SALES Midterms Reviewer

SALLS MldLerms | karlchl SanLos age of
I. Ceneral Concepts

. efinition of Sales

Attlcle 1458 clvll coJe 8y Lhe conLracL of sale one of Lhe conLracLlng parLles (seller) obllgaLes hlmself Lo (1) transfer the ownersh|p of
and (2) Lo de||ver a deLermlnaLe Lhlng and Lhe oLher (buyer) Lo pay Lherefor a prlce cerLaln ln money or lLs equlvalenL

A conLracL of sale may be abso|ute or cond|t|ona|

CCMMLkCIAL SALL
O s Lhe sale of personal properLy for Lhe purpose of resa|e elLher ln Lhe same form or ln a dlfferenL form wlLh Lhe lnLenLlon of derlvlng
proflL ln Lhe resale
O rlor sales law dlsLlngulshed beLween commerclal sales and clvll sales
4 eg ln Lerms of rlsk of loss and deLerloraLlon and hldden defecLs
O Such dlsLlncLlon has been abrogaLed by Lhe provlslons of Lhe Code of Commerce on Sales

. ature of obligations created
eclprocal obllgaLlons (conLracL of purchase and sale)

Attlcle 1458 Clvll Code refer above

Attlcle 1165 clvll coJe When whaL ls Lo be dellvered ls a deLermlnaLe Lhlng Lhe credlLor ln addlLlon Lo Lhe rlghL granLed hlm by ArL 1170
(damages for breach of obllgaLlon) may compel Lhe debLor Lo make Lhe dellvery (speclflc performance)
f Lhe Lhlng ls lndeLermlnaLe or generlc he may ask LhaL Lhe obllgaLlon be complled wlLh aL Lhe expense of Lhe debLor (subsLlLuLed
performance)

C. Sales distinguisbed from otber transactions

a ConLracL for a plece of work

Attlcle 171J clvll coJe 8y Lhe conLracL for a plece of work Lhe conLracLor blnds hlmself Lo execuLe a plece of work for Lhe employer ln
conslderaLlon of a cerLaln prlce or compensaLlon 1he conLracLor may elLher employ only hls |abor or sk||| C a|so furn|sh the mater|a|

Attlcle 1467 clvll coJe
cON1k4c1 Ol 54L A conLracL for Lhe dellvery aL a cerLaln prlce of an arLlcle whlch Lhe vendor ln Lhe ord|nary course of hls buslness
manufactures or procures for the genera| market wheLher Lhe same ls on hand at the t|me or not
cON1k4c1 lOk 4 Plc Ol wOkk lf Lhe goods are Lo be manufacLured spec|a||y for the customer Anu upon h|s spec|a| order and noL
for Lhe general markeL

Ce|est|no Co Co v Co||ector 9 h|| 84 (9% AlLhough wlndows and doors were made only when cusLomers placed Lhelr orders lL does noL
alLer Lhe naLure of Lhe esLabllshmenL whlch accepLs orders as called for Lhe employmenL of maLerlals whlch lL manufacLures ordlnarlly and
hablLually lL ls a conLracL of sale f lL accepLs a [ob LhaL requlres exLraordlnary or addlLlonal equlpmenL or lnvolves servlces noL generally
performed by lL lL ls a conLracL for a plece of work

MC1AnCL Cl uS1nC1Cn
O ulfference ln Lhe rules governlng boLh conLracLs (eg Lax raLes and oLher charges are lower for conLracLors) and appllcaLlon of Sol
O cboostl v ctomwell SC adopLed MassachuseLLs rule LhaL Lhe LesL wheLher Lhe Lhlng Lransferred ls one noL ln exlsLence and whlch never
would have exlsLed buL for Lhe order of Lhe parLy deslrlng Lo acqulre lL or a Lhlng whlch would have exlsLed and been sub[ecL of sale Lo
some oLher person even lf Lhe order had noL been glven
O @toe test of o cottoctot he renders servlce ln Lhe course of an lndependenL occupaLlon represent|ng the w||| of h|s emp|oyer only as
Lo Lhe resu|t of h|s work and not as to the means by whlch lL ls accompllshed (ozo 5teveJotl co v @tllJoJ and o cotloto 5oot
cettol v @tllJoJ)
O ,ote exomples of cON@Ac@ Ol 5A
4 fuLure sale of arLlcles whlch he ls hablLually maklng alLhough aL Lhe Llme noL made or flnlshed
4 arLlcle ordered ls exacLly such as plalnLlff makes and keeps on hand for sale Lo anyone and no change or modlflcaLlon of lL ls
made aL defendanL's requesL alLhough made afLer and ln consequence of defendanL's order for lL


b Lease of Lhlngs

Attlcle 164J clvll coJe n Lhe lease of Lhlngs one of Lhe parLles blnds hlmself Lo glve Lo anoLher Lhe en[oyment or use of a Lhlng for a
pr|ce certa|n and for a perlod whlch may be deflnlLe or lndeflnlLe Powever no lease for more Lhan 99 years shall be valld

Attlcle 1484 clvll coJe Iendor's alLernaLlve remedles ln a conLracL of sale of personal properLy prlce of whlch ls payable ln lnsLallmenLs
1 LxacL fulflllmenL of obllgaLlon ln case of fallure Lo pay (speclflc performance)
2 Cancel sale ln case of fallure Lo pay Lwo or more lnsLallmenLs
3 loreclose Lhe chaLLel morLgage
Attlcle 1485 clvll coJe ArL 1484 also appllcable Lo contracts purport|ng to be |eases of persona| property w|th opt|on to buy when
|essor has depr|ved |essee of the possess|on or en[oyment of th|ng
O Socalled renLs musL be regarded as paymenL of prlnce ln lnsLallmenLs slnce due paymenL of Lhe agreed amounL resulLs ln Lhe
Lransfer of LlLle Lo Lhe lessee

ose v 8arrueco h|| 4 (939% 1he LoLal renLs belng equal Lo Lhe value of Lhe Lhlng leased Lhe SC consldered Lhe LransacLlon as one of sale

c Agency Lo buy or sell

Attlcle 1868 clvll coJe 8y a conLracL of agency a person blnds hlmself Lo render some serv|ce or Lo do someth|ng |n representat|on or
on beha|f of another wlLh Lhe consenL or auLhorlLy of Lhe laLLer

Attlcle 1466 clvll coJe n consLrulng a conLracL conLalnlng provlslons characLerlsLlc of boLh Lhe conLracL of sale and of Lhe conLracL of
agency Lo sell essent|a| c|auses of the who|e |nstrument shall be consldered

CCn1AC1 Cl ACLnC? 1C SLLL
O AgenL recelves Lhe Lhlng Lo be sold and does not pay for |ts pr|ce buL dellvers Lo Lhe prlnclpal Lhe prlce he obLalns form Lhe sale of Lhe
Lhlng Lo a Lhlrd person and lf he does noL succeed ln selllng lL he returns the th|ng (;oltoo v lotsos notJwote co)
O AgenL ls exempLed from all llablllLy ln Lhe dlscharge of hls commlsslon provlded he acLs ln accordance wlLh Lhe lnsLrucLlons recelved from
hls prlnclpals and Lhe laLLer (prlnclpal) musL lndemnlfy Lhe agenL for all Lhe damages whlch he may lncur ln carrylng ouL Lhe agency
wlLhouL faulL on hls parL
O c v omcot ulsLrlbuLor obllged Lo accepL dellvery per monLh and pay prlce on dellvery aL wholesale prlce wlLhouL dlscounL rebaLe or
oLher deducLlon SC held LhaL lL was a conLracL of sale noL agency

SALL CCN1kAC1 CI AGLNC 1C SLLL
8uyer pays Lhe prlce AgenL does noL pay
8uyer acqulres ownershlp over Lhe ob[ecL of Lhe
conLracL
AgenL does noL acqulre ownershlp
Seller warranLs AgenL does noL warranL unless he agrees
Lssence of sale Lransfer of LlLle or agreemenL Lo
Lransfer lL for Lhe prlce pald or promlsed
Lssence of agency dellvery Lo Lhe agenL of Lhe goods noL as Lhe agenL's properLy
buL of Lhe prlnclpal who remalns Lhe owner and has Lhe rlghL Lo conLrol Lhe sales
by Lhe agenL flx Lhe prlce and Lerms demand and recelve Lhe proceeds of Lhe
sales less Lhe agenL's commlsslon

ker Co Ltd v L|ngad 38 SCkA 4 (9% AgenL deslgnaLed as excluslve dealer of manufacLurer wlLhln prescrlbed LerrlLory wlLh sLlpulaLlon
LhaL (1) LlLle Lo goods remaln wlLh manufacLurer unLll pald ln cash or accepLable securlLy LhaL (2) prlce dlscounLs and Lerms of sale shall be Lhose
esLabllshed by Lhe manufacLurer and LhaL (3) proceeds of Lhe sale shall be held ln LrusL for Lhe manufacLurer elaLlonshlp beLween agenL and
manufacLurer ls agency

d 8arLer or exchange

Attlcle 16J8 clvll coJe 8y a conLracL of barLer or exchange one of Lhe parLles blnds hlmself Lo g|ve one th|ng ln cons|derat|on of Lhe
other's prom|se to g|ve another th|ng

Attlcle 1468 clvll coJe lf Lhe conslderaLlon of Lhe conLracL conslsLs parLly ln money and parLly ln anoLher Lhlng Lhe LransacLlon shall be
characLerlzed by Lhe manlfesL lnLenLlon of Lhe parLles f such lnLenLlon does noL clearly appear lL shall be consldered a
8A1L lf value of Lhe Lhlng glven as parL of Lhe conslderaLlon amounL of Lhe money or lLs equlvalenL
O 8ecause Lhe Lrue cause of Lhe conLracL for Lhe oLher parLy ls Lhe Lhlng Lransferred and noL Lhe money
SALL lf
value of Lhlng amounL of money or lLs equlvalenL
value of Lhlng value of money
SALLS MldLerms | karlchl SanLos age 3 of

#,olfest ltetlo# [udged by Lhe parLles conLemporaneous and subsequenL acLs
#xceeJs tbe omoot of moey# CC does noL provlde Lo whaL exLenL Lhe value of Lhe Lhlng glven as a conslderaLlon should exceed Lhe amounL of
money glven for Lhe conLracL Lo be consldered as a barLer

e uaclon en ago

Attlcle 1245 clvll coJe uaLlon ln paymenL whereby properLy ls allenaLed Lo Lhe credlLor ln saLlsfacLlon of a debL ln money shall be
governed by Lhe law of sales
O 1here ls a novaLlon of Lhe conLracL of loan lnLo a conLracL of sale when credlLor agrees Lo accepL a Lhlng ln paymenL of Lhe debL
O f Lhlng glven ln paymenL Lurns ouL Lo belong Lo anoLher credlLor's remedy governed by law on sales noL on loan

SALL DACICN LN AGC
no preexlsLlng credlL reexlsLlng credlL
Clves rlse Lo obllgaLlons LxLlngulshes obllgaLlons
Cause or conslderaLlon ls Lhe prlce from Lhe vlewpolnL
of Lhe seller or Lhe obLalnlng of Lhe ob[ecL from Lhe
vlewpolnL
Cause or conslderaLlon from Lhe vlewpolnL of Lhe person offerlng
Lhe daLlon ln paymenL ls Lhe exLlngulshmenL of hls debL from Lhe
vlewpolnL of Lhe credlLor ls Lhe acqulslLlon of Lhe ob[ecL offered ln
lleu of Lhe orlglnal credlL
CreaLer freedom ln Lhe deLermlnaLlon of Lhe prlce Less freedom ln deLermlnlng Lhe prlce
Clvlng of Lhe prlce may generally end Lhe obllgaLlon of
Lhe buyer
Clvlng of Lhe ob[ecL ln lleu of Lhe credlL may exLlngulsh compleLely
or parLlally Lhe credlL (dependlng on Lhe agreemenL)

Sonny Lo v kS LcoIormwork System h|| Inc Gk No 494 (3%

f ChaLLel MorLgage

5ectlo J cbottel ,ottoe ow ChaLLel morLgage ls a cond|t|ona| sa|e of persona| property as securlLy for paymenL of debL or Lhe
performance of some oLher obllgaLlon speclfled Lhereln
O #CondlLlon" sale shall be vold upon seller paylng Lo purchaser a sum of money or dolng some oLher acL named erformance of sald
condlLlon renders Lhe sale lmmedlaLely vold and morLgagee ls dlvesLed of hls LlLle

Attlcle 2140 clvll coJe 8y a chaLLel morLgage personal properLy ls recorded |n the Chatte| Mortgage keg|ster as a secur|ty for the
performance of an ob||gat|on f Lhe movable lnsLead of belng recorded ls dellvered Lo Lhe credlLor or a Lhlrd person Lhe conLracL ls
pledge and noL a chaLLel morLgage

g uonaLlon

Attlcle 725 clvll coJe uonaLlon ls an act of ||bera||ty whereby a person d|sposes gratu|tous|y of a Lhlng or rlghL ln favor of anoLher who
accepts lL

Attlcle 726 clvll coJe 1here ls also a donaLlon when
1 a person glves Lo anoLher a Lhlng or rlghL on accounL of
a laLLer's merlLs
b servlces rendered by hlm Lo Lhe donor provlded Lhey do noL consLlLuLe a demandable debL
2 glfL lmposes upon Lhe done a burden whlch ls less Lhan Lhe value of Lhe Lhlng glven

Attlcle 745 clvll coJe Lhe done musL accepL Lhe donaLlon
1 personally
2 Lhrough an auLhorlzed person wlLh a
a speclal power for Lhe purpose
b general and sufflclenL power
CLherwlse Lhe donaLlon shall be vold

Attlcle 746 clvll coJe AccepLance musL be made durlng Lhe llfeLlme of Lhe donor and of Lhe donee

Attlcle 747 clvll coJe ersons who accepL donaLlons |n representat|on of others who may noL do so by Lhemselves shall be obllged Lo
make Lhe noLlflcaLlon and noLaLlon of whlch ArL 740 speaks


Attlcle 748 clvll coJe 1he donaLlon of a movable may be ora||y or |n wr|t|ng
An ora| donat|on requlres Lhe s|mu|taneous de||very of Lhe Lhlng or of Lhe document represent|ng Lhe rlghL donaLed
f Lhe value of Lhe personal properLy donaLed 3000 Lhe donaLlon and accepLance shall be made ln wrlLlng CLherwlse Lhe donaLlon
shall be vold

Attlcle 749 clvll coJe n order LhaL Lhe donat|on of an |mmovab|e may be valld lL musL be made ln a publlc documenL speclfylng Lhereln
Lhe properLy donaLed and Lhe value of Lhe charges whlch Lhe done musL saLlsfy
1he accepLance may be made ln Lhe same deed of donaLlon or ln a separaLe publlc documenL buL lL shall noL Lake effecL unless lL ls done
durlng Lhe llfeLlme of Lhe donor
f Lhe accepLance ls made ln a separaLe lnsLrumenL Lhe donor shall be noLlfled Lhereof ln an auLhenLlc form and Lhls sLep shall be noLed
ln boLh lnsLrumenLs

Attlcle 1471 clvll coJe f Lhe pr|ce |s s|mu|ated Lhe sale ls vold buL Lhe acL may be shown Lo have been ln reallLy a
1 donaLlon or
2 some oLher acL or conLracL

. Contracts and rigbts related to Sales

a CpLlonal ConLracL

Attlcle 1479 clvll coJe A promlse Lo buy and sell a deLermlnaLe Lhlng for a prlce cerLaln ls reclprocally demandable
An accepted un||atera| prom|se to buy or to se|| (opLlon conLracL) a deLermlnaLe Lhlng for a prlce cerLaln ls blndlng upon Lhe promlssory
lf Lhe promlse ls supporLed by a conslderaLlon dlsLlncL from Lhe prlce

MA nouse Inc v Sta Mon|ca Industr|a| and Deve|opment Corp Gk No 4 (%

O Also known as #conLracL of opLlon"
O 1he perlod (whlch ls supporLed by conslderaLlon) LhaL ls glven Lo offeree wlLhln whlch Lo accepL Lhe offer
O C1Cn generally unllaLeral conLlnulng offer upon sufflclenL conslderaLlon for a speclfled Llme mplled obllgaLlon Lo Lo keep Lhe offer open
for Lhe Llme speclfled Can be wlLhdrawn before accepLance lf Lhere ls no conslderaLlon (ArL 1324 CC)
4 DnACCL1Lu C1Cn unllaLeral conLracL lacklng Lhe muLual elemenLs of a conLracL
4 ACCL1Lu C1Cn an execuLory conLracL arlses whlch ls muLually blndlng upon Lhe parLles ceases Lo become an opLlon
and becomes a muLual blndlng agreemenL of sale
O A pr|v||ege exlsLlng ln one person (Lhe buyer) for whlch he had pald a conslderaLlon whlch glves hlm Lhe rlghL Lo buy from anoLher person lf he
chooses aL any Llme wlLhln Lhe agreed perlod aL a flxed prlce 1hls belng hls prerogaLlve he may noL be compelled Lo exerclse Lhe opLlon Lo
buy before Lhe Llme explres
O arLles are st||| undec|ded wheLher or noL Lo buy Lhe properLy
O A conLracL by vlrLue of Lhe Lerms of whlch Lhe parLles LhereLo promlse and obllgaLe Lhemselves Lo enLer lnLo anoLher conLracL aL a fuLure Llme
upon Lhe happenlng of cerLaln evenLs or Lhe fulflllmenL of cerLaln condlLlons
O A cons|derat|on for an opLlonal conLracL ls [usL as lmporLanL for any oLher klnd of conLracL L ls separaLe and dlsLlncL from Lhe conslderaLlon ln
Lhe conLracL ln whlch Lhe parLles may enLer lnLo upon Lhelr exerclse of Lhe opLlon
O An accepted un||atera| prom|se to buy or se|| a deLermlnaLe Lhlng for a prlce cerLaln supporLed by conslderaLlon dlsLlncL from Lhe prlce
Cfferor ls bound Lo comply wlLh hls underLaklng buL opLlonee (who has opLlon) has Lhe rlghL buL noL obllgaLlon Lo buy or sell 1he opLlonee
can sue for damages only buL he cannoL sue for speclflc performance on Lhe proposed conLracL
O lOc@AcON unaccepLed unllaLeral promlse Lo buy or sell (opposlLe of opLlon conLracL) lmperfecL promlse whlch ls merely an offer

b ConLracL Lo Sell or LxecuLory ConLracL of Sale

O 8llaLeral conLracL whereby Lhe prospecLlve seller whlle expressly reservlng Lhe ownershlp of Lhe sub[ecL properLy desplLe dellvery Lhereof Lo
Lhe prospecLlve buyer blnds hlmself Lo sell Lhe sald properLy excluslvely Lo prospecLlve buyer upon fulflllmenL of Lhe condlLlon agreed upon
LhaL ls full paymenL of Lhe purchase prlce (cotoel v cA)
O no LlLle passes Lo Lhe buyer as agalnsL Lhe seller or persons clalmlng under hlm Dn1L some acL or condlLlon necessary Lo compleLe Lhe
Lransfer (eg full paymenL of Lhe prlce) has been performed or fulfllled
O Iu|| payment of the purchase pr|ce parLakes of a pos|t|ve suspens|ve cond|t|on nonfulflllmenL of whlch prevenLs Lhe obllgaLlon Lo sell from
arlslng and Lhus ownershlp ls reLalned by Lhe prospecLlve seller wlLhouL furLher remedles by Lhe prospecLlve buyer
O xomples of cON@Ac@ @O 5
4 LxecuLlon of deed of absoluLe sale only upon compleLlng paymenL of Lhe prlce

4 Cwnershlp ls reLalned by Lhe seller unLll paymenL of Lhe prlce ln full such paymenL ls a pos|t|ve suspens|ve cond|t|on fallure of
whlch ls not a breach buL an event that prevented the ob||gat|on of the vendor Lo convey LlLle ln accordance wlLh ArL 1184 CC
(poslLlve condlLlon)
O L may noL be consldered a conLracL of sale because Lhe flrsL essenLlal elemenL (consenL) ls lacklng
4 LxpllclL reservaLlon by seller of Lhe Lransfer of LlLle Lo Lhe prospecLlve buyer seller does noL as yeL agree or consenL Lo
Lransfer ownershlp of Lhe properLy sub[ecL of Lhe conLracL Lo sell unLll Lhe happenlng of an evenL (eg full paymenL)
O ud|c|a| resc|ss|on of contract to se|| not necessary lallure by one of Lhe parLles Lo ablde by Lhe condlLlon ln a conLracL Lo sell resulLed ln Lhe
resclsslon of Lhe conLracL (All ,otool Assoc c v cA)

ne|rs of Anton|o 8ernabe v Court of Appea|s Gk No 44 (8%

Spouses keyes v Sa|vador Gk No 394 (8%

CCnu1CnAL CCn1AC1 Cl SALL v CCn1AC1 1C SLLL

CCNDI1ICNAL CCN1kAC1 CI SALL CCN1kAC1 1C SLLL
lallure Lo pay ls a resoluLory condlLlon whlch puLs an end Lo Lhe LransacLlon lallure Lo pay ls a poslLlve suspenslve condlLlon
1lLle passes Lo Lhe vendee afLer compllance wlLh hls obllgaLlon Cwnershlp ls reLalned by Lhe seller
AfLer dellvery ownershlp ls loss unless lL ls resclnded uellvery does noL affecL loss of ownershlp
llrsL elemenL (consenL) ls presenL albelL condlLloned upon Lhe happenlng of
conLlngenL evenL whlch may or may noL occur ln effecL conLracL of sale ls
auLomaLlcally perfecLed wlLhouL furLher acL havlng Lo be performed by Lhe
seller
Cwnershlp noL auLomaLlcally Lransferred Lo Lhe buyer (even lf Lhere has
been prevlous dellvery Lo hlm) upon fulflllmenL of suspenslve condlLlon
(le full paymenL of purchase prlce) Seller sLlll has Lo convey LlLle Lo
prospecLlve buyer by enter|ng |nto a contract of abso|ute sa|e
W|th respect to sa|e to th|rd person
Dpon fulflllmenL of suspenslve condlLlon sale becomes absoluLe whlch
affecLs seller's LlLle
3 becomes buyer ln bad falLh lf possesses conLrasLlve or acLual
knowledge of defecL ln seller's LlLle
Second buyer cannoL defeaL Lhe flrsL buyer's LlLle
W|th respect to sa|e to th|rd person
no double sale (bec no prevlous sale of properLy desplLe
fulflllmenL of suspenslve condlLlon)
3 noL a buyer ln bad falLh
rospecLlve buyer cannoL seek rellef of reconveyance of properLy
buL only sue under ArL 19 (un[usLlfled dlsregard of rlghL)

c lghL of llrsL efusal

O nnovaLlve [urldlcal relaLlon CannoL be deemed a perfecLed conLracL of sale (ArL 1438) nelLher can lL be broughL wlLhln opLlon conLracLs (2
nd

ar ArL 1479) nor posslbly an offer (ArL 1319)
O ConLalns no clear cerLalnLy on boLh Lhe ob[ecL and cause or conslderaLlon
O Can be consldered belonglng Lo a class of preparaLory [urldlcal relaLlons governed by scaLLered provlslons relaLlng Lo human conducL (ArL 19
slnce no real rlghL was creaLed on Lhe properLy) among oLher laws of general appllcaLlon as Lhe essenLlal elemenLs Lo esLabllsh Lhe vlnculum
[urls are sLlll lndeflnlLe and lnconcluslve
O 8reach ls noL enforceable by acLlon for speclflc performance 1he only remedy ls damages for un[usLlfled dlsregard of Lhe rlghL
O An lnLegral parL of conLracLs of lease of real esLaLe 1he conslderaLlon Lherefore ls bullL lnLo Lhe reclprocal obllgaLlons of Lhe parLles
O 8asls of Lhe rlghL
4 CurrenL offer Lo sell by Lhe lessor
4 Cffer Lo purchase by any prospecLlve buyer

Ang u Asunc|on v Court of Appea|s Gk No 9 (994% AlLhough Lhe ob[ecL may be deLermlnaLe exerclse of rlghL dependenL on
CranLor's evenLual lnLenLlon Lo enLer lnLo a blndlng [urldlcal relaLlon wlLh anoLher
1erms (eg prlce) LhaL are yeL Lo be laLer flrmed up

kosencor Dev Corp v Inqu|ng 34 SCkA 9 (% A sale ln vlolaLlon of ol ls resclsslble (for economlc ln[ury Lo holder of ol who ls a Lhlrd
person ln Lhe sale) lf Lhe acqulslLlon was done/subsequenL buyer ls ln bad falLh (buyer was acLually or consLrucLlvely aware of Lhe ol granLed)
Powever absenL proof of bad falLh Lhe sale ls noL resclsslble because possesslon of properLy has lawfully passed Lo Lhe buyer (ArL 1383 ar 2)

o|ytechn|c Un|vers|ty of the h|||pp|nes v Court of Appea|s 38 SCkA 9 (%
O Cnly afLer Lhe granLee falls Lo exerclse Lhe ol under same Lerms and condlLlons wlLhln Lhe perlod agreed upon could Lhe granLor
valldly offer Lo sell Lhe properLy Lo a 3
rd
person under Lhe same Lerms as offered Lo Lhe granLee
O SC anchored Lhe valldlLy of Lhe sLlpulaLlon on conLracLs as Lhe conslderaLlon for Lhe olr ln Lhe lease agreemenL lLself

d LarnesL Money

Attlcle 1482 clvll coJe Whenever earnesL money ls glven ln a conLracL of sale lL shall be consldered as
4 parL of Lhe prlce

4 proof of Lhe perfecLlon of Lhe conLracL

LAnLS1 MCnL?
O pald ln advance of Lhe purchase prlce agreed upon by Lhe parLles ln a conLracL of sale glven by Lhe buyer Lo Lhe seller Lo blnd Lhe
seller Lo Lhe bargaln

LAkNLS1 MCNL C1ICN MCNL
n glvlng an earnesL money buyer manlfesL hls earnesL deslre
Lo buy Lhe properLy ln quesLlon
8uyer ls sLlll undeclded wheLher or noL Lo buy or sell Lhe
properLy
arL of Lhe purchase prlce Clven as a dlsLlncL conslderaLlon for an opLlon conLracL
Clven only when Lhere ls a perfecLed conLracL of sale Applles Lo a sale noL yeL perfecLed
8uyer ls bound Lo pay Lhe balance Wouldbe buyer noL requlred Lo buy aL all

komero v Court of Appea|s SCkA 3 (99%

noLe SC's rullng ln llotlom llos lbll c et ol v cocoeco (C no 147403 2006)
#L was error for Lhe appellaLe courL Lo rely upon ArLlcle 1482 of Lhe Clvll Code ln concludlng LhaL Lhe earnesL money glven 'would be
consldered as parL of Lhe purchase prlce and proof of Lhe perfecLlon of Lhe conLracL' 1hls CourL has emphaslzed LhaL lL ls Lhe proof of Lhe
concurrence of a|| the essent|a| e|ements of the contract of sa|e and noL Lhe glvlng of earnesL money whlch estab||shes the ex|stence
of a perfected sa|e"

. efinition of Terms

Attlcle 16J6 clvll coJe n Lhe precedlng arLlcles ln Lhls 1lLle governlng Lhe sale of goods unless Lhe conLexL or sub[ecL maLLer oLherwlse
requlres
(1) #uocumenL of LlLle Lo goods" lncludes any blll of ladlng dock warranL quedan or warehouse recelpL or order for Lhe dellvery of goods
or any oLher documenL used ln Lhe ordlnary course of buslness ln Lhe sale or Lransfer of goods as proof of Lhe possesslon or conLrol of
Lhe goods or auLhorlzlng or purporLlng Lo auLhorlze Lhe possessor of Lhe documenL Lo Lransfer or recelve elLher by endorsemenL or by
dellvery goods represenLed by such documenL
#Coods lncludes all chaLLels personal buL noL Lhlngs ln acLlon or money of legal Lender ln Lhe hlllpplnes 1he Lerm lncludes growlng
frulLs or crops
#Crder" relaLlng Lo documenLs of LlLle means an order by endorsemenL on Lhe documenLs
#;uallLy of goods" lncludes Lhelr sLaLe or condlLlon
#Speclflc goods# means goods ldenLlfled and agreed upon aL Lhe Llme a conLracL of sale ls made
An anLecedenL or preexlsLlng clalm wheLher for money or noL consLlLuLes value where goods or documenLs of LlLle are Laken elLher ln
saLlsfacLlon Lhereof or as securlLy Lherefor
(2) A person ls |nso|vent wlLhln Lhe meanlng of Lhls 1lLle who elLher has
ceased Lo pay hls debLs ln Lhe ordlnary course of buslness or
cannoL pay hls debLs as Lhey become due wheLher lnsolvency proceedlngs have been commenced or noL
(3) Coods are ln a #dellverable sLaLe" wlLhln Lhe meanlng of Lhls 1lLle when Lhey are ln such a sLaLe LhaL Lhe buyer would under Lhe conLracL
be bound Lo Lake dellvery of Lhem

II. Formation of tbe Contract

. Capacity of tbe parties

Attlcle 1489 clvll coJe All persons auLhorlzed ln Lhls Code Lo ob||gate themse|ves may enLer lnLo conLracL of sale savlng Lhe
modlflcaLlons conLalned ln Lhe followlng arLlcles
Where necessar|es are sold and dellvered Lo a mlnor or oLher person wlLhouL capaclLy Lo acL he musL pay a reasonable prlce Lherefor
necessarles are Lhose referred Lo ln ArL 290 (now ArL 194 of lC)
cf Att 1J99cc obllotlo of lcopocltoteJ petso wbo eteteJ lto cottoct to testltote tbot wblcb be bos beeflteJ ftom

Attlcle 2J4 lomlly coJe Lmanc|pat|on Lakes place by Lhe aLLalnmenL of ma[orlLy Dnless oLherwlse provlded ma[orlLy commencles aL Lhe
age of 18 years (A 6809)

Attlcle 44 clvll coJe 1he followlng are [ur|d|ca| persons
(1) 1he State and lLs pollLlcal subdlvlslon
(2) CLher corporaLlons lnsLlLuLlons and enLlLles for pub||c |nterest or purpose creaLed by law Lhelr personallLy
belngs as soon as Lhey have been consLlLuLed accordlng Lo law
(3) CorporaLlons parLnershlps and assoclaLlons for pr|vate |nterest or purpose Lo whlch Lhe law granLs a [urldlcal
personallLy separaLe and dlsLlncL from LhaL of each shareholder parLner or member

Attlcle 46 clvll coJe !urldlcal persons may acqulre and possess properLy of all klnds as well as lncur obllgaLlons and brlng clvll or crlmlnal
acLlons ln conformlLy wlLh Lhe laws and regulaLlons of Lhelr organlzaLlon

Attlcle J6(6) cotpototlo coJe Lvery corporaLlon lncorporaLed under Lhls Code has Lhe power and capaclLy
6 n case of sLock corporaLlons Lo lssue or sell sLocks Lo subscrlbers and Lo sell sLocks Lo subscrlbers and Lo sell Lreasury sLocks
ln accordance wlLh Lhe provlslons of Lhls Code and Lo admlL members Lo Lhe corporaLlon lf lL be a nonsLock corporaLlon

a AbsoluLe ncapaclLy

Attlcle 1J27 clvll coJe 1he followlng cannot g|ve consent Lo a conLracL
(1) DnemanclpaLed mlnors
(2) nsane or demenLed persons and
(3) ueafmuLes who do noL know how Lo wrlLe

Attlcle 1J28 clvll coJe ConLracLs enLered lnLo durlng a |uc|d |nterva| are valld ConLracLs agreed Lo ln a state of drunkenness or dur|ng a
hypnot|c spe|| are voldable

Attlcle 1J90 clvll coJe 1he followlng contracts are vo|dab|e or annu||ab|e even Lhough Lhere may have been no damage Lo Lhe
conLracLlng parLles
(1) Cne of Lhe parLles ls lncapable of glvlng consenL (wanL of capaclLy)
(2) ConsenL ls vlLlaLed by mlsLake vlolence lnLlmldaLlon undue lnfluence or fraud (vlLlaLed consenL)
1hese conLracLs are b|nd|ng unless Lhey are annulled by a proper courL acLlon 1hey are suscept|b|e of rat|f|cat|on

Attlcle 1J9J clvll coJe aLlflcaLlon may be effecLed expressly or LaclLly L ls undersLood LhaL Lhere ls a tac|t rat|f|cat|on lf wlLh know|edge
of the reason whlch renders Lhe conLracL voldable and such reason havlng ceased Lhe person who has a rlghL Lo lnvoke lL should execute
an act whlch necessar||y |mp||es an |ntent|on to wa|ve h|s r|ght

Attlcle 1J97 clvll coJe 1he act|on for annu|ment of Lhe conLracLs may be lnsLlLuLed by a|| who are thereby ob||ged pr|nc|pa||y or
subs|d|ar||y Powever persons who are capable cannoL allege Lhe lncapaclLy of Lhose wlLh whom Lhey conLracLed nor can Lhose who
exerLed lnLlmldaLlon vlolence or undue lnfluence or employed fraud or caused mlsLake base Lhelr acLlon upon Lhese flaws of Lhe
conLracL

Attlcle 1J99 clvll coJe When Lhe defecL of Lhe conLracL conslsLs ln Lhe |ncapac|ty of one of the part|es Lhe lncapaclLaLed person ls not
ob||ged to make any rest|tut|on excepL lnsofar as he has been beneflLed by Lhe prlce or Lhlng recelved by hlm

Attlcle 1489 clvll coJe refer above

Attlcle 194 lomlly coJe Support comprlses everyth|ng |nd|spensab|e for sustenance dwe|||ng c|oth|ng med|ca| attendance educat|on
and transportat|on ln keeplng wlLh Lhe flnanclal capaclLy of Lhe famlly
1he educaLlon of Lhe person Lo be supporLed referred Lo ln Lhe precedlng paragraph shall lnclude hls schoollng or Lralnlng for some
professlon Lrade or vocaLlon even beyond Lhe age of ma[orlLy 1ransporLaLlon shall lnclude expenses ln golng Lo and from school or Lo
and from place of work
4 #Necessotles# lndlspensable for supporL accordlng Lo Lhe soclal poslLlon of Lhe famlly

Labaga|a v Sant|ago 3 SCkA 3 (%

b elaLlve ncapaclLy

Attlcles 1490 clvll coJe Pusband and wlfe cannoL sell properLy Lo each oLher excepL
1 When separaLlon of properLy was agreed upon ln marrlage seLLlemenLs
2 When Lhere has been [udlclal separaLlon of properLy under ArL 191

LASCn lC 1PL DLL
O revenL commlsslon of fraud or pre[udlce Lo Lhlrd persons
O revenL one from unduly lnfluenclng Lhe oLher
O Avold lndlrecL donaLlons

Attlcle 1492 clvll coJe 1he prohlblLlons ln Lhe Lwo precedlng arLlcles are appllcable Lo sales ln
1 Legal redempLlon

2 Compromlses
3 enunclaLlons

Attlcle 7J lomlly coJe LlLher spouse may exerclse any leglLlmaLe professlon occupaLlon buslness or acLlvlLy wlLhouL Lhe consenL of Lhe
oLher 1he laLLer may ob[ecL only on a valld serlous and moral grounds
n case of dlsagreemenL Lhe courL shall declded WCn
1 Cb[ecLlon ls proper
2 8eneflL has accrued Lo Lhe famlly prlor Lo Lhe ob[ecLlon (resulLlng obllgaLlon shall be enforced agalnsL Lhe separaLe
properLy of Lhe spouse who has noL obLalned consenL) or LhereafLer
loregolng provlslons shall noL pre[udlce Lhe rlghLs of credlLors who acLed ln good falLh

Attlcle 96 lomlly coJe 1he adm|n|strat|on and en[oyment of Lhe communlLy properLy shall belong Lo boLh spouses [olnLly n case of
dlsagreemenL Lhe husbands declslon shall prevall sub[ecL Lo recourse Lo Lhe courL by Lhe wlfe for proper remedy whlch musL be avalled
of wlLhln flve years from Lhe daLe of Lhe conLracL lmplemenLlng such declslon

n Lhe evenL LhaL one spouse |s |ncapac|tated or oLherwlse unable Lo parLlclpaLe ln Lhe admlnlsLraLlon of Lhe common properLles Lhe
other spouse may assume so|e powers of adm|n|strat|on 1hese powers do noL lnclude d|spos|t|on or encumbrance wlLhouL auLhorlLy of
Lhe courL or Lhe wrlLLen consenL of Lhe oLher spouse n Lhe absence of such auLhorlLy or consenL Lhe dlsposlLlon or encumbrance shall
be vold Powever Lhe LransacLlon shall be consLrued as a cont|nu|ng offer on Lhe parL of Lhe consenLlng spouse and Lhe Lhlrd person and
may be perfecLed as a blndlng conLracL upon Lhe accepLance by Lhe oLher spouse or auLhorlzaLlon by Lhe courL before Lhe offer ls
wlLhdrawn by elLher or boLh offerors
O rohlblLlon can be Laken advanLage of only by persons who bear such a relaLlonshlp Lo Lhe spouses maklng Lhe Lransfer or Lo Lhe properLy
lLself LhaL such Lransfer lnLerferes wlLh Lhelr rlghLs or lnLeresL

Med|na v Co||ector of Interna| kevenue SCkA 3 (9% 1he governmenL ls an lnLeresLed parLy Lo all maLLers lnvolvlng Laxable LransacLlons
and ls quallfled Lo quesLlon Lhelr valldLy or leglLlmacy whenever necessary Lo block Lax evaslon

Ca||m||mCanu||as v Iortun 9 SCkA (984%

c Speclflc ncapaclLy

Attlcle 1491 clvll coJe 1he followlng persons cannoL acqulre by purchase even aL a publlc or [udlclal aucLlon elLher ln person or Lhrough
Lhe medlaLlon of anoLher
(1) 1he guard|an Lhe properLy of Lhe person or persons who may be under hls guardlanshlp
4 AcLual colluslon ls hard Lo prove beLween purchaser and guardlan buL such facL can be deduced from Lhe very shorL Llme
beLween Lhe Lwo sales and Lhe relaLlonshlp beLween Lhem
(2) Agents Lhe properLy whose admlnlsLraLlon or sale may have been enLrusLed Lo Lhem unless Lhe consenL of Lhe prlnclpal has been glven
4 ncapaclLy Lo buy resLs on Lhe facL LhaL greed mlghL geL Lhe beLLer of Lhe senLlmenLs of loyalLy and dlslnLeresLedness whlch
should anlmaLe an admlnlsLraLor or agenL
4 A broker does noL come wlLhln Lhe prohlblLlon because he ls a mere gobeLween or mlddleman beLween Lhe seller and Lhe
buyer brlnglng Lhem LogeLher Lo make Lhe conLracL Lhemselves
(3) Lxecutors and adm|n|strators Lhe properLy of Lhe esLaLe under admlnlsLraLlon
4 8uL an execuLor can buy Lhe heredlLary rlghLs of an helr Lo Lhe esLaLe under hls admlnlsLraLlon (Novol v tlpoez)
(4) ub||c off|cers and emp|oyees Lhe properLy of Lhe SLaLe or of any subdlvlslon Lhereof or of any governmenLowned or conLrolled
corporaLlon or lnsLlLuLlon Lhe admlnlsLraLlon of whlch has been enLrusLed Lo Lhem Lhls provlslon shall apply Lo [udges and governmenL
experLs who ln any manner whaLsoever Lake parL ln Lhe sale
4 nLended noL only Lo move remove any occaslon for fraud buL also Lo surround Lhem wlLh Lhe presLlge necessary Lo carry
ouL Lhelr funcLlons by freelng Lhem from all susplclon whlch alLhough unfounded Lends Lo dlscredlL Lhe lnsLlLuLlon by
puLLlng lnLo quesLlon Lhe honor of sald funcLlonarles
(3) ust|ces [udges prosecut|ng attorneys c|erks of super|or and |nfer|or courts and other off|cers and emp|oyees connected w|th the
adm|n|strat|on of [ust|ce Lhe properLy and rlghLs ln llLlgaLlon or levled upon an execuLlon before Lhe courL wlLhln whose [urlsdlcLlon or
LerrlLory Lhey exerclse Lhelr respecLlve funcLlons Lhls prohlblLlon lncludes Lhe acL of acqulrlng by asslgnmenL and shall apply Lo |awyers
wlLh respecL Lo Lhe properLy and rlghLs whlch may be Lhe ob[ecL of any llLlgaLlon ln whlch Lhey may Lake parL by vlrLue of Lhelr professlon
4 Law lnLends Lo avold |mproper |nterference by a [udge ln a Lhlng levled upon or sold by hls order (o @lco v loblpolt)
4 ncapaclLy of SC or CA !usLlce exLends Lo properLles or rlghLs ln llLlgaLlon ln Lhelr LerrlLorlal [urlsdlcLlon
4 Cl !udge can buy properLles ln llLlgaLlon pendlng ouLslde hls LerrlLorlal [urlsdlcLlon
4 rohlblLlon llkewlse exLends Lo properLles levled upon an execuLlon before Lhe courL wlLhln whose LerrlLorlal [urlsdlcLlon
Lhey exerclse Lhelr respecLlve funcLlons
4 As Lo lawyers curLall any undue lnfluence of Lhe lawyer on hls cllenL on accounL of Lhelr confldenLlal assoclaLlon
4 IlolaLlon of Lhls prohlblLlon also consLlLuLes a breach of profess|ona| eth|cs

4 no prohlblLlon lf cllenL asslgns Lo Lhe lawyer afLer Lhe [udgmenL has been rendered and became flnal ConLlngenL fee of
lawyer maybe annoLaLed as an adverse clalm on properLy awarded Lo cllenL
(6) Any oLhers spec|a||y d|squa||f|ed by |aw

O Such conLracLs made ln vlolaLlon of Lhls provlslon are vold for publlc pollcy 1hey cannoL be raLlfled nelLher can Lhe rlghL Lo seL up
Lhe defense of lllegallLy be walved
O LASCn lC 1PL DLL
1 1he persons occupy flduclary relaLlonshlp wlLh Lhe owner of properLles menLloned
2 revenL Lhem from belng LempLed Lo Lake advanLage of Lhelr poslLlon

D|sta[o v Court of Appea|s 339 SCkA (%

. Uffer and cceptance

a n general

Attlcle 1475 clvll coJe 1he conLracL of sale ls perfecLed aL Lhe momenL Lhere ls a meet|ng of m|nds upon Lhe Lhlng whlch ls Lhe ob[ect of
Lhe conLracL and upon Lhe pr|ce
lrom LhaL momenL Lhe parLles may rec|proca||y demand performance sub[ecL Lo Lhe provlslons of Lhe law governlng Lhe form of
contracts

5A,l cA55
O rlvaLe lnsLrumenL ls noL a mere drafL buL a perfecLed agreemenL and hence obllgaLory even lf Lhere was no sLaLemenL as Lo Lhe area or prlce
per meLer (oyeo v @ombotl)
O Crlglnal agreemenL was abandoned and new proposlLlon was noL enLlrely accepLed by Lhe vendor Lhere was no meeLlng of mlnds and no
perfecLed conLracL (cotejo v coloplto)
O Coowner has noL glven consenL Lo [udlclal sale of a properLy under [udlclal admlnlsLraLlon sale cannoL have valld effecL unLll courL approves
(nollll v lotet)
O no agreemenL when by mlsLake of broker Lhe plalnLlff and defendanL Lurned ouL Lo be boLh buyers (,oJtlol oJ co v 5teveso)
O f purchase of land ls made dependenL on Lhe obLalnlng of loan from a bank and Lhe offer was accepLed no perfecLed conLracL of sale
(Atoeto v otol ltotess AJmllsttotlo)

Spouses I|rme v 8uka| Lnterpr|ses Deve|opment Corporat|on Gk No 48 (3%
D|zon v Court of Appea|s Gk No 44 (999%

b lorm of offer

Attlcle 1J19 clvll coJe ConsenL ls manlfesLed by Lhe meeLlng of Lhe offer and Lhe accepLance upon Lhe Lhlng and Lhe cause whlch are Lo
consLlLuLe Lhe conLracL 1he offer musL be certa|n and Lhe accepLance absoluLe A quallfled accepLance consLlLuLes a counLeroffer

Attlcle 1J25 clvll coJe Dnless lL appears oLherwlse bus|ness advert|sements are of th|ngs for sa|e are not def|n|te offers buL mere
|nv|tat|on Lo make an offer

Attlcle 1J26 clvll coJe Advert|sements for b|dders are slmply lnvlLaLlons Lo make proposals and Lhe adverLlser ls not bound to accept
Lhe hlghesL or lowesL bldders unless Lhe conLrary appears

5A,l cA55
O #LnLerLaln" slmply means LhaL seller ls dellberaLlng abouL Lhe acL of selllng and ls noL Lo be consldered a deflnlLe offer buL [usL an
lnvlLaLlon Lo a proposal whlch may be accepLed or noL (osestock v 8otke)
O f Lhe offer does noL sLaLe Lhe amounL of paymenLs Lo be made ln lnsLallmenLs Lhe offer ls noL cerLaln (oyco v 5etto)

Spouses Navarra v |anters Deve|opment 8ank Gk No 4 (%

c lorm of accepLance

Attlcle 1J19 clvll coJe ConsenL ls manlfesLed by Lhe meeLlng of Lhe offer and Lhe accepLance upon Lhe Lhlng and Lhe cause whlch are Lo
consLlLuLe Lhe conLracL 1he offer musL be cerLaln and Lhe acceptance abso|ute A qua||f|ed acceptance consLlLuLes a counteroffer


O AccepLance musL be plaln and uncondlLlonal Any condlLlon necessarlly lnvolves a new proposal whlch musL be accepLed by Lhe
oLher parLy Lo glve rlse Lo a blndlng agreemenL AccepLance musL be ln accordance wlLh Lhe Lerms and condlLlons of Lhe offer Lo
effecLlvely blnd Lhe offeror

V|||anueva v h|||pp|ne Nat|ona| 8ank Gk No 4493 (%

d Ilces vlLlaLlng consenL

Attlcle 1JJ0 clvll coJe A conLracL where consenL ls glven Lhrough mlsLake vlolence lnLlmldaLlon undue lnfluence or fraud ls voldable

Attlcle 1JJ1 clvll coJe n order LhaL mlsLake may lnvalldaLe consenL lL should refer Lo Lhe
1 SubsLance of Lhe Lhlng whlch ls Lhe ob[ecL of Lhe conLracL or
2 1hose condlLlons whlch have prlnclpally moved one or boLh parLles Lo enLer lnLo Lhe conLracL

Attlcle 1JJ2 clvll coJe When one of Lhe parLles ls unab|e to read or lf Lhe conLracL ls |n a |anguage not understood by h|m and m|stake
or fraud |s a||eged Lhe person enforclng Lhe conLracL musL show LhaL Lhe Lerms Lhereof have been fu||y exp|a|ned Lo Lhe former

Attlcle 1JJJ clvll coJe 1here ls no m|stake lf Lhe parLy alleglng lL knew Lhe doubt cont|ngency or r|sk affecLlng Lhe ob[ecL of Lhe
conLracL

Attlcle 1JJ4 clvll coJe Mutua| error as Lo Lhe |ega| effect of an agreement when Lhe real purpose of Lhe parLles ls frusLraLed may vlLlaLe
consenL

Attlcle 1JJ8 clvll coJe 1here ls fraud when Lhrough |ns|d|ous words or mach|nat|ons of one of Lhe conLracLlng parLles Lhe oLher ls
|nduced to enter lnLo a conLracL whlch wlLhouL Lhem he wou|d not have agreed to
O #nsldlous machlnaLlons" slgnlfles a decelLful scheme or ploL wlLh an evll deslgn or wlLh frauduluenL purpose
O #uecelL" need noL be by means of mlsrepresenLaLlon ln words
O #lallure Lo dlsclose facLs" consLlLuLes fraud when Lhere ls a duLy Lo reveal Lhem (eg parLles are bound by confldenLlal relaLlons)
ArL 1339
5A,l cA55
O ConcealmenL of Lhe facL LhaL he was noL only dlrecLor buL also owner of Lhree fourLhs of Lhe sLock of corporaLlon and who was Lhe chlef
negoLlaLor for Lhe sale of Lhe corpo lands (5tto v eplJe)

Attlcle 1J90(2) clvll coJe Ioldable conLracLs (even lf Lhere ls no damage Lo Lhe conLracLlng parLles) consenL ls vlLlaLed by mlsLake
vlolence lnLlmldaLlon undue lnfluence or fraud (le vlLlaLed consenL)

|neda v Santos h|| 83 (93%
Spouses 1he|s v Court of Appea|s Gk No 3 (99%

C. Formalities of tbe Contract

a n general

Attlcle 148J clvll coJe Sub[ecL Lo Lhe provlslons of Lhe SLaLuLe of lrauds and of any oLher appllcable sLaLuLe a conLracL of sale may be
made
1 n wrlLlng
2 Word of mouLh
3 arLly ln wrlLlng and parLly by word of mouLh
4 May be lnferred from Lhe conducL of parLles
O f noLary publlc ls noL auLhorlzed deed of sale of land ls sLlll valld because publlc lnsLrumenL ls noL even essenLlal for Lhe valldlLy of
Lhe sale (5otfoo v otoo)

rov|nce of Cebu v ne|rs of Mora|es Gk No (8% conLracL of sale ls consensual conLracL perfecLed upon meeLlng of mlnds as Lo
ob[ecL of conLracL and prlce lormal documenL ls noL necessary for sale LransacLlon Lo acqulre blndlng effecL Agreed prlce for Lhe loL proves LhaL a
conLracL of sale was lndeed perfecLed beLween Lhe parLles lallure Lo pay Lhe balance of Lhe purchase prlce dld noL render Lhe sale lnexlsLenL or
lnvalld buL merely gave rlse Lo a rlghL ln favor of Lhe vendor Lo elLher demand speclflc performance or resclsslon
Stages of a contract
a) negoLlaLlon Llme when prospecLlve conLracLlng parLles lndlcaLe lnLeresL ln Lhe conLracL Lo Lhe Llme conLracL ls perfecLed
b) erfecLlon concurrence of Lhe essenLlal elemenLs of Lhe sale whlch are Lhe meeLlng of Lhe mlnds of Lhe parLles as Lo Lhe ob[ecL of
conLracL upon Lhe prlce

c) ConsummaLlon parLles perform Lhelr respecLlve underLaklngs under conLracL of sale culmlnaLlng ln Lhe exLlngulshmenL Lhereof

b SLaLuLe of lrauds

Attlcle 140J clvll coJe 1he followlng conLracLs are unenforceable unless Lhey are raLlfled
1 LnLered lnLo Lhe name of anoLher person by one who has been glven no auLhorlLy or legal represenLaLlon or who has acLed
beyond Lhe powers (unauLhorlzed conLracLs)
2 1hose LhaL do noL comply wlLh Lhe Sol as seL forLh ln Lhls number AgreemenL shall be made unenforceable by acLlon
DnLLSS some noLe or memorandum Lhereof be ln wrlLlng and subscrlbed by Lhe parLy charged or by hls agenL evldence
Lherefore of Lhe agreemenL cannoL be recelved wlLhouL Lhe wrlLlng or a secondary evldence of lLs conLenLs (SLaLuLe of
lrauds)
d AgreemenL for Lhe sa|e of goods chatte|s or th|ngs |n act|on aL a prlce noL less Lhan 300 unless
buyer accepL and recelve parL of such goods and chaLLels or evldences or some of Lhem of such Lhlngs ln
acLlon or pay aL Lhe Llme some parL of Lhe purchase money (part|a| performance)
e AgreemenL for Lhe leaslng for a longer perlod Lhan one year C for Lhe sa|e of rea| property or an |nterest there|n
3 1hose where boLh parLles are lncapable of glvlng consenL Lo a conLracL (boLh parLles lncapaclLaLed)

Attlcle 1405 clvll coJe ConLracLs lnfrlnglng Lhe SLaLuLe of lrauds referred Lo ln no 2 of ArLlcle 1403 are raLlfled by Lhe
O lallure Lo ob[ecL Lo Lhe presenLaLlon of ora| ev|dence Lo prove Lhe same
O Acceptance of benef|ts under Lhem

Statute of Irauds apply only Lo executory contracts noL Lo conLracLs elLher LoLally or parLlally performed
Sol does noL apply where Lhe verbal conLracL of sale of land ls adduced noL for Lhe purpose of enforclng performance Lhereof buL as Lhe
basls of lawful possesslon of Lhe appllcanL enLlLllng hlm Lo have Lhe land reglsLered ln hls name (Almltol v ,osettot)
of lottlol petfotmoce wblcb tokes tbe mottet owoy ftom tbe opetotlo of 5totoe of ltooJs
4 ossesslon of a porLlon of Lhe land
4 ellnqulshmenL of her clalm Lo Lhe enLlre land bulldlng lmprovemenLs on Lhe land
4 1ender of paymenL
4 Surveylng and segregaLlon of Lhe porLlon whlch defendanL promlsed Lo sell Lo plalnLlffs
Wlll consLlLuLe fraud lf permlLLed Lo oppose Lhe performance of hls parL afLer allowed or lnduced Lhe oLher Lo perform ln rellance upon
Lhe agreemenL

Cebu v ne|rs of kub| 34 SCkA 48 (999% LeLLer slgned by defendanL referrlng Lo Lhe land lLs area and purchase prlce of 4 sqm ls sufflclenL
memorandum of Lhe agreemenL as all Lhe essenLlal Lerms are conLalned Lhereln

c Sale of realLy by an agenL

Attlcle 1874 clvll coJe When a sale of a plece of land or any lnLeresL Lhereln ls Lhrough an agenL Lhe auLhorlLy of Lhe laLLer shall be |n
wr|t|ng oLherwlse Lhe sale shall be vo|d

enewal or exLenslon of sald auLhorlLy should also be ln wrlLlng (lo v o @ec)
rlnclpal cannoL raLlfy even lf he does so Lhere would be no reLroacLlve effecL

Cesmer v ara|so Deve|opment Corporat|on Gk No 493 (%

d Secondary Lvldence

5ectlo 5 ole 1J0 oles of coott When orlglnal documenL ls unavallable When Lhe orlglnal documenL has been |ost or destroyed or
cannot be produced |n court Lhe offeror upon proof of lLs
4 execut|on or ex|stence and
4 Lhe cause of lLs unavallablllLy wlLhouL bad falLh on hls parL
may prove lLs conLenLs by
4 a copy or
4 by a reclLal of lLs conLenLs ln some auLhenLlc documenL or
4 by Lhe LesLlmony of wlLnesses ln Lhe order sLaLed

Due execut|on may be proved by
1 1esLlmony of Lhe person who execuLed lL
2 erson before whom lLs execuLlon was acknowledged

3 Any person who was presenL and saw lL execuLed and dellvered
4 AfLer lLs execuLlon and dellvery saw lL and recognlzed Lhe slgnaLures
3 erson Lo whom Lhe parLles Lo Lhe lnsLrumenL had prevlously confessed Lhe execuLlon Lhereof

5ectlo 9 ole 1J0 oles of coott evldence of wrlLLen agreemenLs when Lhe Lerms of an agreemenL have been reduced Lo wrlLlng lL ls
consldered as conLalnlng all Lhe Lerms agreed upon and Lhere can be beLween Lhe parLles and Lhelr successors ln lnLeresL no evldence of
such Lerms oLher Lhan Lhe conLenLs of Lhe wrlLLen agreemenL
Powever a parLy may presenL evldence Lo modlfy explaln or add Lo Lhe Lerms of Lhe wrlLLen agreemenL lf he puLs ln lssue ln hls pleadlng
(a) an |ntr|ns|c amblgulLy mlsLake or lmperfecLlon ln Lhe wrlLLen agreemenL
(b) Lhe fallure of Lhe wrlLLen agreemenL Lo express the true |ntent and agreement of Lhe parLles LhereLo
(c) va||d|ty of Lhe wrlLLen agreemenL
(d) exlsLence of other terms agreed Lo by Lhe parLles or Lhelr successors ln lnLeresL afLer Lhe execuLlon of Lhe wrlLLen agreemenL
1he Lerm #agreemenL" lncludes wllls

e LlecLronlc Commerce AcL

5ectlo 7 epobllc Act No 8792 lecttolc commetce Act Legal ecognlLlon of LlecLronlc uocumenLs LlecLronlc documenLs shall have Lhe legal
effecL valldlLy or enforceablllLy as any oLher documenL or legal wrlLlng and

(a) Where Lhe law requlres a documenL Lo be ln wrlLlng LhaL requlremenL ls meL by an elecLronlc documenL lf Lhe sald elecLronlc documenL
malnLalns lLs lnLegrlLy and rellablllLy and can be auLhenLlcaLed so as Lo be usable for subsequenL reference ln LhaL
(l) 1he elecLronlc documenL has remalned compleLe and unalLered aparL from Lhe addlLlon of any endorsemenL and any
auLhorlzed change or any change whlch arlses ln Lhe normal course of communlcaLlon sLorage and dlsplay and
(ll) 1he elecLronlc documenL ls rellable ln Lhe llghL of Lhe purpose for whlch lL was generaLed and ln Lhe llghL of all Lhe relevanL
clrcumsLances

(b) aragraph (a) applles wheLher Lhe requlremenL Lhereln ls ln Lhe form of an obllgaLlon or wheLher Lhe law slmply provldes consequences
for Lhe documenL noL belng presenLed or reLalned ln lLs orlglnal form
(c) Where Lhe law requlres LhaL a documenL be presenLed or reLalned ln lLs orlglnal form LhaL requlremenL ls meL by an elecLronlc documenL
lf
(l) 1here exlsLs a rellable assurance as Lo Lhe lnLegrlLy of Lhe documenL from Lhe Llme when lL was flrsL generaLed ln lLs flnal
form and
(ll) 1haL documenL ls capable of belng dlsplayed Lo Lhe person Lo whom lL ls Lo be presenLed rovlded 1haL no provlslon of
Lhls AcL shall apply Lo vary any and all requlremenLs of exlsLlng laws on formallLles requlred ln Lhe execuLlon of documenLs
for Lhelr valldlLy

lor evldenLlary purposes an elecLronlc documenL shall be Lhe funcLlonal equlvalenL of a wrlLLen documenL under exlsLlng laws
1hls AcL does noL modlfy any sLaLuLory rule relaLlng Lo Lhe admlsslblllLy of elecLronlc daLa messages or elecLronlc documenLs excepL Lhe rules
relaLlng Lo auLhenLlcaLlon and besL evldence

5ectlo 8 epobllc Act No 8792 lecttolc commetce Act Legal ecognlLlon of LlecLronlc SlgnaLures An elecLronlc slgnaLure on Lhe elecLronlc
documenL shall be equlvalenL Lo Lhe slgnaLure of a person on a wrlLLen documenL lf LhaL slgnaLure ls proved by showlng LhaL a prescrlbed
procedure noL alLerable by Lhe parLles lnLeresLed ln Lhe elecLronlc documenL exlsLed under whlch

(a) A meLhod ls used Lo ldenLlfy Lhe parLy soughL Lo be bound and Lo lndlcaLe sald parLy's access Lo Lhe elecLronlc documenL necessary for hls
consenL or approval Lhrough Lhe elecLronlc slgnaLure
(b) Sald meLhod ls rellable and approprlaLe for Lhe purpose for whlch Lhe elecLronlc documenL was generaLed or communlcaLed ln Lhe llghL
of all Lhe clrcumsLances lncludlng any relevanL agreemenL
(c) L ls necessary for Lhe parLy soughL Lo be bound ln order Lo proceed furLher wlLh Lhe LransacLlon Lo have execuLed or provlded Lhe
elecLronlc slgnaLure and
(d) 1he oLher parLy ls auLhorlzed and enabled Lo verlfy Lhe elecLronlc slgnaLure and Lo make Lhe declslon Lo proceed wlLh Lhe LransacLlon
auLhenLlcaLed by Lhe same

5ectlo 11 epobllc Act No 8792 lecttolc commetce Act AuLhenLlcaLlon of LlecLronlc uaLa Messages and LlecLronlc uocumenLs DnLll Lhe
Supreme CourL by approprlaLe rules shall have so provlded elecLronlc documenLs elecLronlc daLa messages and elecLronlc slgnaLures shall be
auLhenLlcaLed by demonsLraLlng subsLanLlaLlng and valldaLlng a clalmed ldenLlLy of a user devlce or anoLher enLlLy ln an lnformaLlon or
communlcaLlon sysLem among oLher ways as follows
(a) 1he elecLronlc slgnaLure shall be auLhenLlcaLed by proof LhaL a leLLer characLer number or oLher symbol ln elecLronlc form represenLlng
Lhe persons named ln and aLLached Lo or loglcally assoclaLed wlLh an elecLronlc daLa message elecLronlc documenL or LhaL Lhe
approprlaLe meLhodology or securlLy procedures when appllcable were employed or adopLed by a person and execuLed or adopLed by
such person wlLh Lhe lnLenLlon of auLhenLlcaLlng or approvlng an elecLronlc daLa message or elecLronlc documenL

(b) 1he elecLronlc daLa message and elecLronlc documenL shall be auLhenLlcaLed by proof LhaL an approprlaLe securlLy procedure when
appllcable was adopLed and employed for Lhe purpose of verlfylng Lhe orlglnaLor of an elecLronlc daLa message and/or elecLronlc
documenL or ln deLecLlng error or alLeraLlon ln Lhe communlcaLlon conLenL or sLorage of an elecLronlc documenL or elecLronlc daLa
message from a speclflc polnL whlch uslng algorlLhm or codes ldenLlfylng words or numbers encrypLlons answers back or
acknowledgmenL procedures or slmllar securlLy devlces
1he Supreme CourL may adopL such oLher auLhenLlcaLlon procedures lncludlng Lhe use of elecLronlc noLarlzaLlon sysLems as necessary
and advlsable as well as Lhe cerLlflcaLe of auLhenLlcaLlon on prlnLed or hard coples of Lhe elecLronlc documenL or elecLronlc daLa
messages by elecLronlc noLarles servlce provlders and oLher duly recognlzed or appolnLed cerLlflcaLlon auLhorlLles
1he person seeklng Lo lnLroduce an elecLronlc daLa message and elecLronlc documenL ln any legal proceedlng has Lhe burden of provlng
lLs auLhenLlclLy by evldence capable of supporLlng a flndlng LhaL Lhe elecLronlc daLa message and elecLronlc documenL ls whaL Lhe person
clalms lL Lo be

n Lhe absence of evldence Lo Lhe conLrary Lhe lnLegrlLy of Lhe lnformaLlon and communlcaLlon sysLem ln whlch an elecLronlc daLa message or
elecLronlc documenL ls recorded or sLored may be esLabllshed ln any legal proceedlng

(a) 8y evldence LhaL aL all maLerlal Llmes Lhe lnformaLlon and communlcaLlon sysLem or oLher slmllar devlce was operaLlng ln a manner LhaL
dld noL affecL Lhe lnLegrlLy of Lhe elecLronlc daLa message and/or elecLronlc documenL and Lhere are no oLher reasonable grounds Lo
doubL Lhe lnLegrlLy of Lhe lnformaLlon and communlcaLlon sysLem
(b) 8y showlng LhaL Lhe elecLronlc daLa message and/or elecLronlc documenL was recorded or sLored by a parLy Lo Lhe proceedlngs who ls
adverse ln lnLeresL Lo Lhe parLy uslng lL or
(c) 8y showlng LhaL Lhe elecLronlc daLa message and/or elecLronlc documenL was recorded or sLored ln Lhe usual and ordlnary course of
buslness by a person who ls noL a parLy Lo Lhe proceedlngs and who dld noL acL under Lhe conLrol of Lhe parLy uslng Lhe record

MCC Industr|a| Sa|es Corporat|on v Ssangyong Corporat|on Gk No 33 (% uesplLe lnadmlsslblllLy of Lhe facslmlle documenLs
perfecLed conLracL of sale was shown by Lhe acLlon of parLles Lo ask for exLenslon 1hls declslon modlfled Lhe lnsofar as Lhe expanded Lhe
scope of law by lncludlng faxed documenLs

. Legality of tbe Sale

Attlcle 1409 clvll coJe Lhe followlng conLracLs are |nex|stent and vo|d from the beg|nn|ng
(1) Whose cause ob[ecL or purpose ls contrary to |aw mora|s good customs pub||c order or pub||c po||cy
(2) 1hose whlch are abso|ute|y s|mu|ated or f|ct|t|ous
(3) 1hose whose cause or ob[ecL dld noL exlsL aL Lhe Llme of Lhe LransacLlon
(4) 1hose whose ob[ecL ls ouLslde Lhe commerce of men
(3) 1hose whlch conLemplaLe an lmposslble servlce
(6) 1hose where Lhe lnLenLlon of Lhe parLles relaLlve Lo Lhe prlnclpal ob[ecL of Lhe conLracL cannoL be ascerLalned
(7) 1hose whose expressly prohlblLed or declared vold by Lhe law
1hese conLracLs cannoL be raLlfled nelLher can Lhe rlghL Lo seL up Lhe defense of lllegallLy be walved

Attlcle 1411 clvll coJe when Lhe nulllLy proceeds from Lhe |||ega||ty of the cause or ob[ect of Lhe conLracL and Lhe acL consLlLuLes a cr|m|na|
offense boLh parLles belng ln parl dellcLo Lhey shall have no acLlon agalnsL each oLher and boLh shall be prosecuLed Moreover Lhe provlslons of
Lhe enal Code relaLlve Lo Lhe dlsposal of effecLs or lnsLrumenLs of a crlme shall be appllcable Lo Lhe Lhlngs or Lhe prlce of Lhe conLracL
1hls rule shall be appllcable when on|y one of the part|es |s gu||ty buL Lhe lnnocenL one may clalm whaL he has glven and shall noL be bound Lo
comply wlLh hls promlse

N lA uc@O DLL (for lllegal cause or ob[ecL)
1 8C1P are l potl Jellcto
no acLlon agalnsL each oLher
8C1P wlll be prosecuLed
C provlslon relaLlve Lo Lhe dlsposal of effecLs/lnsLrumenLs of a crlme shall apply
2 CnL? CnL ls gullLy
nnCCLn1 A1? may clalm whaL he has glven
nnCCLn1 A1? noL bound Lo comply wlLh hls promlse

Attlcle 1416 clvll coJe When Lhe agreemenL ls noL lllegal per se buL ls merely prohlblLed and Lhe prohlblLlon ls deslgned for Lhe proLecLlon of Lhe
plalnLlff he may lf publlc pollcy ls Lhereby enhanced recover whaL he has pald or dellvered

Attlcle \ 5ectlo 2 1987 costltotlo All lands of Lhe publlc domaln waLers mlnerals coal peLroleum and oLher mlneral olls all forces of
poLenLlal energy flsherles foresLs or Llmber wlldllfe flora and fauna and oLher naLural resources are owned by Lhe SLaLe WlLh Lhe excepLlon of
agrlculLural lands all oLher naLural resources shall noL be allenaLed 1he exploraLlon developmenL and uLlllzaLlon of naLural resources shall be
under Lhe full conLrol and supervlslon of Lhe SLaLe 1he SLaLe may dlrecLly underLake such acLlvlLles or lL may enLer lnLo coproducLlon [olnL
venLure or producLlonsharlng agreemenLs wlLh llllplno clLlzens or corporaLlons or assoclaLlons aL leasL slxLy per cenLum of whose caplLal ls

owned by such clLlzens Such agreemenLs may be for a perlod noL exceedlng LwenLyflve years renewable for noL more Lhan LwenLyflve years and
under such Lerms and condlLlons as may be provlded by law n cases of waLer rlghLs for lrrlgaLlon waLer supply flsherles or lndusLrlal uses oLher
Lhan Lhe developmenL of waLer power beneflclal use may be Lhe measure and llmlL of Lhe granL

1he SLaLe shall proLecL Lhe naLlons marlne wealLh ln lLs archlpelaglc waLers LerrlLorlal sea and excluslve economlc zone and reserve lLs use and
en[oymenL excluslvely Lo llllplno clLlzens

1he Congress may by law allow smallscale uLlllzaLlon of naLural resources by llllplno clLlzens as well as cooperaLlve flsh farmlng wlLh prlorlLy Lo
subslsLence flshermen and flsh workers ln rlvers lakes bays and lagoons

1he resldenL may enLer lnLo agreemenLs wlLh forelgnowned corporaLlons lnvolvlng elLher Lechnlcal or flnanclal asslsLance for largescale
exploraLlon developmenL and uLlllzaLlon of mlnerals peLroleum and oLher mlneral olls accordlng Lo Lhe general Lerms and condlLlons provlded by
law based on real conLrlbuLlons Lo Lhe economlc growLh and general welfare of Lhe counLry n such agreemenLs Lhe SLaLe shall promoLe Lhe
developmenL and use of local sclenLlflc and Lechnlcal resources

1he resldenL shall noLlfy Lhe Congress of every conLracL enLered lnLo ln accordance wlLh Lhls provlslon wlLhln LhlrLy days from lLs execuLlon

Attlcle \ 5ectlo J 1987 costltotlo Lands of Lhe publlc domaln are classlfled lnLo agrlculLural foresL or Llmber mlneral lands and naLlonal parks
AgrlculLural lands of Lhe publlc domaln may be furLher classlfled by law accordlng Lo Lhe uses Lo whlch Lhey may be devoLed Allenable lands of Lhe
publlc domaln shall be llmlLed Lo agrlculLural lands rlvaLe corporaLlons or assoclaLlons may noL hold such allenable lands of Lhe publlc domaln
excepL by lease for a perlod noL exceedlng LwenLyflve years renewable for noL more Lhan LwenLyflve years and noL Lo exceed one Lhousand
hecLares ln area ClLlzens of Lhe hlllpplnes may lease noL more Lhan flve hundred hecLares or acqulre noL more Lhan Lwelve hecLares Lhereof by
purchase homesLead or granL

1aklng lnLo accounL Lhe requlremenLs of conservaLlon ecology and developmenL and sub[ecL Lo Lhe requlremenLs of agrarlan reform Lhe
Congress shall deLermlne by law Lhe slze of lands of Lhe publlc domaln whlch may be acqulred developed held or leased and Lhe condlLlons
Lherefor

Attlcle \ 5ectlo 7 1987 costltotlo Save ln cases of heredlLary successlon no prlvaLe lands shall be Lransferred or conveyed excepL Lo
lndlvlduals corporaLlons or assoclaLlons quallfled Lo acqulre or hold lands of Lhe publlc domaln

Attlcle \ 5ectlo 8 1987 costltotlo noLwlLhsLandlng Lhe provlslons of SecLlon 7 of Lhls ArLlcle a naLuralborn clLlzen of Lhe hlllpplnes who has
losL hls hlllpplne clLlzenshlp may be a Lransferee of prlvaLe lands sub[ecL Lo llmlLaLlons provlded by law

Spouses I|de| v Court of Appea|s Gk No 83 (8% llrsL deed of sale ls vold because slgnaLure ls paLenL forgery uled ln 1941 buL slgned
on 1994 absoluLely slmulaLed or flcLlLlous

S||agan v Intermed|ate Appe||ate Court Gk No 843 (99% AppllcaLlon of ln parl dellcLo rule

Irenze| v Cat|to Gk No 4398 (3% A conLracL LhaL vlolaLes Lhe ConsLlLuLlon and Lhe law ls null and vold and vesLs no rlghLs and creaLes no
obllgaLlon

III. Sub|ect Matter of Sale

. Must be licit
#LC1" SomeLhlng LhaL ls wlLhln Lhe commerce of man someLhlng LhaL can be sold morLgaged or be Lhe ob[ecL of a conLracL

Attlcle 1459 clvll coJe 1he Lhlng musL be ||c|t and Lhe vendor musL have a r|ght to transfer the ownersh|p Lhereof at the t|me |t |s de||vered

Attlcle 1J47 clvll coJe All Lhlngs whlch are not outs|de the commerce of men lncludlng future th|ngs may be Lhe ob[ecL of a conLracL All rlghLs
whlch are not |ntransm|ss|b|e may also be Lhe sub[ecL of conLracLs
no conLracL may be enLered lnLo upon future |nher|tance excepL lnc ases expressly auLhorlzed by law
All servlces whlch are not contrary to |aw mora|s good customs pub||c order or pub||c po||cy may llkewlse be Lhe ob[ecL of Lhe conLracL

What may be the Cb[ects of Contracts
1 All Lhlngs not outs|de the commerce of man
O ncludlng #future th|ngs" do noL belong Lo Lhe obllgor aL Lhe Llme Lhe conLracL ls made Lhey may be made ralsed or acqulred by Lhe
obllgor afLer Lhe perfecLlon of Lhe conLracL
4 CondlLlonal sub[ecL Lo Lhe comlng lnLo exlsLence of Lhe Lhlng
4 AleaLory one of Lhe parLles bears Lhe rlsk of Lhe Lhlng never comlng lnLo exlsLence

O #Outside the commerce of mon" all klnds of Lhlngs and lnLeresLs whose allenaLlon or free exchange ls resLrlcLed by law or sLlpulaLlon
whlch parLles cannoL modlfy aL wlll
4 Servlces whlch lmply an absoluLe submlsslon by Lhose who render Lhem sacrlflclng Lhelr llberLy lndependence or own bellefs or
dlsregardlng ln any manner Lhe equallLy and dlgnlLy of persons eg perpeLual servlLude or slavery
4 ersonal rlghLs eg pottlo postestos marlLal auLhorlLy sLaLus capaclLy of persons honorary LlLles
4 ubllc offlces lnherenL aLLrlbuLes of Lhe publlc auLhorlLy pollLlcal rlghLs of lndlvlduals eg rlghL of suffrage
4 roperLy whlle Lhey perLaln Lo Lhe publlc domlnlon belonglng Lo Lhe SLaLe or lLs pollLlcal subdlvlslons lnLended for publlc use or
publlc servlce or for Lhe developmenL of naLlonal wealLh
4 Churches
4 Sacred Lhlngs eg alr and sea
4 8D1 publlc properLy when no longer lnLended for publlc use or servlce form parL of Lhe paLrlmonlal properLy of Lhe SLaLe
2 All rlghLs not |ntransm|ss|b|e
3 All servlces not contrary Lo law morals good cusLoms publlc order or publlc pollcy
O Lg of Lhlngs prohlblLed by law
4 narcoLlcs or dangerous drugs
4 Wlld blrd or mammal rare wlld planLs proLecLed by law
4 1ubll or oLher polsonous planLs or frulLs
4 uynamlLed flsh or oLher aquaLlc anlmals
4 Cunpowder dynamlL exploslve or blasLlng supplles flrearms or ammunlLlons
What may NO1 be the Cb[ects of Contracts

1 ConLrary Lo law morals good cusLoms publlc pollcy or publlc order
2 ndeLermlnable as Lo Lhelr klnd
3 CuLslde Lhe commerce of man
4 nLransmlsslble rlghLs
3 luLure lnherlLance excepL when auLhorlzed by law
ArL 1347 ar 2 no conLracL may be enLered lnLo upon fuLure lnherlLance excepL ln cases expressly auLhorlzed by law
O 1he successlon musL noL have been opened aL Lhe Llme of Lhe conLracL
O LxcepLlon Lo #fuLure Lhlngs"
6 mposslble Lhlngs or servlces
ArL 1348 mposslble Lhlngs or servlces cannoL be Lhe ob[ecL of conLracLs
O Lg of lmposslble Lhlngs
4 noL suscepLlble of exlsLlng
4 CuLslde Lhe commerce of man
4 8eyond Lhe ordlnary sLrengLh of power of man
O LlablllLy for damages
4 uebLor knew of lmposslblllLy llable for damages
4 uebLor ls lgnoranL of lmposslblllLy and lgnorance ls [usLlflable no llablllLy for damages
4 8oLh parLles have knowledge of lmposslblllLy no llablllLy for damages
O mposslblllLy musL be acLual and conLemporaneous wlLh Lhe maklng of Lhe conLracL and noL subsequenL
4 A8SCLD1L or ob[ecLlve nobody can perform lL
4 LLA1IL or sub[ecLlve due Lo Lhe speclal condlLlons or quallflcaLlon of Lhe debLor lL cannoL be performed
1LMCA? does noL nulllfy Lhe conLracL
LMAnLn1 nulllfles Lhe conLracL

Mart|nez v Court of Appea|s Gk No L3 (94% navlgable publlc sLream converLed lnLo flsh ponds reglsLered under Lhe 1orrens sysLem
sold successlvely Lo dlfferenL persons Lhe rlghL of reverslon Lo Lhe SLaLe does noL prescrlbe as rlvers are ouLslde Lhe commerce of man

ne|rs of Arturo keyes v Socco8e|tran Gk No 44 (8%

. Must be determinate

Attlcle 1J49 clvll coJe 1he ob[ecL of every conLracL musL be determ|nate as Lo lLs klnd 1he facL LhaL Lhe quanLlLy ls noL deLermlnaLe shall noL be an
obsLacle Lo Lhe exlsLence of Lhe conLracL provlded lL ls posslble Lo deLermlne Lhe same w|thout the need of a new contract between the part|es
O CC expanded Lhe meanlng of #deLermlnaLe" Lo generlc Lhlngs fuLure goods and undlvlded lnLeresLs (See #arLlcular klnds")

Attlcle 1460 clvll coJe A Lhlng ls deLermlnaLe when lL ls
1 art|cu|ar|y des|gnated or phys|ca||y segregated from all oLhers of Lhe same class
2 AL Lhe Llme of Lhe conLracL ls enLered lnLo Lhe Lhlng ls capab|e of be|ng made determ|nate wlLhouL Lhe necesslLy of a new
or furLher agreemenL beLween Lhe parLles


Camacho v Court of Appea|s Gk No (%
ne|rs of uan San Andres v kodr|guez Gk No 334 (%

C. Particular kinds

a luLure goods

Attlcle 1461 clvll coJe 1hlngs havlng a potent|a| ex|stence may be Lhe ob[ecL of Lhe conLracL of sale
1he efflcacy of Lhe sa|e of a mere hope or expectancy ls deemed sub[ecL Lo Lhe cond|t|on LhaL Lhe Lhlng wlll come lnLo exlsLence
1he sa|e of a va|n hope or expectancy ls vold

SALL CI 1nING nAVING C1LN1IAL LkIS1LNCL
(expected th|ng%
SALL CI A nCL
(mere hope of expectancy hope |tse|f%
LmpLlo rel speraLl LmpLlo spel
Sale ls sub[ecL Lo Lhe condlLlon LhaL Lhe Lhlng wlll exlsL lf lL does
noL Lhere ls no conLracL
Sale produces effecL even lf Lhe Lhlng does noL come lnLo
exlsLence unless lL ls a valn hope
DncerLalnLy ls wlLh regard Lhe quallLy and quanLlLy of Lhe Lhlng DncerLalnLy ls wlLh regard Lhe exlsLence of Lhe Lhlng
1he ob[ecL ls a fuLure Lhlng 1he ob[ecL ls a presenL Lhlng
O 1he presumpLlon ls ln favor of empLlo rel speraLl

Attlcle 1462 clvll coJe 1he goods whlch form Lhe sub[ecL of a conLracL of sale may be elLher
1 LxlsLlng goods owned or possessed by Lhe seller
2 Coods Lo be manufacLured ralsed or acqulred by Lhe seller
after the perfect|on of the contract of sa|e #luLure goods"
1here may be a conLracL of sale of goods whose acqulslLlon by Lhe seller depends upon a cont|ngency whlch may or may not happen
#aleaLory"

lu@u OOu5 ote tbose stlll to be
O ManufacLured
O alsed (eg young anlmals)
O Acqulred by Lhe seller afLer perfecLlon of Lhe conLracL (eg land whlch seller expecLs Lo buy)
O 1hlngs whose acqulslLlon depends upon a conLlngency whlch may or may noL happen

Mananza|a v Court of Appea|s Gk No (998%
ne|rs of Amparo De| kosar|o v Santos Gk No L489 (98%

b Sale of undlvlded lnLeresL or share

Attlcle 146J clvll coJe 1he sole owner of a Lhlng may sell an undlvlded lnLeresL Lhereln

Attlcle 1464 clvll coJe n case of funglble goods Lhere may be a sale of an undlvlded share of a speclflc mass Lhough Lhe seller purports
Lo sell and Lhe buyer Lo buy a deflnlLe number welghL or measure of Lhe goods ln Lhe mass and Lhough Lhe number welghL or measure
of Lhe goods ln Lhe mass ls undeterm|ned 8y such a sale Lhe buyer becomes owner ln common of such a share of Lhe mass as Lhe
number welghL or measure boughL bears Lo Lhe number welghL or measure of Lhe mass f Lhe mass conta|ns |ess Lhan Lhe number
welghL or measure bought Lhe buyer becomes the so|e owner of Lhe whole mass and Lhe seller ls bound Lo make good the def|c|ency
from goods of Lhe same klnd and quallLy unless a conLrary lnLenL appears

turra|de v Court of Appea|s Gk No L38 (9% A coowner cannoL sell more Lhan hls share 1hus where Lhe survlvlng spouse sold Lhe
con[ugal properLy under a pacLo de reLro and falled Lo redeem lL Lhe vendee a reLro acqulred only Lhe share of Lhe vendor ln Lhe con[ugal properLy
and noL Lhe enLlre properLy

c Sale of Lhlngs ln llLlgaLlon

Attlcle 1J81(4) clvll coJe esclsslble conLracLs 1hose whlch refer Lo Lhlngs under llLlgaLlon lf Lhey have been enLered lnLo by Lhe
defendanL wlLhouL Lhe knowledge and approval of Lhe llLlganLs or or compeLenL [udlclal auLhorlLy

Attlcle 1J85 pot 2 clvll coJe nelLher shall resclsslon Lake place when Lhe Lhlngs whlch are Lhe ob[ecL of Lhe conLracL are |ega||y |n the
possess|on of Lhlrd persons who d|d not act |n bad fa|th


Santos v Intermed|ate Appe||ate Court Gk No 384 (99%
1|rado v Sev|||a Gk No 84 (99%

d 1hlngs sub[ecL Lo resoluLory condlLlon

Attlcle 1465 clvll coJe 1hlngs sub[ecL Lo a resoluLory condlLlon may be Lhe ob[ecL of Lhe conLracL of sale

O Lg of Lhlng sub[ecL Lo resoluLory condlLlon
4 Legal or convenLlonal rlghL of redempLlon
4 Sub[ecL Lo reserva Lroncal

. Ubligation of tbe vendor to transfer ownersbip

a Sale by a person noL Lhe owner

Attlcle 1505 clvll coJe Sub[ecL Lo Lhe provlslons of Lhls 1lLle where goods are sold by a person who ls noL Lhe owner Lhereof and who
does noL sell Lhem under auLhorlLy or wlLh Lhe consenL of Lhe owner Lhe buyer requlres no beLLer LlLle Lo Lhe goods Lhan Lhe seller had
unless Lhe owner of Lhe goods ls by hls conducL precluded from denylng Lhe seller's auLhorlLy Lo sell

noLhlng ln Lhls 1lLle however shall affecL (LxcepLlon where Lhe buyer acqulres beLLer LlLle)
(1) 1he provlslons of any factors act record|ng |aws or any oLher provlslon of law enabllng Lhe apparent owner of goods Lo
dlspose of Lhem as lf he were Lhe Lrue owner Lhereof
(2) 1he valldlLy of any conLracL of sale under statutory power of sa|e or under Lhe order of a court of competent [ur|sd|ct|on
(3) urchases made ln a merchants store or ln fa|rs or markets ln accordance wlLh Lhe Code of Commerce and speclal laws (n)

nemo daL quod non habeL ?ou can'L glve whaL you don'L have Cnly Lhe owner of Lhe goods or one auLhorlzed by Lhe owner Lo sell can
Lransfer LlLle LhereLo Lo Lhe buyer

Attlcle 14J4 clvll coJe When a person who ls noL Lhe owner of a Lhlng sells or allenaLes and dellvers lL and |ater the se||er or grantor
acqu|res t|t|e thereto such LlLle passes by operaLlon of law Lo Lhe buyer or granLee esLoppel by deed

ne|rs of Sever|na San M|gue| v Court of Appea|s Gk No 34 (%
Spouses kaymundo v Spouses 8andong Gk No (%
Chua v Court of Appea|s Gk No 9 (3% 1he earnesL money when glven ln a conLracL Lo sell forms parL of Lhe conslderaLlon only lf Lhe
sale ls consummaLed upon fullpaymenL of Lhe purchase prlce

b LxcepLlons

Attlcle 14J1 clvll coJe 1hrough esLoppel an admlsslon or represenLaLlon ls rendered concluslve upon Lhe person maklng lL and cannoL
be denled or dlsproved as agalnsL Lhe person relylng Lhereon
1rue owner ho|ds out another or allows anoLher Lo appear as Lhe owner or one wlLh full auLhorlLy Lo dlspose of Lhe properLy and lnnocenL
Lhlrd parLles are mlsled lnLo deallng wlLh such apparent owner or agent such Lhlrd parLles wlll be proLecLed (ArL 1911)

Attlcle 1911 clvll coJe Lven when Lhe agenL has exceeded hls auLhorlLy Lhe prlnclpal ls solldarlly llable wlLh Lhe agenL lf Lhe former had
a||owed the |atter to act as though he had fu|| powers

Attlcle 1505 clvll coJe 1hree excepLlons as Lo
O Sale by Lhe apparenL owner (facLor's acL and recordlng laws) alLhough we don'L have facLor laws ln Lhe hlllpplnes and
reglsLraLlon of moLor vehlcles are done only for purposes of llcenslng (cerLlflcaLe of reglsLraLlon ls noL concluslve of ownershlp
of vehlcles)
O Sales under sLaLuLory power or courL order
uoes noL follow however LhaL lf Lhe goods sold dld noL belong Lo Lhe [udgmenL debLor / pledgor / morLgagor Lhe lnnocenL purchaser aL
such sale acqulred a beLLer LlLle for he sLeps merely lnLo Lhe shoes of Lhe [udgmenL debLor / pledgor / morLgagor Cwner of such goods
can recover by relmburslng prlce pald Lherefor (ArL 339)
O MerchanL's sLore lnLends Lo glve sLablllLy Lo buslness LransacLlons

Attlcle 1898 clvll coJe f Lhe agenL conLracLs
O n Lhe name of Lhe prlnclpal

O Lxceedlng Lhe scope of hls auLhorlLy
O rlnclpal does noL raLlfy Lhe conLracL
Vo|d lf Lhe parLy wlLh whom Lhe agenL conLracL ls aware of the ||m|ts of the powers granLed by Lhe prlnclpal
n Lhls case however Lhe agenL ls llable lf he undertook to secure the pr|nc|pa|'s rat|f|cat|on

Attlcle 559 clvll coJe 1he possesslon of movable properLy acqulred ln good falLh ls equlvalenL Lo a LlLle neverLheless one who has losL
any movable or has been unlawfully deprlved Lhereof may recover lL from Lhe person ln possesslon of Lhe same
f Lhe possessor of a movable losL or of whlch has been lawfully deprlved has acqulred lL |n good fa|th at a pub||c sa|e Lhe owner cannoL
obLaln lLs reLurn wlLhouL re|mburs|ng the pr|ce pa|d Lherefor

Attlcle 1506 clvll coJe Where Lhe seller has a
O voldable LlLle LhereLo
O buL LlLle has noL been avolded aL Lhe Llme of Lhe sale
8uyer acqulres a good LlLle Lo Lhe goods provlded he buys Lhem
O n good falLh
O lor value
O WlLhouL noLlce of Lhe seller's defecL of LlLle

Cnce Lhe goods ob[ecL of Lhe voldable conLracL has been Lransferred Lo an lnnocenL purchaser for value before Lhe conLracL was
annulled Lhe laLer acqulred a valld LlLle

Attlcle 1J90 clvll coJe Ioldable conLracLs
O WanL of capaclLy
O IlLlaLed consenL
8lndlng unless annulled by proper courL acLlon SuscepLlble of raLlflcaLlon

Attlcle 16J6 clvll coJe An antecedent or preex|st|ng c|a|m wheLher for money or noL consLlLuLes #value" where goods or documents
of t|t|e are Laken elLher ln saLlsfacLlon Lhereof or as a securlLy Lhereof

Navarro and Iortea v Second Laguna Deve|opment 8ank Gk No 948 (3%
Chua na| v kapunan Gk No L8 (98%
Man||a Memor|a| ark Cemetery Inc v L|nsangan Gk No 39 (4% AcLs of an agenL beyond Lhe scope of hls auLhorlLy do noL blnd Lhe
prlnclpal uless he raLlfles Lhem expressly or lmplledly
Ledesma v Court of Appea|s Gk No 8 (99% LxcepLlon Lo Lhe general rules of lrrevendlcablllLy 1 LosL Lhe Lhlng 2 Dnlawfully deprlved of
Lhlng 3 requlslLes Lo make possesslon of movable properLy equlvalenL Lo LlLle
a ossesslon ln good falLh
b Cwner volunLarlly parLed wlLh possesslon of Lhlng
c ossesslon ls ln concepL of owner

IV. Price

. In general

a necesslLy of a prlce

Attlcle 1J18 clvll coJe 1here ls no conLracL unless Lhe followlng requlslLes concure
(1) ConsenL
(2) Cb[ecL cerLaln
(3) Cause of Lhe obllgaLlon

Attlcle 1J5J clvll coJe 1he sLaLemenL of a fa|se cause ln conLracLs shall render Lhem vo|d lf lL should noL be proved LhaL Lhey were
founded upon another cause whlch ls Lrue and lawful

Attlcle 1471 clvll coJe f Lhe prlce ls s|mu|ated Lhe sale ls vold buL Lhe acL may be shown Lo have been ln reallLy a donat|on or some
other act or contract

1|ng no v 1eng Gu| Gk No 3 (8%
Labaga|a v Court of Appea|s Gk No 33 (%

b nadequacy of prlce

Attlcle 1J55 clvll coJe LxcepL ln cases speclfled by law |es|on or |nadequacy of cause sha|| not |nva||date a contract unless Lhere has
been fraud mlsLake or undue lnfluence

Attlcle 1470 clvll coJe Gross |nadequacy of pr|ce does noL affecL a conLracL of sale excepL as lL may lndlcaLe
O a defect |n consent C
O LhaL Lhe parLles really lnLended a donat|on or some other act or contract
noL appllcable when Lhe seller ls glven Lhe rlghL Lo redeem

Deve|opment 8ank of the h|||pp|nes v Mo|| 43 SCkA 8 (9% f Lhere ls a rlghL Lo redeem ln a foreclosure sale lnadequacy of prlce ls noL
maLerlal because Lhe lesser Lhe prlce Lhe easler lL wlll be for Lhe owner Lo effecL Lhe redempLlon

Spouses 8uenaventura v Court of Appea|s Gk No 3 (3%
h|||pp|ne Iree ress Inc v Court of Appea|s Gk No 384 (%

c ueflnlLeness and cerLalnLy

Attlcle 1472 clvll coJe 1he prlce of securlLles graln llqulds and oLher Lhlngs shall also be consldered cerLaln when Lhe prlce flxed ls LhaL
whlch Lhe Lhlng sold would have
O Cn a deflnlLe day
O arLlcular exchange or markeL
O An amounL ls flxed above or below Lhe prlce on such day or ln such exchange or markeL
rovlded sald amounL be certa|n

Attlcle 147J clvll coJe 1he flxlng of Lhe prlce can never be lefL Lo Lhe dlscreLlon of one of Lhe conLracLlng parLles Powever lf Lhe prlce
flxed by one of Lhe parLles ls accepLed by Lhe oLher Lhe sale ls perfecLed

Attlcle 1474 clvll coJe Where Lhe pr|ce cannot be determ|ned ln accordance Lo Lhe precedlng arLlcles or ln any oLher manner Lhe
conLracL ls |neff|cac|ous Powever lf Lhe Lhlng or any parL Lhereof has been de||vered to and appropr|ated by Lhe buyer he musL pay a
reasonab|e pr|ce Lherefor WhaL ls a reasonable prlce ls a quesLlon of facL dependenL on Lhe clrcumsLances of each parLlcular case

Attlcle 1469 clvll coJe n order LhaL a prlce may be cons|dered certa|n lL shall be sufflclenL LhaL lL be so
1 WlLh reference Lo anoLher Lhlng cerLaln
2 ueLermlnaLlon Lhereof be lefL Lo Lhe [udgmenL of speclfled person/s
4 Should such 3
rd
person/s acLed |n bad fa|th or by m|stake courLs may flx Lhe prlce
4 Where such 3
rd
person/s prevented from flxlng Lhe prlce or Lerms by fau|t of the se||er or the buyer parLy noL ln faulL
may have such remedles (for fraud) agalnsL Lhe parLy ln faulL as allowed Lhe seller or Lhe buyer as Lhe case may be

Attlcle 1171 clvll coJe esponslblllLy ar|s|ng from fraud ls demandab|e |n a|| ob||gat|ons Any walver of an acLlon for fuLure fraud ls vod

1an 1|ah v u ose Gk No 499 (939% When Lhe prlce cannoL be deLermlned ln any oLher manner Lhe conLracL ls lnefflcaclous

. Medium of payment

rlce should be payable ln money or lLs equlvalenL (eg leLLers of credlL) oLherwlse lL may be consldered a barLer or an lnnomlnaLe conLracL
f prlce ls llfe annulLy or obllgaLlon Lo supporL Lhe conLracL ls noL sale because Lhe prlce ls a presLaLlon whlch cannoL be cerLaln

Attlcle 1245 clvll coJe uaLlon ln paymenL whereby properLy ls allenaLed Lo Lhe credlLor ln saLlsfacLlon of a debL ln money shall be goverened by
Lhe law of sales

Attlcle 1468 clvll coJe f conslderaLlon ls parLly ln money and parLly ln anoLher Lhlng (deLermlnaLlon of sales or barLer)
A 1ransacLlon Lo be characLerlzed by manlfesL lnLenLlon of parLles
8 Ialue of Lhlng money or equlvalenL 8A1L
C Ialue of Lhlng money or equlvalenL SALL
u Ialue of Lhlng money or equlvalenL SALL

Attlcle 1482 clvll coJe Whenever earnest money ls glven ln a conLracL of sale lL shall be consldered as parL of Lhe prlce and proof of Lhe perfecLlon
of Lhe conLracL
arLles may sLlpulaLe LhaL earnesL money regarded ln boLh senses (as a penal clause and as parL of Lhe prlce)

Spouses Serrano and nerrera v Court of Appea|s Gk No 393 (%

1opac|o v Court of Appea|s Gk No (99%

V. Perfection of tbe Contract

Attlcle 1J05 clvll coJe ConLracL ls a meeLlng of mlnds beLween Lwo persons whereby one blnds hlmself wlLh respecL Lo Lhe oLher Lo glve
someLhlng or Lo render some servlce

. ffect of perfection

Attlcle 1475 clvll coJe 1he conLracL of sale ls perfected aL Lhe momenL Lhere ls a meet|ng of the m|nds upon Lhe Lhlng whlch ls Lhe ob[ect of Lhe
conLracL and upon Lhe pr|ce

Spouses |menez v ordana Gk No (4%

8aut|sta v Court of Appea|s Gk No 3 (%

agco v Court of Appea|s Gk No 93 (994%

. Sale by uction

Attlcle 1476 clvll coJe n Lhe case of a sale by aucLlon
(1) Where goods are puL up for sale by aucLlon ln loLs each loL ls Lhe sub[ecL of a separaLe conLracL of sale
(2) A sale by aucLlon ls perfected when Lhe aucLloneer announces |ts perfect|on by Lhe fa|| of the hammer or ln other customary manner
DnLll such announcemenL ls made any b|dder may retract h|s b|d and Lhe auct|oneer may w|thdraw the goods from Lhe sale unless Lhe
aucLlon has been announced Lo be w|thout reserve
O #wlLhouL reserve" goods cannoL be wlLhdrawn from Lhe sale afLer a bld ls made
(3) A r|ght to b|d may be reserved expressly by or on behalf of Lhe seller unless oLherwlse provlded by law or by sLlpulaLlon
(4) Where noLlce has noL been glven LhaL a sale by aucLlon ls sub[ecL Lo a rlghL Lo bld on behalf of Lhe seller lL shall noL be lawful for Lhe
seller Lo bld hlmself or Lo employ or lnduce any person Lo bld aL such sale on hls behalf or for Lhe aucLloneer Lo employ or lnduce any
person Lo bld aL such sale on behalf of Lhe seller or knowlngly Lo Lake any bld from Lhe seller or any person employed by hlm Any sale
conLravenlng Lhls rule may be LreaLed as fraudu|ent by Lhe buyer

WPLn SLLLL MA? 8L ALLCWLu 1C A1CA1L n 1PL 8uunC
a Dpon noLlce of such facL
b rovlded by law or by sLlpulaLlon

LASCn lC CP81Cn ACAnS1 SLLLL 1C A1CA1L secreL employmenL of puffers for Lhe purpose of enhanclng Lhe prlce renders Lhe
sale fraudulenL and consequenLly vold

D|zon v D|zon Gk No 39 (% SlnceLhe aucLlon sale had already been perfecLed a supplemenLal sale wlLh hlgher conslderaLlon aL Lhe
lnsLance of only one parLy (hereln peLlLloner) could no longer be valldly execuLed

C. ilateral promise to buy and sell

1
st
lot Attlcle 1479 clvll coJe A prom|se to buy and se|| a deLermlnaLe Lhlng for a prlce cerLaln ls reclprocally demandable

Vazquez v Aya|a Corporat|on Gk No 4934 (4%

. Uptions

2
J
lot Attlcle 1479 clvll coJe An accepted un||atera| prom|se to buy or to se|| a deLermlnaLe Lhlng for a prlce cerLaln ls blndlng upon Lhe
promlssory lf Lhe promlse ls supporLed by a conslderaLlon dlsLlncL from Lhe prlce

Noo| v Court of Appeas| Gk No 3 (99%

8|b|e 8apt|st Church v Court of Appea|s Gk No 44 (4% An opLlon conLracL needs Lo be supporLed by a separaLe conslderaLlon 1he
conslderaLlon need not be monetary buL could conslsL of oLher Lhlngs or underLaklngs Powever lf Lhe conslderaLlon ls noL moneLary Lhese musL
be Lhlngs or underLaklngs of value ln vlew of Lhe onerous naLure of Lhe conLracL of opLlon lurLhermore when a conslderaLlon for an opLlon
conLracL ls noL moneLary sald conslderaLlon musL be clearly speclfled as such ln Lhe opLlon conLracL or clause

Navotas Industr|a| Corporat|on v Cruz Gk No 9 (% L blnds Lhe parLy who has glven Lhe opLlon noL Lo enLer lnLo Lhe prlnclpal
conLracL wlLh any oLher person durlng Lhe perlod deslgnaLed and wlLhln LhaL perlod Lo enLer lnLo such conLracL wlLh Lhe one Lo whom Lhe opLlon
was granLed lf Lhe laLLer should declde Lo use Lhe opLlon L ls a separaLe agreemenL dlsLlncL from Lhe conLracL whlch Lhe parLles may enLer lnLo
upon Lhe consummaLlon of Lhe opLlon

. ssignment of Credits or Incorporeal Rigbts

Attlcle 1624 clvll coJe An ass|gnment of cred|ts and other |ncorporea| r|ghts shall be perfecLed ln accordance wlLh Lhe provlslons of ArL 1473

Attlcle 1625 clvll coJe An asslgnmenL of credlLs rlghLs or acLlon shall produce no effect as aga|nst th|rd persons unless lL appear ln a pub||c
|nstrument l asslgnmenL of real properLy recorded ln eglsLry of roperLy

SALL ASSIGNMLN1 CI CkLDI1
1he sub[ecL obllged ls Lhe whole world AfLer Lhe Lransfer a Lhlrd person ls obllged
1he vendor warranLs agalnsL evlcLlon and hldden defecLs Asslgnor warranLs Lhe exlsLence or legallLy of Lhe credlL and ln
some cases Lhe lnsolvency of Lhe debLor

h|||pp|ne Nat|ona| 8ank v Court of Appea|s Gk No 83 (99%

ro[ect 8u||ders Inc v Court of Appea|s Gk No 99433 (% AsslgnmenL of credlL ls an acL of Lransferrlng elLher onerously or graLulLously
Lhe rlghL of asslgnor Lo an asslgnee who would Lhen be capable of proceedlng agalnsL Lhe debLor for enforcemenL or saLlsfacLlon of Lhe credlL

VI. Transfer of ownersbip

. How effected

Attlcle 1477 clvll coJe 1he ownersh|p of the th|ng sold shall be transferred Lo Lhe vendee upon Lhe actua| or construct|ve de||very Lhereof
Cf ArL 1303 lghL of possesslon or ownershlp may be Lhus reserved noLwlLhsLandlng Lhe dellvery of Lhe goods Lo Lhe buyer
Cf ArL 1478 1he parLles may st|pu|ate LhaL ownersh|p ln Lhe Lhlng shall noL pass Lo Lhe purchaser unLll he has fu||y pa|d the pr|ce

Lscueta v L|m Gk No 3 (%
Mascunana v Court of Appea|s Gk No 84 (%
Va||arta v Court of Appea|s Gk No L49 (98%

. ceptions

Attlcle 1502 clvll coJe When goods are dellvered Lo Lhe buyer #on so/e or return" Lo glve Lhe buyer an opt|on to return Lhe goods lnsLead of
paylng Lhe prlce Lhe ownersh|p passes Lo Lhe buyer of dellvery buL he may revest Lhe ownershlp ln Lhe seller by reLurnlng or Lenderlng Lhe goods
wlLhln Lhe Llme flxed ln Lhe conLracL or lf no Llme has been flxed wlLhln a reasonable Llme (n)

When goods are dellvered Lo Lhe buyer on opprovo/ or on trio/ or on sotisfoction or oLher slmllar Lerms Lhe ownersh|p there|n passes Lo Lhe
buyer
(1) When he s|gn|f|es h|s approva| or acceptance Lo Lhe seller or does any oLher acL adopLlng Lhe LransacLlon
(2) f he does not s|gn|fy hls approval or accepLance Lo Lhe seller buL reta|ns Lhe goods wlLhouL glvlng not|ce of re[ect|on
O Lhen lf a t|me has been f|xed for Lhe reLurn of Lhe goods on Lhe exp|rat|on of such Llme and
O lf no t|me has been f|xed on Lhe explraLlon of a reasonab|e t|me WhaL ls a reasonable Llme ls a quesLlon of facL

SALL Ck kL1UkN SALL CN AkCVAL
8uyer has Lhe r|ght to return Lhe Lhlng wlLhln Lhe Llme
flxed ln Lhe agreemenL or wlLhln a reasonable Llme as
long as Lhe Lhlng's condlLlon has noL subsLanLlally
changed
8uyer geLs Lhe Lhlng sold on Lrlal and slgnlfles hls acceptance or
refusa| wlLhln a cerLaln perlod
Cwnershlp passes to the buyer upon Lhe dellvery of Lhe
Lhlng buL he may revest lL
1lLle Lo Lhe goods rema|n w|th the se||er alLhough lL has already
been dellvered Lo Lhe buyer (Iollotto v cA)

Attlcle 1478 clvll coJe 1he parLles may st|pu|ate LhaL ownersh|p ln Lhe Lhlng shall noL pass Lo Lhe purchaser unLll he has fu||y pa|d the pr|ce


Attlcle 150J pot1 clvll coJe When Lhere ls a conLracL of sale of speclflc goods Lhe seller may by Lhe Lerms of Lhe conLracL reserve the r|ght of
possess|on or ownersh|p ln Lhe goods unt|| certa|n cond|t|ons have been fu|f|||ed 1he rlghL of possesslon or ownershlp may be Lhus reserved
noLwlLhsLandlng Lhe dellvery of Lhe goods Lo Lhe buyer or Lo a carrler or oLher ballee for Lhe purpose of Lransmlsslon Lo Lhe buyer

Industr|a| 1ext||e Manufactur|ng Company of the h|||pp|nes Inc v L Lnterpr|ses Inc Gk No 4 (993%
LDCA ub||sh|ng and D|str|but|ng Corporat|on v Spouses Leonor Gk No 898 (99%

C. Kinds of elivery

Mode of acqulrlng ownershlp as a consequence of cerLaln conLracLs such as sale by vlrLue of whlch acLually or consLrucLlvely Lhe ob[ecL ls
placed ln Lhe conLrol and possesslon of Lhe vendee
2 klnds of uellvery
(1) AcLual or real
(2) Legal or consLrucLlve
(a) Legal formallLles (1
sL
ar ArL 1498)
(b) Symbollcal LradlLlon or LradlLlon symbollca (2
nd
ar ArL 1498)
(c) 1radlLlo longa manu by mere consenL or agreemenL (ArL 1499)
(d) 1radlLlo brevl manu buyer already had possesslon of Lhe ob[ecL even before Lhe purchase (ArL 1499)
(e) 1radlLlo consLlLuLum seller remalns ln possesslon of Lhe properLy albelL ln a lower capaclLy (ArL 1300)
(3) ;uaslLradlLlon dellvery of rlghLs credlLs or lncorporeal properLy made by
(a) laclng LlLles of ownershlp ln Lhe hand of Lhe buyer
(b) Allowlng Lhe buyer Lo make use of Lhe rlghLs (ArL 1301)

a eal/acLual dellvery

Attlcle 1497 clvll coJe 1he Lhlng sold shall be understood as de||vered when lL ls placed ln Lhe contro| and possess|on of Lhe vendee

1en Iorty kea|ty and Deve|opment Corp v Cruz Gk No (3% Cwnershlp ls Lransferred noL by conLracL buL by LradlLlon or dellvery
nowhere ln Lhe Clvll Code ls lL provlded LhaL Lhe execuLlon of a ueed of Sale ls a cocloslve presumpLlon of dellvery of possesslon of a plece of real
esLaLe 1he execuLlon of a publlc lnsLrumenL glves rlse on|y to a pr|ma fac|e presumpt|on of dellvery Such presumpLlon ls desLroyed when Lhe
dellvery ls noL effecLed because of a legal lmpedlmenL Such consLrucLlve or symbollc dellvery belng merely presumpLlve was deemed negated by
the fa||ure of the vendee to take actua| possess|on of the |and so|d

V|sayan Sawm||| Company Inc v Court of Appea|s Gk No 838 (993%

b Symbollc dellvery

Attlcle 1498 clvll coJe When Lhe sale ls made Lhrough a pub||c |nstrument Lhe execuLlon Lhereof shall be equ|va|ent to de||very of Lhe
Lhlng whlch ls Lhe ob[ecL of Lhe conLracL lf from Lhe deed Lhe conLrary does noL appear or cannoL be clearly lnferred
WlLh regard Lo movable properLy lLs dellvery may also be made by Lhe de||very of the keys of Lhe place or deposlLory where lL ls sLored
or kepL

h|||pp|ne Suburban Deve|opment Corporat|on v Aud|tor Genera| 3 SCkA 39 (9% When Lhere ls no symbollc dellvery of Lhe ob[ecL even
afLer Lhe execuLlon of Lhe publlc lnsLrumenL when Lhe lnLenLlon of Lhe parLles ls oLherwlse for example
a CerLaln daLe ls flxed for Lhe purchaser Lo Lake possesslon
b n case of sale by lnsLallmenL sLlpulaLed LhaL unLll lasL paymenL ls pald LlLle Lo properLy remalns wlLh Lhe vendor
c Iendor reserves Lhe rlghL Lo use and en[oy properLy unLll gaLherlng of Lhe pendlng crops
d Iendor has no conLrol over Lhe goods aL Lhe momenL of sale hence maLerlal dellvery could noL have been made

Nork|s D|str|butors Inc v Court of Appea|s Gk No 99 (99% Mere lssuance of lnvolce dld noL prove Lhe Lransfer of Lhe ownershlp as lL
was a mere sLaLemenL of Lhe descrlpLlon and prlce of Lhe moLorcycle 1he reglsLraLlon of Lhe unlL under hls name dld noL also confer ownershlp
because Lhere was no lnLenLlon Lo dellver lL Lo hlm aL Lhe Llme of Lhe reglsLraLlon 8oLh documenLs are mere condlLlons precedenL for Lhe
processlng of Lhe loan

|neda v Court of Appea|s Gk No 4 (3%
Cao|bes v Cao|besanto[a Gk No 83 (%

L;DS1LS Cl CCnS1DC1IL uLLIL? 8LlCL CWnLSP MA? 8L 1AnSM11Lu
O Seller musL have conLrol over Lhe Lhlng oLherwlse how can he puL anoLher ln conLrol llcLlon ylelds Lo reallLy he cannoL Lransfer consLrucLlve
possesslon lf Lhere ls legal lmpedlmenL Lo acLual possesslon

O 8uyer musL be puL under conLrol
O nLenLlon Lo dellver Lhe Lhlng for purposes of ownershlp

c 1radlLlon Longa Manu

Attlcle 1499 clvll coJe 1he dellvery of a movab|e property may llkewlse be made by Lhe mere consent or agreement of Lhe conLracLlng
parLles lf Lhe Lhlng sold cannot be transferred to the possess|on of the vendee at the t|me of the sa|e or lf Lhe laLLer already had lL ln hls
possesslon for any oLher reason

San Lorenzo Deve|opment Corp v Court of Appea|s Gk No 44 (% 1he perfect|on of a conLracL of sale should noL however be
confused wlLh lLs consummat|on n relaLlon Lo Lhe acqulslLlon and Lransfer of ownershlp lL should be noLed LhaL sale ls not a mode but mere|y a
t|t|e 5o/e by itse/f does not tronsfer or offect ownership Lhe mosL LhaL sale does ls Lo create the ob||gat|on to transfer ownersh|p L ls trodition
or de/ivery os o consequence of so/e thot octuo//y tronsfers ownership

8oard of L|qu|dators v I|oro Gk No L (9%

d 1radlLlon 8revl Manu

Attlcle 1499 clvll coJe 1he dellvery of a movab|e property may llkewlse be made by Lhe mere consenL or agreemenL of Lhe conLracLlng
parLles lf Lhe Lhlng sold cannoL be Lransferred Lo Lhe possesslon of Lhe vendee aL Lhe Llme of Lhe sale or lf Lhe laLLer a|ready had |t |n h|s
possess|on for any other reason

e 1radlLlon ConsLlLuLum ossessorlum

Attlcle 1499 clvll coJe 1here may also be ttoJltlo costltotom possessotlom

Carbone|| v Court of Appea|s Gk No L99 (9%

f uellvery Lo a common carrler

Attlcle 150J clvll coJe When Lhere ls a conLracL of sale of speclflc goods Lhe seller may by Lhe Lerms of Lhe conLracL reserve Lhe rlghL of
possesslon or ownershlp ln Lhe goods unLll cerLaln condlLlons have been fulfllled 1he rlghL of possesslon or ownershlp may be Lhus
reserved noLwlLhsLandlng Lhe dellvery of Lhe goods Lo Lhe buyer or Lo a carrler or oLher ballee for Lhe purpose of Lransmlsslon Lo Lhe
buyer

Where goods are shlpped and by Lhe blll of ladlng Lhe goods are dellverable Lo Lhe seller or hls agenL or Lo Lhe order of Lhe seller or of
hls agenL Lhe se||er thereby reserves the ownersh|p |n the goods 8uL lf excepL for Lhe form of Lhe blll of ladlng Lhe ownershlp would
have passed Lo Lhe buyer on shlpmenL of Lhe goods Lhe sellers properLy ln Lhe goods shall be deemed Lo be only for Lhe purpose of
securlng performance by Lhe buyer of hls obllgaLlons under Lhe conLracL

Where goods are shlpped and by Lhe blll of ladlng Lhe goods are dellverable Lo order of Lhe buyer or of hls agenL buL possesslon of Lhe
blll of ladlng ls reLalned by Lhe seller or hls agenL Lhe se||er thereby reserves a r|ght to the possess|on of Lhe goods as agalnsL Lhe buyer

Where Lhe seller of goods draws on Lhe buyer for Lhe prlce and LransmlLs Lhe blll of exchange and blll of ladlng LogeLher Lo Lhe buyer Lo
secure accepLance or paymenL of Lhe blll of exchange Lhe buyer ls bound Lo reLurn Lhe blll of ladlng lf he does noL honor Lhe blll of
exchange and lf he wrongfully reLalns Lhe blll of ladlng he acqulres no added rlghL Lhereby f however Lhe blll of ladlng provldes LhaL
Lhe goods are dellverable Lo Lhe buyer or Lo Lhe order of Lhe buyer or ls lndorsed ln blank or Lo Lhe buyer by Lhe conslgnee named
Lhereln one who purchases ln good falLh for value Lhe blll of ladlng or goods from Lhe buyer wlll obLaln Lhe ownershlp ln Lhe goods
alLhough Lhe blll of exchange has noL been honored provlded LhaL such purchaser has recelved dellvery of Lhe blll of ladlng lndorsed by
Lhe conslgnee named Lhereln or of Lhe goods wlLhouL noLlce of Lhe facLs maklng Lhe Lransfer wrongful

Attlcle 152J clvll coJe Where ln pursuance of a conLracL of sale Lhe seller ls auLhorlzed or requlred Lo send Lhe goods Lo Lhe buyer
dellvery of Lhe goods Lo a carrler wheLher named by Lhe buyer or noL for Lhe purpose of Lransmlsslon Lo Lhe buyer ls deemed Lo be a
dellvery of Lhe goods Lo Lhe buyer excepL ln Lhe case provlded for ln ArLlcle 1303 flrsL second and Lhlrd paragraphs or unless a conLrary
lnLenL appears

Dnless oLherwlse auLhorlzed by Lhe buyer Lhe seller musL make such conLracL wlLh Lhe carrler on behalf of Lhe buyer as may be
reasonable havlng regard Lo Lhe naLure of Lhe goods and Lhe oLher clrcumsLances of Lhe case f Lhe seller omlL so Lo do and Lhe goods

are losL or damaged ln course of LranslL Lhe buyer may decllne Lo LreaL Lhe dellvery Lo Lhe carrler as a dellvery Lo hlmself or may hold Lhe
seller responslble ln damages

Dnless oLherwlse agreed where goods are senL by Lhe seller Lo Lhe buyer under clrcumsLances ln whlch Lhe seller knows or oughL Lo
know LhaL lL ls usual Lo lnsure Lhe seller musL glve such noLlce Lo Lhe buyer as may enable hlm Lo lnsure Lhem durlng Lhelr LranslL and lf
Lhe seller falls Lo do so Lhe goods shall be deemed Lo be aL hls rlsk durlng such LranslL

8utuan Sawm||| Inc v Court of 1ax Appea|s Gk No L (9%
Mob|| C|| h|||pp|nes Inc v Court of Appea|s Gk No 3 (99%
I|||p|no Merchants Insurance Co Inc v Court of Appea|s Gk No 84 (989%

. ouble or Multiple Sales

a Sale of Movables possessor ln good falLh
uellvery may be made ln Lhe dlfferenL forms as provlded ln ArL 1497 Lo ArL 1301

Attlcle 1544 clvll coJe f Lhe same Lhlng should have been sold Lo dlfferenL vendees Lhe ownershlp shall be Lransferred Lo Lhe person
who may have flrsL Laken possess|on Lhereof ln good falLh lf lL should be movab|e property
Should lL be lmmovable properLy Lhe ownershlp shall belong Lo Lhe person acqulrlng lL who ln good falLh flrsL recorded lL ln Lhe eglsLry
of roperLy
Should Lhere be no lnscrlpLlon Lhe ownershlp shall perLaln Lo Lhe person who ln good falLh was flrsL ln Lhe possesslon and ln Lhe
absence Lhereof Lo Lhe person who presenLs Lhe oldesL LlLle provlded Lhere ls good falLh

1omass| v V|||aAbr|||e Gk No L4 (98%

b Sale of mmovables

Attlcle 1544 clvll coJe f Lhe same Lhlng should have been sold Lo dlfferenL vendees Lhe ownershlp shall be Lransferred Lo Lhe person
who may have flrsL Laken possesslon Lhereof ln good falLh lf lL should be movable properLy
Should lL be |mmovab|e property Lhe ownershlp shall belong Lo Lhe person acqulrlng lL who ln good falLh flrsL recorded |t |n the keg|stry
of roperty
Should Lhere be no |nscr|pt|on Lhe ownershlp shall perLaln Lo Lhe person who ln good falLh was flrsL ln Lhe possess|on and ln Lhe
absence Lhereof Lo Lhe person who presenLs Lhe o|dest t|t|e provlded Lhere ls good falLh

DLLS Cl LlLLnCL
1) eglsLranL ln good falLh
2) ossessor ln good falLh (f Lhere was no reg|strat|on C reglsLraLlon was done ln bad fa|th)
O no dlsLlncLlon beLween acLual or consLrucLlve
O #CSSLSSC n CCCu lA1P" one who ls noL aware LhaL Lhere exlsLs ln hls LlLle or mode of acqulslLlon any flaw whlch
lnvalldaLes lL no knowledge of facLs whlch should have puL hlm upon such lnqulry or lnvesLlgaLlon as mlghL be necessary Lo
acqualnL hlm wlLh Lhe defecLs ln Lhe LlLle of hls vendor
O #CCCu lA1P" conslsLs ln an honesL lnLenLlon Lo absLaln from Laklng any unconsclenLlous advanLage of anoLher
O Cood falLh of second buyer musL conLlnue unLll hls conLracL rlpens lnLo ownershlp by LradlLlon or recordlng
O #LCS1LLu LAnuS" purchaser ls noL requlred Lo do more Lhan rely on Lhe cerLlflcaLe of Lhe LlLle lssued ln Lhe name of hls
vendor he need noL Lrace lLs orlgln Lo prlor cerLlflcaLes of LlLle
O ArL 1344 (on double sales) noL appllcable Lo execut|on sa|es because Lhe purchaser aL such sales ls subsLlLuLed Lo or acqulres
only whaLever rlghLs LlLles or lnLeresLs Lhe [udgmenL debLor may have over Lhe properLy as of Lhe Llme of Lhe levy (eg rlghL of
redempLlon)
3) erson wlLh Lhe oldesL LlLle ln good falLh

DnLCS1LLu LAnuS
O ArL 1344 ls also appllcable Lo unreg|stered |ands under AcL 3444 reglsLraLlon of lnsLrumenLs ls #wlLhouL pre[udlce Lo a Lhlrd parLy wlLh a
beLLer rlghL" mere reglsLraLlon of sale ln one's favor does noL glve hlm any rlghL over Lhe land lf Lhe vendor was noL Lhe owner of Lhe land
O As Lo maLLers whlch Look place before Lhe flrsL recorded Lransfer of Lhe land one musL conducL hls own lnvesLlgaLlon because reglsLraLlon was
#wlLhouL pre[udlce Lo a Lhlrd parLy wlLh a beLLer rlghL"
O noL appllcable Lo unreglsLered lands under AcL 496 prlor unrecorded sale cannoL pre[udlce execuLlon sales lf no 3
rd
parLy clalm was
presenLed before Lhe execuLlon sale Look place


Spouses 1ang|ao v Spouses arungao Gk No 93 (% Cood falLh ls essenLlal belng Lhe baslc premlse of Lhe preferenLlal rlghLs granLed
Lo Lhe person clalmlng ownershlp of Lhe lmmovable A buyer of real properLy ln possesslon of persons oLher Lhan Lhe seller musL be wary and
should lnvesLlgaLe Lhe rlghLs of Lhose ln possesslon for wlLhouL such lnqulry Lhe buyer can hardly be regarded as a buyer ln good falLh and cannoL
have any rlghL over Lhe properLy

ku|es |n the app||cat|on of Art|c|e 44
(1) knowledge by Lhe flrsL buyer of Lhe second sale cannoL defeaL Lhe flrsL buyer's rlghLs excepL when Lhe second buyer flrsL reglsLers ln good
falLh Lhe second sale and
(2) knowledge galned by Lhe second buyer of Lhe flrsL sale defeaLs hls rlghLs even lf he ls flrsL Lo reglsLer slnce such knowledge LalnLs hls
reglsLraLlon wlLh bad falLh ulfferenLly puL Lhe acL of reglsLraLlon by Lhe second buyer musL be coupled wlLh good falLh meanlng Lhe
reglsLranL musL have no knowledge of Lhe defecL or lack of LlLle of hls vendor or musL noL have been aware of facLs whlch should puL hlm
upon such lnqulry and lnvesLlgaLlon as mlghL be necessary Lo acqualnL hlm wlLh Lhe defecLs ln Lhe LlLle of hls vendor

Spouses 8ernardez v Court of Appea|s Gk No 888 (% 1he one who acqulres lL and flrsL records lL ln Lhe eglsLry of roperLy shall be
deemed Lhe owner ltlmos tempote potlot jote llrsL ln Llme sLronger ln rlghL Powever Lhe acL of reglsLraLlon musL be coupled wlLh good
falLh 1haL ls Lhe reglsLranL musL have no knowledge of any defecL ln Lhe LlLle of Lhe vendor or musL noL have been aware of facLs whlch should
have puL hlm upon such lnqulry and lnvesLlgaLlon as mlghL be necessary Lo acqualnL hlm wlLh any such defecL

Iudot v Catt|eya Land Inc Gk No 8 (%

Spouses Sa|era v Spouses Ce|edon|o and koda[e Gk No 39 (% Any loL buyer ls expecLed Lo be vlgllanL exerclslng uLmosL care ln
deLermlnlng wheLher Lhe seller ls Lhe Lrue owner of Lhe properLy and wheLher Lhere are oLher clalmanLs 1here ls no lndlcaLlon from Lhe record
LhaL respondenLs flrsL deLermlned Lhe sLaLus of Lhe loL Whlle Lax declaraLlons are noL concluslve proofs of ownershlp however Lhey are
good lJlclo of possesslon ln Lhe concepL of owner for no one ln hls rlghL mlnd would be paylng Laxes for a properLy LhaL ls noL ln hls acLual or aL
leasL consLrucLlve possesslon

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