpaid balance of the claim to the specific tax on the goods
purchase price any time without themselves (Arts. 2247 and 2241).
interest and to have such full NOTE: The bringing of an action to
payment of the purchase price recover the purchase price is not one of
annotated in the certificate of the ways of losing the possessory lien. An
title covering the property. unpaid seller does not lose his lien by
reason that he has obtained a money
B. If Buyer has paid less than 2 judgement or decree for the price of
years of installments goods (Art. 1529, last paragraph).
1. The seller shall give the buyer a
grace period of NOT less than 60 II. Stoppage of goods in transitu
days from the date the Requisites:
installment became due. If the 1. Seller must be unpaid
buyer fails to pay the installments 2. Buyer must be insolvent
due at the expiration of the grace 3. Goods must be in transit
period, the seller may cancel the 4. Seller must either:
contract after 30 days from a. actually take possession of
receipt by the buyer of the notice the goods sold OR
of cancellation or the demand for b. give notice of his claim to the
rescission of contract by a carrier or other person in
notarial act. possession
2. Same No. 3 and 4 paragraph A 5. Seller must surrender the
above negotiable document of title, if
any, issued by the carrier or
NOTE: Down payments, deposits or bailee
options on the contract shall be included 6. Seller must bear the expenses of
in the computation of the total number of delivery of the goods after the
installment payments made exercise of the right

Remedies of Unpaid Seller GOODS ARE CONSIDERED IN TRANSITU:

I. Possessory Lien 1. after delivery to a carrier or other
When may be exercised: bailee and before the buyer or his agent
1. Where the goods have been sold takes delivery of them; and
without any stipulation as to 2. If the goods are rejected by the buyer,
credit and the carrier or other bailee continues
2. When the goods have been sold in possession of them
on credit, but the term of credit
has expired GOODS ARE NO LONGER CONSIDERED IN
3. Where the buyer becomes TRANSITU:
insolvent 1. after delivery to the buyer or his agent
When lost: in that behalf;
1. Delivery of the goods to a carrier 2. if the buyer or his agent obtains
or bailee for the purpose of possession of the goods at a point before
transmission to the buyer without the destination originally fixed;
reserving ownership or right of 3. if the carrier or the bailee
possession acknowledges to hold the goods on behalf
2. When the buyer lawfully obtains of the buyer; and
possession of the goods 4. if the carrier or bailee wrongfully
3. By waiver of the lien refuses to deliver the goods to the buyer
NOTE: Possessory lien is lost after the
seller loses possession but his lien as an Effects of the exercise of the right
unpaid seller remains; hence he is still an 1. The goods are no longer in transit.
unpaid creditor with respect to the price 2. The contract of carriage ends;
of specific goods sold. His preference can instead the carrier now becomes a
only be defeated by the governments mere bailee, and will be liable as
such.

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)
 San Beda College of Law 135

MEMORY AID IN CIVIL LAW

3. The carrier should not deliver price, irrespective of the delivery

anymore to the buyer or the latters or transfer of title
agent; otherwise he will clearly be 3. Where the goods cannot readily
liable for damages. be resold for a reasonable price
4. The carrier must redeliver to, or AND the buyer wrongfully refuses
according to the directions of the to accept them even before the
seller. ownership of the goods has
passed, if Article 1596 is
WAYS OF EXERCISING THE RIGHT TO inapplicable.
STOP:
1. By taking actual possession of the VI. Action for damages
goods When may be exercised:
2. By giving notice of his claim to the 1. In case of wrongful neglect or
carrier or bailee refusal by the buyer to accept or
pay for the thing sold (Art. 1596
III. Special Right of Resale par.1)
May be exercised only when the 2. In an executory contract, where
unpaid seller has either a right of lien the ownership in the goods has
OR has stopped the goods in transitu not passed, and the seller cannot
AND under ANY of the following maintain an action to recover the
conditions: price (Art 1595)
1. Where the goods are perishable in 3. If the goods are not yet identified
nature at the time of the contract or
2. Where the right to resell is subsequently
expressly reserved in case the B. REMEDIES OF THE BUYER FOR
buyer should make a default BREACH OF CONTRACT
3. Where the buyer delays in the
payment of the price for an 1. Action for specific performance
unreasonable time (Art. 1598)
Where the seller has broken the
IV. Rescission contract to deliver specific or
Types: ascertained goods
1. Special Right to Rescind Under The judgment or decree may be
Art. 1534 If the seller has either unconditional, or upon such terms
the right of lien OR a right to stop and conditions as to damages,
the goods in transitu AND under payment of the price and otherwise
either of 2 situations: as the court may deem just
a. Where the right to rescind on
default has been expressly 2. Remedies of buyer for breach of
reserved warranty by seller (Art. 1599):
b. Where the buyer has been in 1. Recoupment accept the goods and
default for an unreasonable set up the sellers breach to reduce
time or extinguish the price
2. Under Art. 1597 (technical 2. Accept the goods and maintain an
rescission) action for damages for breach of
warranty
V. Action for the price 3. Refuse to accept the goods and
When may be exercised: maintain an action for damages for
1. Where the ownership has passed breach of warranty
to the buyer AND he wrongfully 4. Rescind the contract by returning or
neglects OR refuses to pay for the offering the return of the goods, and
price recover the price of any part thereof
2. Where the price is payable on a NOTE: These are alternative remedies.
day certain AND he wrongfully
neglects OR refuses to pay for the When rescission by buyer not allowed:

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)
 San Beda College of Law 136

MEMORY AID IN CIVIL LAW

1. if the buyer accepted the goods One which lacks the proper
knowing of the breach of warranty formalities, form of words, or other
without protest requisites prescribed by law for a
2. if he fails to notify the seller within a mortgage, but shows the intention of
reasonable time of his election to rescind the parties to make the property
3. if he fails to return or offer to return subject of the contract as security for
the goods in substantially as good a debt and contains nothing
condition as they were in at the time of impossible or contrary to law
the transfer of ownership to him (Cachola vs. CA 208SCRA496)

EXTINGUISHMENT OF SALE * When can there be presumption as to

1. Same causes as in all other Equitable Mortgage?
obligations 1) Parties must have entered into a
2. Conventional Redemption contract denominated as a contract of
3. Legal Redemption sale
2) The intention of the parties was to
CONVENTIONAL REDEMPTION secure an existing debt by way of
The right which the vendor reserves mortgage
to himself, to reacquire the property NOTE: In the cases referred to in Arts.
sold provided he returns to the 1602 and 1604, the apparent vendor may
vendee: ask for the reformation of the instrument.
b. the price of the sale; Remedy of Reformation: To correct the
c. expenses of the contract; instrument so as to make it express the
d. any other legitimate payments true intent of the parties.
made therefore and;
e. the necessary and useful Redemption Period
expenses made on the thing sold; a. if there is an agreement: period
and agreed upon cannot exceed 10 years
f. fulfills other stipulations which b. if no agreement as to the period: 4
may have been agreed upon. years from the date of the contract
c. the vendor who fails to repurchase
the property within the period agreed
A sale with conventional redemption is
upon may, however, exercise the
deemed to be an equitable mortgage in
right to repurchase within 30 days
any of the following cases: (IPERTOD)
FROM the time final judgment was
1. Unusually Inadequate purchase price; rendered in a civil action on the basis
2. Possession by the vendor remains, as that the contract was a true sale with
lessee or otherwise; right of repurchase
3. Extension of redemption period after This refers to cases involving a
expiration; transaction where one of the
4. Retention by the vendee of part of parties contests or denies that
the purchase price; the true agreement is one of sale
5. Vendor binds himself to pay the Taxes with right to repurchase; not to
of the thing sold; cases where the transaction is
6. Any Other case where the parties conclusively a pacto de retro
really intended that the transaction sale. Example: Where a buyer a
should secure the payment of a debt retro honestly believed that he
or the performance of any obligation; entered merely into an Equitable
or Mortgage, not a pacto de retro
7. When there is Doubt as to whether transaction, and because of such
contract is contract of sale with right belief he had not redeemed
of repurchase or an equitable within the proper period.
mortgage. NOTE: Tender of payment is
sufficient to compel redemption, but
Equitable Mortgage is not in itself a payment that relieves
the vendor from his liability to pay

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)
 San Beda College of Law 137

MEMORY AID IN CIVIL LAW

the redemption price (Paez vs. 4. Sale of adjacent rural lands not
Magno.) exceeding one hectare (Article
1621)
5. Sale of adjacent small urban
LEGAL REDEMPTION
lands bought merely for
The right to be subrogated, upon the speculation (Article 1622)
same terms and conditions stipulated B. Under special laws:
in the contract, in the place of one 1. An equity of redemption in cases
who acquires a thing by (1) purchase of judicial foreclosures
or (2) dation in payment, or (3) by any 2. A right of redemption in cases of
other transaction whereby ownership extra-judicial foreclosures
is transferred by onerous title. 3. Redemption of homesteads
May be effected against movables or 4. Redemption in tax sales
immovables. 5. Redemption by an agricultural
It must be exercised within thirty (30) tenant of land sold by the
days from the notice in writing by the landowner
vendor.\

ASSIGNMENT OF CREDIT
NOTE: Written notice under Article 1623 a contract by which the owner of a
is mandatory for the right of redemption credit transfers to another his rights
to commence (PSC vs. Sps. Valencia 19 and actions against a third person in
August 2003.) consideration of a price certain in
money or its equivalent
BASIS OF LEGAL REDEMPTION: Not on
any proprietary right, which after the sale NOTE: Transfer of rights by assignment
of the property on execution, leaves the takes place by the perfection of the
judgment debtor and vests in the contract of assignment without the
purchaser, but on a bare statutory necessity of delivering the document
privilege to be exercised only by the evidencing the credit.
persons named in the statute. this rule does not apply to
negotiable documents and
Tender of payment is not necessary; documents of title which are
offer to redeem is enough. governed by special laws.

PRE-EMPTION REDEMPTION Effects of Assignment:

1. arises before 1. arises after sale 1. transfers the right to collect the full
sale value of the credit, even if he paid a
2. no rescission 2. there can be price less than such value
because no sale as rescission of the 2. transfers all the accessory rights
yet exists original sale 3. debtor can set up against the assignee
3. the action is 3. action is directed all the defenses he could have set up
directed against against the buyer
against the assignor
the prospective
seller
Effect of payment by the debtor after
assignment of credit
Instances of legal redemption:
1. Before Notice of the assignment
A. Under the Civil Code (legal
redemption): Payment to the original creditor
1. Sale of a co-owner of his share to is valid and debtor shall be
a stranger (Article 1620) released from his obligation
2. When a credit or other 2. After Notice
incorporeal right in litigation is Payment to the original creditor
sold (Article 1634) is not valid as against the
3. Sale of an heir of his hereditary assignee
rights to a stranger (Article 1088)

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)
 San Beda College of Law 138

MEMORY AID IN CIVIL LAW

He can be made to pay again by GENERAL RULE: Debtor has the right of
the assignee legal redemption in sale of credit or
incorporeal rights in litigation
Warranties of the assignor of credit: EXCEPTIONS:
a. He warrants the existence of the a. Sale to a co-heir or co-owner
credit b. Sale to a co-owner
b. He warrants the legality of the c. Sale to the possessor of property
credit at the perfection of the in question
contract
NOTE: There is no warranty as to the
solvency of the debtor unless it is
BARTER
expressly stipulated OR unless the
insolvency was already existing and of BARTER
public knowledge at the time of the contract whereby one of the parties
assignment binds himself to give one thing in
consideration of the other's promise
NOTE: The seller of an inheritance to give another thing (Article 1638)
warrants only the fact of his heirship but
not the objects which make up his NOTE: Barter is similar to a sale with the
inheritance. only difference that instead of paying a
price in money, another thing is given in
Liabilities of the assignor of credit for lieu of the purchase price
violation of his warranties
1. Assignor in good faith PERFECTION and CONSUMMATION
Liability is limited only to the Perfected from the moment there is
price received and to the a meeting of minds upon the things
expenses of the contract, and any promised by each party in
other legitimate payments by consideration of the other
reason of the assignment
2. Assignor in bad faith Consummated from the time of
Liable not only for the payment of mutual delivery by the contracting
the price and all the expenses but parties of the things promised
also for damages
NOTES:
Legal Redemption in Sale or Credit or Where the giver of the thing bartered
other incorporeal right in litigation is not the lawful owner thereof, the
Requisites: aggrieved party cannot be compelled
1. There must be a sale or assignment of to deliver the thing which he has
credit promised and is also entitled to
2. There must be a pending litigation at damages.
the time of the assignment Where a party is evicted of the thing
3. The debtor must pay the assignee: exchanged, the injured party is given
a. price paid by him the option, either to recover the
b. judicial cost incurred by him; AND property he has given in exchange
c. interest on the price from the with damages or only claim an
date of payment indemnity for damages.
As to matters not provided for by the
4. The right must be exercised by the provisions on barter, the provisions
debtor within 30 days from the date on sales will apply suppletorily
the assignee demands (judicially or
extra-judicially) payment from him BULK SALES LAW (Act No. 3952)
When Sale or Transfer in Bulk:
SALE OF CREDIT OR OTHER Any sale, transfer, mortgage, or
INCORPOREAL RIGHTS IN LITIGATION assignment:

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)
 San Beda College of Law 139

MEMORY AID IN CIVIL LAW

1. Of a stock of goods, wares, If the statement is fair upon its

merchandise, provisions, or materials face and the buyer has no
otherwise than in the ordinary course knowledge of its incorrectness
of trade and the regular prosecution and nothing to put him on inquiry
of business; or about it, he will be protected in
2. Of all or substantially all, of the its purchase
business or trade; or The remedy of the creditor is not
3. Of all or substantially all, of the against the goods but to
fixtures and equipment used in the prosecute the seller criminally
business of the vendor, mortgagor, 2. With knowledge or imputed
transferor or assignor (section 2) knowledge of buyer
The vendee accepts it at his peril
When sale or transfer in bulk not The sale is valid only as between
covered by Bulk Sales Law: the vendor and the vendee but
1. If the sale or transfer is in the void against the creditors
ordinary course of trade and the
regular prosecution of business of the 3. With names of certain creditors
vendor; without notice are omitted from
2. If it is made by one who produces and the list
delivers a written waiver of the The sale is void as to such
provisions of the Bulk Sales Act from creditors, whether the omission
his creditors was fraudulent or not,
3. If it is made by an executor, 4. With respect to an innocent
administrator, receiver, assignee in purchaser for a value from the
insolvency, or public officer, acting original purchaser
under judicial process (Section 8); An innocent purchaser for value
and from the original purchaser is
4. If it refers to properties exempt from protected
attachment or execution (Rules of However if the circumstances are
Court, Rule 39, Section 12) such as to bind the subsequent
purchaser with constructive
Protection Accorded to Creditors by notice that the sale to the vendor
Bulk Sales Law: (original purchaser) was
1. It requires the vendor, mortgagor, fraudulent, the property will be
transferor or assignor to deliver to liable in his hands to creditors of
the vendee, mortgagee, or to his or the original vendor
its agent or representative a sworn Effect of violation of law on Transfer:
written statement of names and 1. As between the parties
addresses of all creditors to whom The Bulk Sales Law does not in
said vendor, etc. may have been any way affect the validity of the
indebted together with the amount transfer as between the
due or to be due (Section 3) intermediate parties thereto
2. It requires the vendor, mortgagor, A sale not in compliance with the
transferor or assignor, at least 10 Bulk Sales Law is valid against all
days before the sale, transfer, persons other than the creditors.
mortgage, assignment to make a full 2. As against creditors
detailed inventory showing the A purchaser in violation of the
quantity and the cost of price of law acquires no right in the
goods, and to notify every creditor of property purchased as against the
the price terms and conditions of the creditors of the seller
sale, etc. (Section 5) His status is that of a trustee or
receiver for the benefit of the
Effects of False Statements in the creditors of the seller; as such, he
Schedule of Creditors: is responsible for the disposition
1. Without knowledge of buyer of the property

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)
 San Beda College of Law 140

MEMORY AID IN CIVIL LAW

Remedies Available to creditors:

The proper remedy is one against the High-End or Luxury Goods
goods to subject them to the payment Goods which are not necessary for life
of the debt, such as execution, maintenance and whose demand is
attachment, garnishment, or by a generated in large part by the higher
proceeding in equity income groups
An ordinary action against the Shall include but not limited to:
purchaser to obtain money jewelry, branded or designer clothing
judgement will not lie, unless the and footwear, wearing apparel,
purchaser has sold or otherwise leisure and sporting goods,
disposed of, or dealt with the electronics and other personal effects
property, so as to become personally NOTE: A natural-born citizen of the
liable to creditors for value of it. Philippines who has lost his citizenship
Acts Punished by Bulk Sales Law: but who resides in the Philippines shall be
1. Knowingly or wilfully making or granted the same rights as Filipino
delivering a statement required by citizens
the Act which does not include the
names of all the creditors of the Foreign Equity Participation:
vendor, etc. with the correct amount Foreign-owned partnerships,
due or to become due or which associations and corporations formed
contains any false or untrue and organized under the laws of the
statement; and Philippines may, upon registration
2. Transferring title to any stock of with SEC and DTI, or in case of
goods, wares, merchandise, Foreign-owned single proprietorship
provisions or materials sold in bulk with the DTI, engage or invest in
without consideration or for nominal retail trade business, subject to the
consideration (Section 7) following categories:
1. Category A:
RETAIL TRADE LIBERALIZATION ACT
Paid-up capital of the equivalent
(RA 8762)
in Philippine Peso of: <
$2,500,000 US Dollars
Retail Trade
Reserved exclusively for Filipino
Any act occupation or calling of citizens and corporations wholly
habitually selling direct to the
owned by citizens
general public merchandise,
2. Category B:
commodities or goods for
consumption, but the restrictions of Minimum paid-up capital of the
this law shall not apply to the equivalent in Philippine Peso of
following: $2,500,000 US Dollars, but
1. Sales by manufacturer, processor, <$7,500,000
laborer, or worker, to the general May be wholly owned by
public the products manufactured, foreigners except for the first two
processed produced by him if his years after the effectivity of this
capital does not exceed P100,000; Act wherein foreign participation
2. Sales by a farmer or agriculturalist shall be limited to not > 60% of
selling the products of his farm total equity.
3. Sales in restaurant operations by a 3. Category C:
hotel owner or inn-keeper Paid-up capital of the equivalent
irrespective of the amount of capital; in Philippine Peso of:
provided that the restaurant is $7,500,000 US Dollars or more
incidental to the hotel business; and May be wholly owned by
4. Sales which are limited only to foreigners
products manufactured, processed or NOTE: In no case shall the
assembled by a manufacturer through investments for establishing a
a single outlet, irrespective of store in Categories B and C be
capitalization

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)
 San Beda College of Law 141

MEMORY AID IN CIVIL LAW

less than the equivalent in unless such retailer has at least 1

Philippine Peso of: US $830,000 store capitalized at a minimum of
4. Category D: $25,000,000 US Dollars
Enterprises specializing in high- 3. 5-year track record in retailing; and
end or luxury products with paid- 4. Only nationals from, or juridical
up capital of the equivalent in entities formed or incorporated in
Philippine Peso of: $250,000 US Countries which allow to engage in
Dollars per store retail trade in the Philippines
May be wholly owned by
foreigners

PD 957 (SUBDIVISION AND

NOTES: CONDOMINIUM BUYERS PROTECTIVE
Foreign investor shall be required to DECREE
maintain in the Philippines the FULL
amount of the prescribed minimum Registration of Projects
capital, UNLESS the foreign investor The registered owner of a parcel of
has notified the SEC and the DTI of its land who wishes to convert the same
intention to repatriate its capital and into a subdivision project shall submit
cease operations in the Philippines his subdivision plan to the HOUSING
AND LAND-USE REGULATORY BOARD,
Failure to maintain the full amount of which shall act upon and approve the
the prescribed minimum capital prior
same, upon a finding that the plan
to notification of the SEC and the DTI
complies with the Subdivision
shall subject the foreign investors to
Standards' and Regulations
penalties or restrictions on any future
enforceable at the time the plan is
trading activities/business in the
submitted. The same procedure shall
Philippines
be followed in the case of a plan for
a condominium project except that,
NOTE: Foreign Investors Acquiring Shares
in addition, said Authority shall act
of Stock of existing retail stores whether
upon and approve the plan with
or not publicly listed whose net worth is
respect to the building or buildings
in excess of the Peso equivalent of US
included in the condominium project
$2,500,000 may purchase only up to the
in accordance with the National
maximum of 60% of the equity thereof
Building Code (R.A. No. 6541).
within the first 2 years, and thereafter,
The subdivision plan, as so approved,
they may acquire the remaining
shall then be submitted to the
percentage consistent with the allowable
Director of Lands for approval in
foreign participation as herein provided
accordance with the procedure
prescribed in Section 44 of the Land
NOTE: All retail Trade enterprises under
Registration Act (Act No. 496, as
categories B and C in which foreign
amended by R.A. No. 440): Provided,
ownership exceeds 80% of equity shall
that it case of complex subdivision
offer a minimum of 30% of their equity to
plans, court approval shall no longer
the public through any stock exchange in
be required. The condominium plan
the Philippines within 8 years from the
as likewise so approved, shall be
start of the operations
submitted to the Register of Deeds of
the province or city in which the
Qualification of Foreign Retailers
property lies and the same shall be
1. Minimum of $200,000,000 US Dollars
acted upon subject to the conditions
net worth in its parent corporation
and in accordance with the procedure
for Categories B and C and
prescribed in Section 4 of the
$50,000,000 net worth in its parent
Condominium Act (R.A. No. 4726).
corporation for Categories D
2. 5 retailing branches or franchises in
National Housing authority (now
operation anywhere around the world
Housing and Land Use Regulatory

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)
 San Beda College of Law 142

MEMORY AID IN CIVIL LAW

Board) has the exclusive jurisdiction

to regulate the real estate trade and LEASE
business.
LEASE
License to sell consensual, bilateral, onerous, and
Such owner or dealer to whom has commutative contract by virtue of
been issued a registration certificate which one person binds himself to
shall not, however, be authorized to grant temporarily the use of the thing
sell any subdivision lot or or to render some service to another
condominium unit in the registered who undertakes to pay some rent.
project unless he shall have first Kinds of Leases (From the view point of
obtained a license to sell the project the subject matter
within two weeks from the 1. Lease of things
registration of such project. 2. Lease of service
3. Lease of work
Exempt transactions
A license to sell and performance NOTE: Since lease is consensual and is not
bond shall not be required in any of imposed by law, only the lessor has the
the following transactions: right to fix the rents. However, the
1. Sale of a subdivision lot resulting from increasing of the rent is not an absolute
the partition of land among co- right on the part of the lessor.
owners and co-heirs.
2. Sale or transfer of a subdivision lot by Characteristics or Requisites for Lease
the original purchaser thereof and of Things
any subsequent sale of the same lot. 1. Consensual
3. Sale of a subdivision lot or a 2. Principal
condominium unit by or for the 3. Nominate
account of a mortgagee in the 4. Purpose is to allow enjoyment or
ordinary course of business when use of a thing (the person to
necessary to liquidate a bona fide enjoy is the lessee; the person
debt. allowing the enjoyment by
another is the lessor
Grounds for Revocation of registration 5. Subject matter must be within
certificate and license to sell of owners the commerce of man
or dealers 6. Purpose to which the thing will be
1. Is insolvent; or devoted should not be immoral
2. Has violated any of the provisions of 7. Onerous (there must rent or price
this Decree or any applicable rule or certain)
regulation of the Authority, or any 8. Period is Temporary (not
undertaking of his/its performance perpetual, hence, the longest
bond; or period is 99 years)
3. Has been or is engaged or is about to 9. Period is either definite or
engage in fraudulent transactions; or indefinite
4. Has made any misrepresentation in If no term is fixed, we should
any prospectus, brochure, circular or apply Art.1682 (for rural leases)
other literature about the subdivision and Art. 1687 (for urban leases)
project or condominium project that If the term is fixed but
has been distributed to prospective indefinite, the court will fix the
buyers; or term under the law of obligations
5. Is of bad business repute; or and contracts
6. Does not conduct his business in 10. Lessor need not be the owner
accordance with law or sound
business principles. NOTE: A usufructuary may thus lease
the premises in favor of a stranger,
such lease to end at the time that the
usufruct itself ends

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)
 San Beda College of Law 143

MEMORY AID IN CIVIL LAW

Lease of Contract for a

Rent Services Piece of Work
The compensation either in (locatio (locatio operas)
operatum)
money, provisions, chattels, or
1. the 1. the important
labor, received by the lessor from important object object is the work
the lessee. is the labor done
performed by the
lessor
NOTES: 2. the result is 2. the result is
When a student boards and lodges in generally not generally
a dormitory, there is no contract of important, hence important;
lease. The contract is not designated the laborer is generally, the price
specifically in the Civil Code. It is an entitled to be is not payable until
innominate contract. It is however, paid even if the work is
believed that the contract can be there is completed, and said
destruction of price cannot be
denominated as the contract of board
the work through lawfully demanded
and lodging. fortuitous event if the work is
There is a contract of lease when the destroyed before it
use and enjoyment of a safety deposit is finished and
box in a bank is given for a price accepted
certain. This is certainly not a
contract of deposit.
A lease of personal property with
option to buy (at a nominal amount) Lease of Agency
at the end of the lease can be Services
considered a sale. It is based on It is based on
employment representation
the lessor of agent represents his
LEASE SALES services does not principal and enters
1. only use or 1. ownership is represent his into juridical acts.
enjoyment is transferred employer nor
transferred does he execute
2. transfer is 2. transfer is juridical acts.
temporary permanent Principal Preparatory
3. lessor need not 3. seller must be contract contract
be the owner the owner at the
time the property
is delivered Rule for Lease of Consumable Goods
4. the price of the 4. usually, the GENERAL RULE: Consumable goods
object, selling price is cannot be the subject matter of a
distinguished from mentioned contract of lease of things.
the rent, is usually Why? To use or enjoy them, they will have
not mentioned to be consumed. This cannot be done by
a lease since ownership over them is not
Lease of Lease of Services transferred to him by the contract of
Things lease.
1. object of 1. object is some EXCEPTIONS:
contract is a work or service a. If they are merely exhibited
thing b. If they are accessory to an
2. lessor has to 2. lessor has to industrial establishment
deliver the thing perform some work
leased or service RECORDING OF LEASE OF PERSONAL
3. in case of 3. in case of breach, PROPERTY
breach, there no action for GENERAL RULE: Lease of real property
can be an action specific
is personal right
for specific performance
performance EXCEPTIONS: Lease partakes of the
nature of real right if:

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)
 San Beda College of Law 144

MEMORY AID IN CIVIL LAW

a. Lease of real property is more absolutely his his rights to the

than 1 year rights and assignee
b. Lease of real property is obligations to the
registered regardless of duration sublessee
4. the sublessee, 4. the assignee has a
generally, does direct action against
NOTE: Lease of personal property cannot
not have any the lessor
be registered. To be binding against third direct action
persons, the parties must execute a against the lessor
public instrument.
RIGHTS OF LESSOR IF SUBLEASE
* Lease may be made orally, but if the
PROHIBITED BUT ENTERED INTO BY
lease of Real Property is for more than 1
LESSEE:
year, it must be in writing under the
1) Rescission and damages, or
Statue of Frauds.
2) Damages only (Contract will be allowed
to remain in force)
Persons Disqualified to be Lessees 3) Ejectment
Because Disqualified to Buy
1. A husband and a wife cannot lease to Instances when sublessee is liable to the
each other their separate properties lessor:
except: a. All acts which refer to the use and
a. if separation of property was preservation of the thing leased
agreed upon in the manner stipulated between
b. if there has been judicial the lessor and the lessee
separation of property b. The sublessee is subsidiarily
Persons referred to in Art. 1491 are liable to the lessor for any rent
disqualified because of fiduciary due from the lessee.
relationships NOTE: The sublessee shall not be
responsible beyond the amount of rent
SUBLEASE due from him.
A separate and distinct contract of
lease wherein the original lessee Accion Directa: direct action which the
becomes a sublessor to a sublessee. lessor may bring against a sublessee who
Allowed unless expressly prohibited. misuses the subleased property.
The sublessee is subsidiarily liable for
any rent due. The lessor has an accion OBLIGATIONS OF THE LESSOR (DnM)
directa against the sublessee for a. Delivery of the object (cannot be
unpaid rentals and improper use of waived)
the object. b. Making of necessary repairs
c. Maintenance in peaceful and
adequate possession
SUBLEASE ASSIGNMENT OF
LEASE
OBLIGATIONS OF THE LESSEE (R2EN2U)
1. there are two 1. there is only one
leases and two juridical a. to pay rent
distinct juridical relationship, that of b. to use thing leased as a diligent
relationships the lessor and the father of a family, devoting it to
although assignee, who is the use stipulated
immediately converted into a c. to pay expenses for the deed of
connected and lessee lease
related to each d. to notify the lessor of usurpation
other or untoward acts
2. the personality 2. the personality of
e. to notify the lessor of need for
of the lessee does the lessee
not disappear disappears
repairs
f. to return the property leased
3.the lessee does 3. the lessee upon termination of the lease
not transmit transmits absolutely

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)
 San Beda College of Law 145

MEMORY AID IN CIVIL LAW

Effect of Destruction of the Thing 1. only to dwelling place or any other

Leased: building intended for human
1. Total destruction by a fortuitous habitation
event 2. even if at the time the contract was
Lease is extinguished perfected, the lessee knew of the
dangerous condition or waived the
right to rescind on account of this
condition
Rules on Alteration of the Form of the
2. Partial destruction Lease
a. Proportional reduction of the The Lessor can alter provided there
rent, or is no impairment of the use to which
b. Rescission of the lease the thing is devoted under the terms
When lessee may suspend payment of of the lease
rent: Alteration can also be made by the
1. lessor fails to undertake necessary Lessee so long as the value of the
repairs property is not substantially impaired
2. lessor fails to maintain the lessee in
peaceful and adequate enjoyment of Rules in case of Urgent Repairs
the property leased The lessee is obliged to tolerate the
work although it may be very
NOTE: Suspend- for the intervening annoying to him and although during
period, the lessee does not have to pay the same time he may be deprived of
the rent. a part of the premises
1. If repairs last for more than 40 days:
EFFECTIVITY OF THE SUSPENSION: Lessee cannot act for reduction of
The right begins: rent or rescission
a) In the case of repairs, from the time he 2. If 40 days or more: lessee can ask for
made the demand for said repairs, and proportionate reduction
the demand went unheeded. NOTE: In either case, rescission may be
b) In the case of eviction, from the time availed of if the main purpose is to
the final judgment for eviction becomes provide a dwelling place and the property
effective. becomes uninhabitable.

Alternative remedies of Aggrieved party Effects if Lessor fails to make Urgent

(Lessor/Lessee) in case of Non- Repairs
fulfillment of duties: 1. Lessee may order repairs at the
1. Rescission and damages lessors cost
2. Damages only, allowing the contract 2. Lessee may sue for damages
to remain in force Specific 3. Lessee may suspend the payment of
Performance the rent
NOTE: Damages Recoverable in 4. Lessee may ask for rescission, in case
ejectment cases are the rents or the fair of substantial damage to him
rental value of the premises. The
following cannot be successfully claimed: TRESPASS IN LEASE:
1. Profits plaintiff could have 1. Trespass in fact (perturbacion de
earned were it not for the mere hecho):
possible entry or unlawful physical enjoyment is reduced
detainer Lessor will not be held liable.
2. Material injury to the premises 2. Trespass in law (perturbacion de
3. Actual, moral, or exemplary derecho):
damages
A third person claims legal right
to enjoy the premises
Immediate termination of lease under
Art. 1660 applies:
Lessor will be held liable

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)