SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
1.2 ESSENTIAL REQUISITES
Sales
LEABRES V CA
1 CONTRACT OF SALE, CONCEPTS
(NCC 1458)
By the contract of sale, one of the contracting parties
obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
1.1 CHARACTERISTICS
 Consensual
 perfected by mere consent of the parties
 NCC 1475. The contract of sale is
perfected at the moment there is a meeting of
minds upon the thing which is the object of
the contract and upon the price
 Principal
 can exist by itself without being dependent
upon another contract
 Bilateral
 Bilateral because it carries the correlative
duty of the seller to deliver the property and
the obligation of the buyer to pay the price
(NCC 1458 supra)
 Reciprocal because each party is a debtor
and creditor of the other, such that the
obligation of one is dependent upon the
obligation of the other; and they are to be
performed simultaneously.
 NCC 1475. From that moment, the parties
may reciprocally demand performance,
subject to the provisions of the law governing
the form of contracts
 Onerous
 Valuable consideration given by both
parties to acquire rights
 Commutative
 parties exchange almost equivalent values
 NCC 2010. By an ALEATORY CONTRACT,
one of the parties/both reciprocally bind
themselves to give/to do something in
consideration of what the other shall give/do
upon the happening of an event which is
uncertain, or which is to occur at an
indeterminate time
 NCC 1461. Things having a potential
existence may be the object of the contract of
sale. The efficacy of the sale of a mere
hope/expectancy is deemed subject to the
condition that the thing will come into
existence.
The sale of vain hope/expectancy is void.
 Nominate
 Designated by special name
 Title VI Book IV (Sales)
Requisites of a Valid Contract of Sale:
(1)
(2)
(3)
Consent/meeting of the minds of the parties;
Determinate subject matter; and
Price certain in money/its equivalent
Case: Plaintiff bought portion of subdivision from
surviving husband of deceased owner evidenced by
receipt.
Phil. Trust Co. relieved surviving husband as
administrator and advertised the sale of subject
subdivision
NO ADVERSE CLAIM  thus, subdivision was sold to
Manotok Realty, Inc.
 RECEIPT LACKING IN REQUISITES (mere
acknowledgment of P1k is not enough)
 Consent or meeting of minds
NCC 1475. The contract of sale is
perfected at the moment there is a
meeting of minds upon the thing
which is the object of the contract and
upon the price.
NCC 1319. Consent is manifested by
the meeting of the offer and the
acceptance upon the thing and the
cause which are to constitute the
contract. The offer must be certain
and the acceptance absolute. A
qualified acceptance constitutes a
counter-offer.
Note: Cases of sale against the will of the owner:
expropriation (forced sale) of property;
execution sale to enforce a judgment of a court;
foreclosure sale of mortgaged/pledged property
 Object or subject matter
Refers to DETERMINATE THINGS or at least
capable of being made determinate
 because if the seller and the buyer differ in
regard to the thing sold, there is no meeting of
minds; thus, no sale.
May be
real/personal/tangible/intangible/present/ future
property.
Must be licit and within the commerce of men
 Cause or consideration
Refers to price certain in money or its equivalent
(such as a check/promissory note/assumption by
the buyer of the mortgage debt of the seller) which
is the consideration for the thing sold.
The cause in a sale:
as to the seller  buyer’s promise to pay the price
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
as to the buyer  seller’s promise to deliver thing
Summary: Arnoldus is a domestic corporation which
sold
has for its secondary purpose the
“preparing/processing/buying/selling/exporting/impo
Price  cost at which something is obtained in
rting/manufacturing/trading/dealing in cabinet shop
exchange for something else
products/wood/& metal home and office
furniture/cabinets/doors/windows etc. including their
Note: Absence of price  NO VALID SALE
component parts and materials of any and all nature
Failure to pay price  breach of contract
and description.
1.3 SALE DISTINGUISHED FROM OTHER
CONTRACTS
1.3.1
Barter (NCC 1638 & 1468)
NCC 1638. By the contract of barter or exchange, one
of the parties binds himself to give one thing in
consideration of the other’s promise to give another
thing.
NCC 1468. If the consideration of the contract
consists partly in money, and partly in another thing,
the transaction shall be characterized by the manifest
intention of the parties. If such intention does not
clearly appear, it shall be considered a barter if the
value of the thing given as a part of the consideration
exceeds the amount of the money or its equivalent;
otherwise, it is a sale.
1.3.2
Donation
NCC 725. Donation is an act of liberality whereby a
person disposes gratuitously of a thing or right in favor
of another, who accepts it.
 An act of liberality
 Gratuitous
 Onerous donations governed by Rules on Contracts
 Title III Book III (Donation)
 Must comply with formalities mandated by law for
validity
 Cannot have the legal effect of depriving the
compulsory heirs of their legitimes
1.3.3
Contract for Piece of Work (NCC 1467)
A contract for the delivery at a certain price of an
article which the vendor in the ordinary course of his
business manufactures or procures for the general
market, whether the same is on hand at the time or
not, is a contract of sale, but if the goods are to be
manufactured specially for the customer and upon his
special order, and not for the general market, it is a
contract for a piece of work.
CO V CIR
Summary: Oriental Sash Factory case
When a factory accepts a job that requires the use of
extraordinary/additional equipment/involves services
NOT generally performed by it  contract for a piece
of work
CIR V ARNOLDUS CARPENTRY
Held: Manuracturer is NOT AN INDEPENDENT
CONTRACTOR
1.3.4
Agency to Sell (NCC 1466)
In construing a contract containing provisions
characteristic of both the contract of sale and of the
contract of agency to sell, the essential clauses of the
whole instrument shall be considered.
Agency
Title to goods is
retained by the owner
despite delivery of
goods to agent
Agent is required to turn
over to the principal the
price of the goods which
he received from the
buyer
Principal retains control
over the property
Sale
NCC 1477. The
ownership of the thing
sold shall be transferred
to the vendee upon the
actual/constructive
delivery thereof.
NCC 1458. Other party
obligates himself to pay
a price certain in
money/its equivalent
Recipient of property
may do with it as he
pleases
QUIROGA V PARSONS
Summary: Purchase and Sale of Quiroga beds
Doctrine: A contract is what the law defines it to be
and not what it is called by the contracting parties
Case: What was essential, as constituting its cause
and subject matter, is that the plaintiff was to furnish
the defendant with the beds which the latter might
order, at the prices stipulated, and the defendant was
to pay the price in the manner stipulated. The price
agreed upon was determined by the plaintiff for the
sale of these beds in Manila.
 These features exclude the legal conception of an
agency or order to sell whereby the mandatory or
agent received the thing to sell it, and does not pay its
price, but delivers to the principal the price he obtains
from the sale of the thing to a third person, and if he
does not succeed in selling it, he returns it.
Note: “commission on sales”  mere discount on the
invoice price;
“agency”  expresses that defendant was the only
one that could sell plaintiff’s beds in Visayas
GONZALO PUYAT & SONS V ARCO AMUSEMENT CO
Summary: Purchase and sale of sound reproducing
equipment for cinematographs which respondent
ordered from abroad thru petitioner.
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
Doctrine: The contract is the law between the parties
1.4.1 Absolute
and should include all the things they are supposed to
have been agreed upon. What does not appear on the
NCC 1179. Every obligation whose performance does
face of the contract should be regarded merely as
not depend upon a future/uncertain event/upon a
"dealer's" or "trader's talk", which cannot bind either
past event unknown to the parties, is demandable at
party.
once.
Doctrine: In agency, the agent is exempted from all
liability in the discharge of his commission provided
he acts in accordance with the instructions received
from his principal (Sec 254 Code of Commerce), and
the principal must indemnify the agent for all
damages which the latter may incur in carrying out the
agency without fault or imprudence on his part (Art
1729, Civil Code).
 In this case, respondent may still legally hold
petitioner to the prices fixed at $1.7k and $1.6k.
Note: The 10% commission does not necessarily
make the petitioner an agent of the respondent, as
this provision is only an additional price which the
respondent bound itself to pay.
Case: Respondent contends that it merely agreed to
pay the cost price and not the list price, in addition to
all other expenses. Note that the 25% discount
granted by Starr Piano was available only to petitioner
as the former's agent. Respondent could not have
secured this discount nor was petitioner willing to
waive that discount. Respondent could not secure the
equipment except through petitioner alone; it willingly
paid the price quoted; it received the equipment as
represented. Not every concealment is fraud; and
short of fraud, it were better that, within certain limits,
business acumen permit of the loosening of the
sleeves and of the sharpening of the intellect of men
and women in the business world.
1.3.5 Lease
Lease
No transfer of
ownership; rights of
lessee are limited to the
use and enjoyment of
the thing leased
Temporary transfer
Sale
NCC 1496. The
ownership of the thing
sold is acquired by the
vendee from the
moment it is delivered
Permanent transfer
unless subject to
resolutory condition
Lessor need not be the
Seller must be the
owner of the thing
owner at the time the
property is delivered, or
at least authorized by
the owner to transfer
ownership
Note: A conditional sale may be made in the form of a
“lease with option to buy” as a device to circumvent
the provisions of the Recto Law governing sale of
personal property on installments.
1.4 KINDS OF SALE
NCC 1458. A contract of sale may be absolute or
conditional.
Sale is not subject to any condition whatsoever and
title/ownership passes to the buyer upon delivery of
the thing sold
1.4.2
Conditional
NCC 1179. Every obligation which contains a
resolutory condition shall also be demandable,
without prejudice to the effects of the happening of
the event.
NCC 1181. In conditional obligations, the acquisition
of rights, as well as the extinguishment/loss of those
already acquired, shall depend upon the happening of
the event which constitutes the condition.
Sale contemplates a contingency (NCC 1461,
1462(2), 1465), and in general, where the contract is
subject to certain conditions (NCC 1503(1)), usually
the full payment of the purchase price (NCC 1478).
NCC 1478. The parties may stipulate that ownership
in the thing shall not pass to the purchaser until he
has fully paid the price
1.4.3
Contract to Sell as distinguished from
Contract of Sale (NCC 1466)
In Contract to Sell:
 by agreement, ownership is reserved to the vendor
and is NOT TO PASS to the vendee until full payment
of the purchase price
 is a contract preparatory to the contract of sale
 may be rescinded (NCC 1191. Resolution)
 Positive suspensive condition: Failure to pay the
purchase price is an event that prevents the execution
of the contract of sale
(Vendor not obliged to convey title)
In Contract of Sale:
 The title to the property passes to the vendee upon
the delivery of the thing sold
 Non-payment of the price is a negative resolutory
condition
(i.e. cannot recover until sale is rescinded/resolved)
DIGNOS V CA
Doctrine: it has been held that a deed of sale is
absolute in nature although denominated as a "Deed
of Conditional Sale" where nowhere in the contract in
question is a proviso or stipulation to the effect that
title to the property sold is reserved in the vendor until
full payment of the purchase price, nor is there a
stipulation giving the vendor the right to unilaterally
rescind the contract the moment the vendee fails to
pay within a fixed period.
RAYOS V CA
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
Issue: Whether spouses Miranda committed a breach
agreement reserving to the petitioners the right to
in their contract to sell upon their failure to refund the
unilaterally resolve the contract upon the buyer’s
last quarterly installment
failure to pay within a fixed period. Unlike in a contract
of sale, the payment of the price is a positive
Held: No.
suspensive condition in a contract to sell, failure of
The petitioners cannot, likewise, be faulted for
which is not a breach but an event which prevents the
refusing to execute a deed of absolute sale over the
obligation of the vendor to convey title from becoming
property in favor of the respondents, and in refusing
effective.
to turn over the owner's duplicate of TCT No. 100156
unless the respondents refunded the said amount.
Lastly, the contract of sale of the parties is
The respondents were obliged under the contract to
enforceable notwithstanding the fact that the same
sell to pay the said amount to the PSB as part of the
was an oral agreement, not reduced into writing as
purchase price of the property.
required by Article 1403(2) NCC. This is so because
the provision applies only to executory, and not to
The parties executed a contract to sell and not a
completed, executed or partially executed contracts.
contract of sale.
Contract to Sell  the petitioners retained ownership
without further remedies by the respondents until the
payment of the purchase price of the property in full.
Such payment is a positive suspensive condition,
failure of which is not really a breach, serious or
otherwise, but an event that prevents the obligation of
the petitioners to convey title from arising, in
accordance with Article 1184 of the Civil Code.
2 OBJECT OF SALE (NCC 1306)
The nonfulfillment by the respondent of his obligation
to pay, which is a suspensive condition to the
obligation of the petitioners to sell and deliver the title
to the property, rendered the contract to sell
ineffective and without force and effect.
NCC 1347. All things which are not outside the
commerce of men, including future things, may be the
object of a contract. All rights which are not
intransmissible may also be the object of contracts.
The parties stand as if the conditional obligation had
never existed. Article 1191 of the New Civil Code will
not apply because it presupposes an obligation
already extant. There can be no rescission of an
obligation that is still non-existing, the suspensive
condition not having happened. However, the
respondents may reinstate the contract to sell by
paying the P29,223.67, and the petitioners may agree
thereto and accept the respondents' late payment.
CLEMENO V LOBREGAT
Held: The contract was a perfected verbal contract of
sale, with petitioner as vendor and respondent as
vendee.
Sale is a consensual contract and is perfected by
mere consent, which is manifested by a meeting of
the minds as to the offer and acceptance thereof on
three elements: subject matter, price and terms of
payment. Conformably to Article 1477 NCC, the
ownership of the property was transferred to the
respondent upon delivery of possession of the
premises to him. Petitioners cannot re-acquire
ownership and recover possession thereof unless the
contract is rescinded in accordance with law. The
failure of the respondent to complete the payment of
the purchase price within the stipulated period merely
accorded the petitioners the option to rescind the
contract of sale as provided in Article 1592 NCC.
The contract was not a contract to sell because there
was no agreement for the petitioner to retain
ownership over the property until after the respondent
shall have paid the purchase price in full, nor an
NCC 1306. The contracting parties may establish
such stipulations, clauses, terms, and conditions as
they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or
public policy.
No contract may be entered into upon future
inheritance except in cases expressly authorized by
law.
Requisites concerning object:
(1) As to things:
a. Must be DETERMINATE (NCC 1458,
1460)
b. Must be LICIT OR LAWFUL  not
contrary to law, morals, good customs,
public order, or public policy (NCC
1347, 1409[1,4])
c. Should NOT BE IMPOSSIBLE (NCC
1348)
(2) As to rights:
a. Must NOT BE INTRANSMISSIBLE/
PERSONAL
(e.g. right of usufruct, right of
conventional redemption, etc.)
Note: SERVICES MAY NOT BE THE OBJECT OF A
CONTRACT OF SALE
2.1 SUBJECT MATTER MUST BE LICIT (NCC
1459)
The thing must be licit and the vendor must have a
right to transfer the ownership thereof at the time it is
delivered.
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
Note: Kinds of illicit things are illicit per se (of its
The sale of a vain hope or expectancy is void.
nature) and per accidens (because of some provisions
of law declaring it illegal)
Sale really refers to an “expected thing” which is not
yet in existence (not to the hope or expectancy which
It is not required that vendor must have the right to
already exists), in view of the condition that the thing
transfer ownership of the property sold at the time of
will come into existence.
the perfection of the contract.
Reason: Future goods  goods whose acquisition by
2.4.1 Emptio rei speratae (sale an expected thing)
the seller depends upon a contingency
Sale of a future thing
2.2 SUBJECT MATTER MUST BE DETERMINATE
(NCC 1460)
A thing is determinate when it is particularly
designated or physically segregated from all others of
the same class.
The requisite that a thing be determinate is satisfied
if at the time the contract is entered into, the thing is
capable of being made determinate without the
necessity of a new or further agreement between the
parties.
It is sufficient that the thing is determinable or
capable of being made determinate without necessity
of a new or further agreement between the parties to
ascertain its identity, quantity, or quality.
NCC 1409. The following contracts are
inexistent and void from the
beginning:
...
(3) Those whose cause or object did not
exist at the time of the transaction;
(4) Those whose object is outside the
commerce of men; . . .
(6) Those where the intention of the
parties relative to the principal object
of the contract cannot be ascertained;
...
2.3 SALE OF THINGS HAVING POTENTIAL
EXISTENCE (NCC 1461)
Things have a potential existence may be the object of
the contract of sale.
Provided, the future thing is reasonably certain to
come into existence as the natural increment or usual
incident of something in existence already belonging
to the seller, and the title will vest in the buyer the
moment the things comes into existence.
2.4 SALE OF HOPE OR EXPECTANCY (NCC
1461)
The efficacy of the sale of a mere hope or expectancy
is deemed subject to the condition that the thing will
come into existence.
Thing sold must come into existence; otherwise, sale
is not effective
e.g. Sale of land subject to condition that seller wins
case for recovery of the same pending before SC.
Object  land; Subject to condition;
thus, if seller wins the case  expected thing will
come into existence & obligation to sell will arise
2.4.2 Emptio spei (sale of hope itself)
Deals with a present thing  the hope/expectancy is
the object of the contract
Sale produces effects even if the thing hoped for does
not come into existence
e.g. Sale of sweepstakes ticket in the hope of winning
a prize.
Object  hope itself; thus, sale valid even if B does
not win the prize
2.5 SALE OF EXISTING AND FUTURE GOODS (NCC
1462)
The goods which form the subject of a contract of sale
may be either existing goods, owned or possessed by
the seller, or goods to be manufactured, raised, or
acquired by the seller after the perfection of the
contract of sale, in this Title called “future goods.”
There may be a contract of sale of goods, whose
acquisition by the seller depends upon a contingency
which may or may not happen.
Existing goods or goods owned or possessed by the
seller
Future goods or goods to be manufactured, raised, or
acquired.
 valid only as an executory contract to be fulfilled by
the acquisition and delivery of the goods specified.
 upon acquisition, either party acquires the right to
demand the execution of the contract of sale
 NOT sale of future goods if goods are to be
manufactured especially for the buyer and are not
readily saleable to others in the manufacturer’s
regular course of business (CONTRACT FOR A PIECE
OF WORK)
2.6 SALE OF UNDIVIDED INTEREST (NCC 1463)
The sole owner of a thing may sell an undivided
interest therein.
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
ALMENDRA V IAC
 If mortgagor redeems the property, then the sale
made by B (purchaser at auction) is extinguished.
The sale to Angeles of ½ portion of the conjugal
property may only be considered valid as a sale of
Aleja’s ½ interest therein. Aleja could not have sold
RICE
particular hilly portion specified in the deed of sale in
absence of proof that the conjugal partnership
property had been partitioned after the death of
3.1 CERTAINTY AS TO PRICE (NCC 1469)
Santiago
In order that the price may be considered certain, it
shall be sufficient that it be so with reference to
2.7 SALE OF FUNGIBLE GOODS (NCC 1464)
another thing certain, or that the determination
thereof be left to the judgment of a specified person
In the case of fungible goods, there may be a sale of
or persons.
an undivided share of a specific mass, though the
seller purports to sell and the buyer to buy a definite
Should such person or persons be unable or unwilling
number, weight or measure of the goods in the mass,
to fix it, the contract shall be inefficacious, unless the
and though the number, weight or measure of the
parties subsequently agree upon the price.
goods in the mass is undetermined. By such a sale the
buyer becomes owner in common of such a share of
If the third person or persons acted in bad faith or by
the mass as the number, weight or measure bought
mistake, the courts may fix the price.
bears to the number, weight or measure of the mass.
If the mass contains less than the number, weight or
Where such third person or persons are prevented
measure bought, the buyer becomes the owner of the
from fixing the price or terms by fault of the seller or
whole mass and the seller is bound to make good the
the buyer, the party not at fault may have such
deficiency from goods of the same kind and quality,
remedies against the party in fault as are allowed the
unless a contrary intent appears.
seller or the buyer, as the case may be.
3 P
Fungible goods refer to interchangeable goods such
as grain, oil, etc., that allow one to be replaced by
another without loss of value.
Rules in sale of undivided share of a specific mass:
(when the quantity sold is different from the quantity
in the mass)
 If the quantity (number, weight, or measure) of
mass > the quantity sold
 parties become co-owners of the mass
 If the quantity of the mass < quantity sold
 buyer becomes owner of the whole mass
 seller bound to make good the deficiency from
goods of the same kind/quality, unless the
contrary appears.
2.8 SALE OF THINGS SUBJECT TO RESOLUTORY
CONDITION (NCC 1465)
Things subject to a resolutory condition may be the
object of the contract of sale.
e.g. Right of Repurchase
S (vendor a retro) sold parcel of land to B (vendee a
retro), subject to the condition that S can repurchase
the property within 2yrs from the date of the sale.
 If S exercises his right of repurchase, then the sale
made by B to C before expiration of the 2yr period
falls.
Mortgage
Under the law (Act 3135), the mortgagor may redeem
the property at any time within one year from and
after the date of the sale (sale after foreclosure).
Rules: Price is certain if:
(a) The parties have agreed upon a definite amount
for the sale
Fixing of the price can never be left to the discretion
of one of the parties;
However, if the price fixed by one party is accepted by
the other  sale perfected
(b) It be certain with reference to another thing
certain
(c) The determination of the price be left to the
judgment of a specified person/s
If such person/s are UNABLE/UNWILLING to fix the
price  contract INEFFICACIOUS, unless the parties
subsequently agree upon the price
If the 3rd person/s acted in BAD FAITH/BY MISTAKE
 courts may fix the price
Where such 3rd person/s are PREVENTED FROM
FIXING THE PRICE/TERMS by fault of the seller/buyer
 party NOT AT FAULT may have such remedies
against party party at fault as are allowed the
seller/buyer, as the case may be.
(d) The price fixed is that which the thing sold would
have on a definite day, or in a particular
exchange or market, or when an amount is fixed
above or below the price on such day, or in such
exchange or market, provided said amount is
certain.
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
Held: No, the price is not simulated in this case.
3.2 WHO MAY DETERMINE PRICE (NCC 1469,
Simulation occurs when an apparent contract is a
1473-74)
declaration of a fictitious will, deliberately made by
agreement of the parties, in order to produce, for the
NCC 1473. The fixing of the price can never be left to
purpose of deception, the appearance of a juridical
the discretion of one of the contracting parties.
act which does not exist or is different from that which
However, if the price fixed by one of the parties is
was really executed.
accepted by the other, the sale is perfected.
Its requisites are:
NCC 1474. Where the price cannot be determined in
a) An outward declaration of will different from the will
accordance with the preceding articles, or in any other
of the parties;
manner, the contract is inefficacious. However, if the
thing or any part thereof has been delivered to and
b) The false appearance must have been intended by
appropriated by the buyer, he must pay a reasonable
mutual agreement; and
price therefor. What is a reasonable price is a question
c) The purpose is to deceive third persons.
of fact dependent on the circumstances of each
particular case.
The basic characteristic then of a simulated contract
is that it is not really desired or intended to produce
legal effects or does not in any way alter the juridical
3.3 EFFECT OF GROSS INADEQUACY OF PRICE
situation of the parties.
(NCC 1470)
Gross inadequacy of price does not affect a contract
of sale, except as it may indicate a defect in the
consent, or that the parties really intended a donation
or some other act or contract.
Situation: if contract purports to be a contract of sale
instead of a loan (sanglaan)
 parties make it look like party is selling land (in
reality, it is only as security for loan)
 signs that contract really a loan instead of sale:
(1)
inadequately low price
(2)
possession still with seller
(3)
seller pays real estate tax
 PACTUM COMISORIUM  automatically
appropriates without foreclosure and auction
 unlawful
3.4 EFFECT WHERE PRICE IS SIMULATED (NCC
1471)
If the price is simulated, the sale is void, but the act
may be shown to have been in reality a donation, or
some other act or contract.
Simulation  parties make it appear that a price
certain in money is to be paid or has been paid
NCC 1345. Simulation of a contract may be
absolute/relative. The former (absolute) takes place
when the parties do not intend to be bound at all;
the latter (relative) when the parties conceal their true
agreement.
NCC 1346. An absolutely simulated/fictitious contract
is void. A relative simulation, when it does not
prejudice a 3rd person and is not intended for any
purpose contrary to law, morals, good customs, public
order, or public policy binds the parties to their real
agreement.
PAYONGAYONG V CA
Case: The cancellation of Mendoza’s certificate of title
over the property and the procurement of one in its
stead in the name of respondents, which acts were
directed towards the fulfillment of the purpose of the
contract, unmistakably show the parties intention to
give effect to their agreement. The claim of simulation
does not thus lie.
3.5 CERTAINTY OF PRICE OF SECURITIES, GRAINS,
LIQUIDS, ETC. (NCC 1472)
The price of securities, grain, liquids, and other things
shall also be considered certain, when the price fixed
is that which the thing sold would have on a definite
day, or a particular exchange or market, or when an
amount is fixed above or below the price on such day,
or in such exchange or market, provided said amount
be certain.
3.6 EFFECT OF FAILURE TO DETERMINE PRICE
(NCC 1474)
Where the price cannot be determined in accordance
with the preceding articles, or in any other manner,
the contract is inefficacious. However, if the thing or
any part thereof has been delivered to and
appropriated by the buyer, he must pay a reasonable
price therefor. What is a reasonable price is a question
of fact dependent on the circumstances of each
particular case.
Note: Failure to pay price stipulated after the
execution of the contract does not convert the
contract into one without cause/consideration as to
vitiate the validity of the contract,
 it not being essential for the existence of cause
that payment or full payment be made at the time of
the contract.
 such failure does not ipso facto resolve the
contract  remedy is to demand specific
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
performance or rescission/cancellation of the sale
inexistence of a contract is permanent and incurable
with damages in either case.
and cannot be the subject of prescription.
3.7 MEETING OF MINDS AS TO PRICE
MAPALO V MAPALO
Issue: Whether there was a consideration in the deed
of absolute sale between spouses Mapalo and
Maximo Mapalo
Held: No.
For a contract to exist at all, three essential requisites
must concur: (1) consent, (2) object, and (3) cause or
consideration. The element of consent is present as to
the deed of sale of October 15, 1936. For consent
was admittedly given, albeit obtained by fraud.
Accordingly, said consent, although defective, did
exist. In such case, the defect in the consent would
provide a ground for annulment of a voidable
contract, not a reason for nullity ab initio. The parties
are agreed that the second element of object is
likewise present in the deed. Not so, as to the third
element of cause or consideration. Liberality as a
cause or consideration does not exist as regards the
western portion of the land in relation to the deed of
1936; that there was no donation with respect to the
same.
Contracts without a cause or consideration produce
no effect whatsoever. The statement of a false
consideration renders the contract voidable, unless it
is proven that it is supported by another real and licit
consideration and that the action for annulment of a
contract on the ground of falsity of consideration shall
last four years, the term to run from the date of the
consummation of the contract.
Accordingly, since the deed of sale of 1936 is
governed by the Old Civil Code, it should be asked
whether its case is one wherein there is no
consideration, or one with a statement of a false
consideration. If the former, it is void and inexistent; if
the latter, only voidable, under the Old Civil Code. As
observed earlier, the deed of sale of 1936 stated that
it had for its consideration Five Hundred (P500.00)
Pesos. In fact, however, said consideration was totally
absent. The problem, therefore, is whether a deed
which states a consideration that in fact did not exist,
is a contract without consideration, and therefore void
ab initio, or a contract with a false consideration, and
therefore, at least under the Old Civil Code, voidable.
A contract that states a false consideration is one that
has in fact a real consideration but the same is not
the one stated in the document. It can be seen that
where, as in this case, there was in fact no
consideration, the statement of one in the deed will
not suffice to bring it under the rule of Article 1276 of
the Old Civil Code as stating a false consideration. A
contract of purchase and sale is null and void and
produces no effect whatsoever where the same is
without cause or consideration in that the purchase
price which appears thereon as paid has in fact never
been paid by the purchaser to the vendor. The
SWEDISH MATCH V CA
Litonjua’s letter proposing acquisition of Phimco for
$36M was merely an offer. Litonjua repeatedly
stressed in his letters that they would not be able to
submit their final bid by June 30.
There is no meeting of minds as to price.
Note: In general, contracts undergo three distinct
stages, to wit: negotiation; perfection or birth; and
consummation. Negotiation begins from the time the
prospective contracting parties manifest their interest
in the contract and ends at the moment of agreement
of the parties. Perfection or birth of the contract takes
place when the parties agree upon the essential
elements of the contract. Consummation occurs when
the parties fulfill or perform the terms agreed upon in
the contract, culminating in the extinguishment
thereof.
Note: A negotiation is formally initiated by an offer. A
perfected promise merely tends to insure and pave
the way for the celebration of a future contract. An
imperfect promise (policitacion), on the other hand, is
a mere unaccepted offer. Public advertisements or
solicitations and the like are ordinarily construed as
mere invitations to make offers or only as proposals.
At any time prior to the perfection of the contract,
either negotiating party may stop the negotiation. The
offer, at this stage, may be withdrawn; the withdrawal
is effective immediately after its manifestation, such
as by its mailing and not necessarily when the offeree
learns of the withdrawal.
4 FORMATION/PERFECTION OF
CONTRACT OF SALE (NCC 1475)
The contract of sale is perfected at the moment there
is a meeting of minds upon the thing which is the
object of the contract and upon the price.
4.1 OPTION CONTRACT (NCC 1479)
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon
the promissor if the promise is supported by a
consideration distinct from the price.
Kinds of promise to buy/sell:
(1) An accepted unilateral promise to sell in which
the promise (acceptor) elects to buy
(2) An accepted unilateral promise to buy in which
the promise (acceptor) elects to sell
(3) A bilateral promise to buy and sell reciprocally
accepted in which either of the parties
chooses to exact fulfillment
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Unaccepted Unilateral Promise (POLICITATION):
of sale, even though the option was not supported by
 creates no juridical effect or legal bond
a sufficient consideration.
Option  privilege existing in one person for which he
has paid a consideration which give him the right to
buy(sell) from(to) another person, if he chooses, at
any time within the agreed period at a fixed price, or
under, or in compliance with certain terms and
conditions.
 is a preparatory contract separate and distinct
from the main contract
 it is only when the option is exercised when a sale
may be perfected
In other words, since there may be no valid contract
without a cause or consideration, the promisor is not
bound by his promise and may, accordingly, withdraw
it. Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an offer
to sell which, if accepted, results in a perfected
contract of sale.
ADELFA PROPERTIES V CA
- An accepted unilateral promise which specifies the
thing to be sold and the price to be paid, when
coupled with a valuable consideration distinct and
separate from the price, is what may properly be
termed a perfected contract of option.
An option is a continuing offer/contract by which the
owner stipulates with another that the latter shall
have the right to buy the property at a fixed price
within a certain time, or under/in compliance with
certain terms and conditions, or which gives the
owner of the property the right to sell/demand a sale.
 also called “unaccepted offer”
 NOT A PURCHASE; merely secures privilege to buy
 sale of right to purchase
 imposes no binding obligation on the holder of the
option aside from the consideration for the offer
ATKINS KROLL AND CO. V CUA HIAN TEK
The argument, maifestly assumes that only a
unilateral promise arose when the offeree accepted.
Such assumption is a mistake, because a bilateral
cotract to sell and to buy was created upon
acceptance. So much so that B. Cua Hian Tek could
be sued, he had backed out after accepting, by
refusing to get the sardines and/or to pay for their
price. Indeed, the word "option" is found neither in the
offer nor in the acceptance. On the contrary, B
accepted "the firm offer for the sale" and adds, "the
undersigned buyer has immediately filed an
application for import license.
Furthermore, an option is unilateral: a promise to sell
at the price fixed whenever the offeree should decide
to exercise his option within the specified time. After
accepting the promise and before he exercises his
option, the holder of the option is not bound to buy.
He is free either to buy or not to later. In this case,
however, upon accepting herein petitioner's offer a
bilateral promise to sell and to buy ensued, and the
respondent ipso facto assumed the obligations of a
purchaser. He did not just get the right subsequently
to buy or not to buy. It was not a mere option then; it
was bilateral contract of sale.
SANCHEZ V RIGOS
An option is unilateral: a promise to sell at a fixed
price whenever the offeree should decide to exercise
his option within the specified time
ANG YU ASUNCION V CA
Notes:
- The option is not the contract of Sale itself. The
optionee has the right, but not the obligation, to buy.
Once the option is exercised timely, i.e. the offer is
accepted before a breach of the option, a bilateral
promise to sell and to buy ensues and both parties
are then reciprocally bound to comply with their
respective undertaking.
Option
Require, among others,
a clear certainty in both
the object and the cause
or consideration of the
envisioned contract.
Right of First Refusal
While the object might
be made determinate,
the exercise of the right,
however, would be
dependent not only on
the grantor’s eventual
intention to enter into a
binding juridical relation
with another but also on
terms, including the
price, that obviously are
yet to be later firmed up.
BIBLE BAPTIST CHURCH V CA
Doctrine: For an option contract to be valid and
enforceable against the promissor, there must be a
separate and distinct consideration that supports it.
Case: Petitioners cannot insist that the P84k they paid
in order to release the Villanueva’s property from the
mortgage should be deemed the separate
consideration to support the contract of option.
It must be pointed out that said amount was in fact
apportioned into monthly rentals spread over a period
of 1yr, at P7k per month. The amount of P84k has
been fully exhausted and utilized by their occupation
of the premises and there is no separate
consideration to speak of which could support the
option.
If the option is given without a consideration, it is a
mere offer of a contract of sale, which is not binding
until accepted. If, however, acceptance is made
before a withdrawal, it constitutes a binding contract
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
4.1.1 Option contract distinguished from Contract
3.
A right to bid may be reserved expressly by or
of Sale
on behalf of the seller, unless otherwise provided by
law or by stipulation.
4.2 MUTUAL PROMISE TO BUY AND SELL (NCC
1479)
A promise to buy and sell a determinate thing for a
price certain is reciprocally demandable.
It has practically the same effect as a perfected
contract of sale since it is reciprocally demandable.
The concurrence of both acts (the offer and
acceptance) generates a binding contract of sale.
4.3 STATUS OF ADVERTISEMENTS (NCC 1325
& 1326)
NCC 1325. Unless it appears otherwise, business
advertisements of things for sale are not definite
offers, but mere invitations to make an offer.
NCC 1326. Advertisements for bidders are simply
invitations to make proposals, and the advertiser is
not bound to accept the highest or lowest bidder,
unless the contrary appears.
4.4 ACCEPTANCE BY LETTER OR TELEGRAM (NCC
1319)
Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind
the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed
to have been entered into in the place where the offer
was made.
4.5 PERFECTION OF SALE BY AUCTION (NCC
1476)
In the case of a sale by auction:
1.
Where goods are put up for sale by auction in
lots, each lot is the subject of a separate contract of
sale.
2.
A sale by auction is perfected when the
auctioneer announces its perfection by the fall of the
hammer, or in other customary manner. Until such
announcement is made, any bidder may retract his
bid; and the auctioneer may withdraw the goods from
the sale unless the auction has been announced to be
without reserve.
4.
Where notice has not been given that a sale
by auction is subject to a right to bid on behalf of the
seller, it shall not be lawful for the seller to bid himself
or to employ or induce any person to bid at such sale
on his behalf or for the auctioneer, to employ or induce
any person to bid at such sale on behalf of the seller
or knowingly to take any bid from the seller or any
person employed by him. Any sale contravening this
rule may be treated as fraudulent by the buyer.
4.6 EARNEST MONEY (NCC 1482)
Whenever earnest money is given in a contract of sale
it shall be considered as part of the price and as proof
of the perfection of the contract.
Definition: money given by the buyer to the seller to
bind the bargain.
Constitutes an advance payment  must be
deducted from the total price.
4.6.1
Earnest Money distinguished from Option
Money
Earnest money
Option money
Part of the purchase
Given as distinct
price
consideration for the
option contract
Given only where there
Applies to sale NOT yet
is already a sale
perfected
When given, buyer
When given, would-be
bound to pay the
buyer NOT required to
balance
buy
But option money may become earnest money if the
parties so agree
LIMSON V CA
Issue: WON the agreement between the parties was a
contract of option and not a contract to sell.
Held: Yes.
The Receipt readily shows that respondent spouses
and petitioner only entered into a contract of option.
Respondent spouses did not sell their property; they
did not also agree to sell it; but they sold something,
i.e., the privilege to buy at the election or option of
petitioner. The agreement imposed no binding
obligation on petitioner, aside from the consideration
for the offer.
Issue: WON the sum of P20k given by the petitioner is
an earnest money.
Held: No.
The consideration of P20k paid by petitioner to
respondent spouses was referred to as "earnest
money." However, a careful examination of the words
used indicates that the money is not earnest money
but option money.
"Earnest money" and "option money" are not the same
but distinguished thus:
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
(a) earnest money is part of the purchase price, while
the latter shall be in writing; otherwise, the sale shall
option money is the money given as a distinct
be void.
consideration for an option contract;
NCC 1581. The form of sale of large cattle shall be
(b) earnest money is given only where there is already
governed by special laws.
a sale, while option money applies to a sale not yet
perfected; and,
NCC 1403. The following contract are unenforceable,
(c) when earnest money is given, the buyer is bound to
unless they are ratified:
pay the balance, while when the would-be buyer gives
option money, he is not required to buy, but may even
xxx
forfeit it depending on the terms of the option.
There is nothing in the Receipt which indicates that
the P20k was part of the purchase price. Moreover, it
was not shown that there was a perfected sale
between the parties where earnest money was given.
Finally, when petitioner gave the "earnest money," the
Receipt did not reveal that she was bound to pay the
balance of the purchase price. In fact, she could even
forfeit the money given if the terms of the option were
not met. Thus, the P20k could only be money given as
consideration for the option contract.
SAN MIGUEL PROPERTIES V HUANG
Doctrine: It is not the giving of earnest money, but the
proof of the concurrence of all the essential elements
of the contract of sale which establishes the existence
of a perfected sale.
Held: The P1 million "earnest-deposit" could not have
been given as earnest money because, at the time
when petitioner accepted the terms of respondents'
offer of March 29, 1994, their contract had not yet
been perfected. This is evident from the conditions
attached by respondents to their letter. The first
condition for an option period of 30 days sufficiently
showed that a sale was never perfected. Acceptance
of this condition did not give rise to a perfected sale
but merely to an option or an accepted unilateral
promise on the part of respondents to buy the subject
properties within 30 days from the date of acceptance
of the offer. Such option giving respondents the
exclusive right to buy the properties within the period
agreed upon is separate and distinct from the
contract of sale which the parties may enter. All that
respondents had was just the option to buy the
properties, which privilege was not, however,
exercised by them because there was a failure to
agree on the terms of payment. No contract of sale
may thus be enforced by respondents. Hence, the
Supreme Court reversed the decision of the Court of
Appeals and dismissed respondents' complaint.
4.7 FORM OF SALES (NCC 1483, 1874,
1581, 1403[2 A,D,E])
NCC 1483. Subject to the provisions of the Statute of
Frauds and of any other applicable statue, a contract
of sale may be made in writing, or by word of mouth,
or partly in writing and partly by word of mouth, or may
be inferred from the conduct of the parties.
(2) Those that do not comply with the Statute of
Frauds as set forth in this number. In the
following cases an agreement hereafter made
shall be unenforceable by action, unless the
same, or some note or memorandum thereof, be
in writing, and subscribed by the party charged,
or by his agent; evidence, therefore, of the
agreement cannot be received without the
writing, or a secondary evidence of its contents:
(a). An agreement that by its terms is not to be
performed within a year from the making thereof;
xxx
(d). An agreement for the sale of goods, chattels or
things in action, at a price not less than P500,
unless the buyer accept and receive part of such
goods and chattels, or the evidences, or some of
them, of such things in action, or pay at the time
some part of the purchase money; but when a
sale is made by auction and entry is made by the
auctioneer in his sales book, at the time of the
sale, of the amount and kind of property sold,
terms of sale, price, names of the purchasers and
persons on whose account the sale is made, it is
a sufficient memorandum;
(e). An agreement for the leasing for a longer period
than 1yr, or for the sale of real property or of an
interest therein;
xxx
5 PARTIES TO A CONTRACT OF SALE
(NCC 1327, 1489)
NCC 1327. The following cannot give consent to a
contract:
(1).
Unemancipated minors;
(2).
Insane or demented persons, and deaf-mutes
who do not know how to write.
NCC 1489. All persons who are authorized in this
Code to obligate themselves, may enter into a
contract of sale, saving the modifications contained in
the following articles.
NCC 1874. When a sale of a piece of land or any
interest therein is through an agent, the authority of
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5.3.1 Guardians, Agents, and Administrators
Where necessaries are sold and delivered to a minor
or other person without capacity to act, he must pay a
(1).
The guardian, the property of the person or
reasonable price therefor. Necessaries are those
persons who may be under his guardianship;
referred to in Article [194 FC].
FC 194. Support comprises of everything
indispensable for sustenance, dwelling, clothing,
medical attendance, education, and transportation, in
keeping with the financial capacity of the family.
5.1 SALE BY MINOR (NCC 1489)
(2).
Agents, the property whose administration or
sale may have been entrusted to them, unless the
consent of the principal have been given;
(3).
Executors and administrators, the property of
the estate under administration;
5.3.2
5.2 SALE BETWEEN SPOUSES (NCC 1490)
The husband and the wife cannot sell property to each
other, except:
(1).
When a separation of property was agreed
upon in the marriage settlements; or
(2).
When there has been a judicial separation of
property under Article [134 FC].
MATABUENA V CERVANTES
Issue: WON the donation made was void
Held: Yes
While Art. 133 of the Civil Code considers as void a
"donation between the spouses during the marriage,"
policy considerations of the most exigent character as
well as the dictates of morality require that the same
prohibition should apply to a common-law
relationship.
The lack of validity of the donation made by the
deceased to defendant Petronila Cervantes does not
necessarily result in plaintiff having exclusive right to
the disputed property. Prior to the death of Felix
Matabuena, the relationship between him and the
defendant was legitimated by their marriage on March
28, 1962. She is therefore his widow. As provided for
in the Civil Code, she is entitled to one-half of the
inheritance and the plaintiff, as the surviving sister, to
the other half.
Public Officers and Employees (NCC 1491-92)
(4).
Public officers and employees, the property of
the State or of any subdivision thereof, or of any
government owned or controlled corporation, or
institution, the administration of which has been
entrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever take part in the sale;
5.3.3
Judges
(5).
Justices, judges, prosecuting attorneys, clerks
of superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose
jurisdiction or territory they exercise their respective
functions; xxx
5.3.4
Lawyers
(5).
xxx this prohibition includes the act of
acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be
the object of any litigation in which they may take part
by virtue of their profession;
(6).
Any others specially disqualified by law.
NCC 1492. The prohibitions in the two preceding
articles are applicable to sales in legal redemption,
compromises, and renunciations.
Note: The policy of the law is to prohibit donations in
favor of the other consort and his descendants
because of fear of undue and improper pressure and
influence upon the donor, a prejudice deeply rooted in
our ancient law then there is every reason to apply the
same prohibitive policy to persons living together as
husband and wife without the benefit of nuptials.
OLAGUER V PURUGANAN
5.3 SPECIAL INCAPACITY (NCC 1491-92)
The prohibition against agents purchasing property in
their hands for sale or management is, however, not
absolute. It does not apply where the principal
consents to the sale of the property in the hands of
the agent or administrator.
NCC 1491. The following persons cannot acquire by
purchase, even at a public or judicial auction, either in
person or through the mediation of another:
Doctrine: A person who undertakes to act as agent for
another cannot be permitted to deal in the agency
matter on his own account and for his own benefit
without the consent of his principal, freely given, with
full knowledge of every detail known to the agent
which might affect the transaction.
Case: In the present case, records show that
petitioner's position is less credible than that taken by
respondent Locsin given petitioner's
contemporaneous and subsequent acts. In 1980,
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when Fernando returned a stock certificate she
during the pendency of the litigation involving the
client’s property.
borrowed from the petitioner, it was marked
"cancelled." Although the petitioner alleged that he
In this case, no actual acquisition of the property took
was furious when he saw the word cancelled, he had
place. Mere demand for the delivery of the litigated
not demanded the issuance of a new certificate in his
property does not cause the transfer of ownership.
name. Instead of having been put on his guard,
petitioner remained silent over this obvious red flag
With regard to the charged violation of the CPR, the
and continued receiving, through his wife, payments
IBP Commissioner did not specify the acts of
which totalled to the aggregate amount of the shares
respondent that constitute gross misconduct. Thus,
of stock valued at par. When the payments stopped,
the recommended penalty of suspension for six
no demand was made by either petitioner or his wife
months is not proportionate to the offense committed.
for further payments. From the foregoing, it is clear
Hence, respondent is found guilty of conduct
that petitioner knew of the transaction, agreed to the
unbecoming of a lawyer. He is reprimanded with
purchase price of P600k for the shares of stock, and
warning.
had in fact facilitated the implementation of the terms
of the payment by providing respondent Locsin,
through petitioner's wife, with the information on the
BLIGATIONS OF THE ELLER
bank accounts of his in-laws.
6 O
VALENCIA V CABANTING
Doctrine: Property subject to litigation cannot be an
object of a sale especially when the lawyer involved
took part in the case.
Note: Public policy prohibits the transactions in view
of the fiduciary relationship involved.
It is intended to curtail any undue influence of the
lawyer upon his client.
Greed may get the better of the sentiments of loyalty
and disinterestedness. Any violation of this prohibition
would constitute malpractice and is a ground for
suspension.
Case: while it is true that Atty. Arsenio Fer Cabanting
purchased the lot after finality of judgment, there was
still a pending certiorari proceeding. A thing is said to
be in litigation not only if there is some contest or
litigation over it in court, but also from the moment
that it becomes subject to the judicial action of the
judge. (Gan Tingco vs. Pabinguit, 35 Phil. 81).
Logic dictates, in certiorari proceedings, that the
appellate court may either grant or dismiss the
petition. Hence, it is not safe to conclude, for
purposes under Art. 1491 that the litigation has
terminated when the judgment of the trial court
become final while a certiorari connected therewith is
still in progress. Thus, purchase of the property by
Atty. Cabanting in this case constitutes malpractice in
violation of Art. 1491 and the Canons of Professional
Ethics. Clearly, this malpractice is a ground for
suspension.
RAMOS V NGASEO
Held: Respondent did not violate Article 1491 of the
Civil Code.
Under Article 1491, lawyers are prohibited from
acquiring either by purchase or assignment the
property or rights involved which are the object of the
litigation in which they intervene by virtue of their
profession. However, the said prohibition applied only
of the sale or assignment of the property takes place
S
6.1 PRESERVATION OF THE OBJECT OF SALE
(NCC 1163)
Every person obliged to give something is also obliged
to take care of it with the proper diligence of a good
father of a family, unless the law or the stipulation of
the parties requires another standard of care.
In case of loss/deterioration/improvement of the
thing before delivery, the rules under NCC 1189 shall
be observed, the vendor being considered the debtor
(1538)
NCC 1189. When the conditions have been imposed
with the intention of suspending the efficacy of an
obligation to give, the following rules shall be
observed
in
case
of
the
improvement/loss/deterioration of the thing during
the
pendency
of
the
condition:
(1)
If the thing is lost without the fault of the
[vendor], the obligation shall be extinguished;
(2)
If the thing is lost through the fault of the
[vendor], he shall be obliged to pay damages; it is
understood that the thing is lost when it
perishes/goes out of commerce/disappears in such a
way that its existence is unknown/it cannot be
recovered;
(3)
When the thing deteriorate without the fault of
the [vendor], the impairment is to be borne by the
[vendee];
(4)
If the thing deteriorates through the fault of
the [vendor], the [vendee] may choose between the
rescission of the obligation and its fulfillment, with
indemnity
for
damages
in
either
case;
(5)
If the thing is improved by its nature/by time,
the improvement shall inure to the benefit of the
[vendee];
(6)
If it is improved at the expense of the [vendor],
he shall have no other right than that granted to the
usufructuary.
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Note: Vendor must deliver to vendee only/ his
6.2 TRANSFER OF OWNERSHIP AND DELIVERY OF
authorized representative
THE OBJECT (NCC 1495)
Note: It is only after the delivery (actual/constructive)
The vendor is bound to transfer the ownership of and
that the vendee acquires a real right/ownership over
deliver, as well as warrant the thing which is the object
it (1164)
of the sale.
After delivery, the risk of loss of the thing sold is borne
by the vendee (1480)
Very Important Note: In all the different modes of
6.2.2 Ways of effecting delivery (NCC 1496-1501)
effecting delivery (infra), it is the real intention of the
parties, to deliver on the part of the vendor, and to
NCC 1496. The ownership of the thing sold is acquired
accept on the part of the vendee which gives legal
by the vendee from the moment it is delivered to him
effect to the act.
in any of the ways specified in Articles 1497-1501, or
Without such intention  NO TRADITION
in any other manner signifying an agreement that the
 Actual/manual delivery of an article sold is not
possession is transferred from the vendor to the
always essential to the passing of title. The parties
vendee.
may agree when and on what condition the ownership
shall pass to the buyer.
Ways of effecting delivery:
Principal Obligations of the Seller
1. Actual/real delivery (1497)
1. To TRANSFER OWNERSHIP of the determinate
2. Constructive/legal delivery (1498-1501)
thing sold (1496)
3. Other manner signifying an agreement that
 ownership acquired by the vendee from the
the possession is transferred to the vendee
moment the thing is delivered to him
(1496-1499)
2. To DELIVER the thing
Ways of effecting constructive delivery:
 vendor bound to deliver the thing sold and
its accessions and accessories in the
1. Execution of a public instrument (1498(1))
condition in which they were upon the
2. Symbolical tradition/tradition symbolica
perfection of the contract.
(1498(2))
 GR: creditor has a right to the fruits of the
3. Traditio longa manu (1499)
thing from the time the obligation to deliver
4. Traditio brevi manu (1499)
the thing arises (1164)
5. Traditio constitutum possessorium (1500)
BUT in a contract of sale  fruits shall pertain
6. Quasi-delivery/quasi-traditio (1501)
to the buyer from the day on when the
contract was perfected (1537)
6.2.2.1 Actual or Real (NCC 1497)
note: the parties may stipulate that the fruits
of the thing shall pertain to the buyer at some
NCC 1497. The thing sold shall be understood as
future time such as when the obligation is one
delivered, when it is placed in the control and
with a period.
possession of the vendee.
3. To WARRANT against eviction and hidden
defects
Involves PHYSICAL DELIVERY of the thing and is
4. To TAKE CARE OF THE THING, pending
usually done by the passing of a movable thing from
delivery, with proper diligence  1163
hand to hand.
5. To PAY FOR THE EXPENSES FOR THE
In the case of immovable, physically placing it in his
EXECUTION AND REGISTRATION OF THE DEED
possession and control.
OF SALE, unless there is a stipulation to the
Note: actual/real delivery not always essential to the
contrary (1487)
passing of title thereto (1475).
6.2.1 Concept of Delivery or Tradition
Parties may stipulate when and on what condition the
ownership in the subject of the contract shall pass to
Definition: Tradition is a derivative mode of acquiring
the buyer.
ownership by virtue of which one who has the right
e.g. ownership shall pass to the vendee only after he
and intention to alienate a corporeal thing, transmits
has fully paid the price (1478)
it by virtue of a just title to one who accepts the same.
Delivery contemplates “the absolute giving up of the
control and custody on the part of the vendor, and the
assumption of the same by the vendee.” [Equatorial
Realty Dev. V Mayfair Theater, Inc. (2001)]
Note: Intention to deliver essential  Delivery is
indispensable requisite to transfer ownership (transfer
cannot be effected by mere consent)
 To transfer ownership, actual delivery must be
made WITH INTENTION of delivering the thing sold.
Proof of delivery: generally evidenced by written
acknowledgment of a person that s/he has actually
received the thing/goods  delivery receipts
6.2.2.2 Constructive or Legal (NCC 1498-1501)
NCC 1498. When the sale is made through a public
instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the
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contract, if from the deed the contrary does not
The condition that petitioner should first register the
appear or cannot clearly be inferred.
deed of sale and secure a new title in the name of the
vendee before the latter shall pay the balance of the
With regard to movable property, its delivery may also
purchase price, did not preclude the transmission of
be made by the delivery of the keys of the place or
ownership. In the absence of an express stipulation to
depository where it is stored or kept.
the contrary, the payment of the purchase price of the
good is not a condition, precedent to the transfer of
NCC 1499. The delivery of movable property may
title to the buyer, but title passes by the delivery of the
likewise be made by the mere consent or agreement
goods.
of the contracting parties, if the thing sold cannot be
6.2.2.2.1 Public Instrument
transferred to the possession of the vendee at the
Definition: one which is acknowledged before a notary
time of the sale, or if the latter already had it in his
public or any official authorized to administer oath, by
possession for any other reason.
the person who executed the same.
NCC 1500. There may also be tradition constitutum
GR: There is presumptive/constructive delivery by the
possessorium.
execution of public instrument.
E: when it appears from the document that delivery
NCC 1501. With respect to incorporeal property, the
was not the intention of the parties; or
provisions of the first paragraph of Article 1498 shall
if the vendee cannot enjoy the possession because of
govern. In any other case wherein said provisions are
the opposition/resistance of a third person (squatter)
not applicable, the placing of the titles of ownership in
the possession of the vendee or the use by the vendee
Note: Symbolic delivery by the execution of a public
of his rights, with the vendor’s consent, shall be
instrument is equivalent to actual delivery ONLY
understood as a delivery.
WHEN the thing is subject to the control of the vendor
PHIL SUBURBAN DEV CORP V AUDITOR GENERAL
Issue: Whether there was already a valid transfer of
ownership between the parties.
Held: Considering the aforementioned approval and
authorization by the President of the Philippines of the
specific transaction in question, the prior approval by
the Auditor General envisioned by Administrative
Order would therefore, not be necessary.
Under the civil law, delivery (tradition) as a mode of
transmission of ownership maybe actual (real
tradition) or constructive (constructive tradition).
When the sale of real property is made in a public
instrument, the execution thereof is equivalent to the
delivery of the thing object of the contract, if from the
deed the contrary does not appear or cannot clearly
be inferred.
In other words, there is symbolic delivery of the
property subject of the sale by the execution of the
public instrument, unless from the express terms of
the instrument, or by clear inference therefrom, this
was not the intention of the parties. Such would be
the case, for instance, when a certain date is fixed for
the purchaser to take possession of the property
subject of the conveyance, or where, in case of sale by
installments, it is stipulated that until the last
installment is made, the title to the property should
remain with the vendor, or when the vendor reserves
the right to use and enjoy the properties until the
gathering of the pending crops, or where the vendor
has no control over the thing sold at the moment of
the sale, and, therefore, its material delivery could not
have been made.
Case: there is no question that the vendor had
actually placed the vendee in possession and control
over the thing sold, even before the date of the sale.
(dapat walang squammy)
Note: execution of public instrument as a manner of
delivery applies to both movable and immovable
property.
Note: Constructive delivery is symbolic when, to effect
the delivery, the parties make use of a token symbol
to represent the thing delivered.
6.2.2.2.2 Traditio Longa Manu
Delivery of movable property:
Takes place by the mere consent or agreement of the
contracting parties
e.g. as when the vendor merely points to the thing
sold which shall thereafter be at the control and
disposal of the vendee.
Note: “by mere consent or agreement” is qualified by
the phrase “if the thing sold cannot be transferred to
the possession of the vendee at the time of the sale”
6.2.2.2.3 Traditio Brevi Manu
Takes place when the vendee has already the
possession of the thing sold by virtue of another title
e.g. as when the lessor sells the thing leased to the
lessee.
Delivery takes place by fiction of law
6.2.2.2.4 Traditio Constitutum Possessorium
Oppossite of tradition brevi manu.
Takes place when the vendor continues in possession
of the property sold not as owner but in some other
capacity
e.g. as when the vendor stays as a tenant of the
vendee
6.2.2.2.5 Quasi-traditio
Tradition can only be made WRT corporeal things
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In case of incorporeal things, delivery is effected:
Ownership passes to
Ownership remains in
buyer on delivery;
the seller until buyer
(1) By execution of a public instrument;
and subsequent return
signifies his
(2) When (1) is N/A,
of goods reverts
approval/acceptance to
By the placing of the titles of ownership in the
ownership in the seller
seller
possession of the vendee; or
Risk of loss/injury rests Risk remains with the
(3) By allowing the vendee to use his rights as
upon the buyer
seller
new owner with the consent of the vendor.
Note: If the contract uses the phrase, “for sale or
return,” the intention may be to enter into a contract
6.2.2.3 Special Rule on:
of agency.
6.2.2.3.1 Contract of Sale or Return (NCC 1502)
When goods are delivered to the buyer “on sale or
return” to give the buyer an option to return the goods
instead of paying the price, the ownership passes to
the buyer on delivery, but he may revest the ownership
in the seller by returning or tendering the goods within
the time fixed in the contract, or, if no time has been
fixed, within a reasonable time.
Property is sold but the buyer, who becomes the
owner of the property on delivery, has the option to
return the same to the seller instead of paying the
price.
Option to purchase/return the goods rests entirely on
the buyer without reference to the quality of the
goods.
6.2.2.3.2 Contract of Sale on Trial or Approval (NCC
1502)
When goods are delivered to the buyer on approval or
on trial or on satisfaction, or other similar terms, the
ownership therein passes to the buyer:
(1).
When he signifies his approval or acceptance
to the seller or does any other act adopting the
transaction;
(2).
If he does not signify his approval or
acceptance to the seller, but retains the goods without
giving notice of rejection, then if a time has been fixed
for the return of the goods, on the expiration of such
time, and, if no time has been fixed, on the expiration
of a reasonable time. What is a reasonable time is a
question of fact.
Contract in the nature of an option to purchase IF the
goods prove satisfactory, the approval of the buyer
being a condition precedent.
Title shall continue in the seller until the sale has
become absolute either by buyer’s approval/failing to
comply with the express/implied conditions of the
contract as to giving notice of dissatisfaction or as to
returning the goods.
Sale or return
Subject to a resolutory
condition
Depends entirely on the
will of the buyer
Sale on trial
Subject to a suspensive
condition
Depends on the
character/quality of the
goods
6.2.2.3.3 Sale of Specific Goods with Reserved Title
(NCC 1503)
Where there is a contract of sale of specific goods, the
seller may, by the terms of the contract, reserve the
right of possession or ownership in the goods until
certain conditions have been fulfilled. The right of
possession or ownership may be thus reserved
notwithstanding the delivery of the goods to the buyer
or to a carrier or other bailee for the purpose of
transmission to the buyer.
Where goods are shipped, and by the bill of lading the
goods are deliverable to the seller or his agent, or to
the order of the seller or of his agent, the seller
thereby reserves the ownership in the goods. But, if
except for the form of the bill of lading, the ownership
would have passed to the buyer on shipment of the
goods, the seller’s property in the goods shall be
deemed to be only for the purpose of securing
performance by the buyer of his obligations under the
contract.
Where goods are shipped, and by the bill of lading the
goods are deliverable to the order of the buyer or of
his agent, but possession of the bill of lading is
retained by the seller or his agent, the seller thereby
reserves a right to the possession of the goods as
against the buyer.
Where the seller of goods draws on the buyer for the
price and transmits the bill of exchange and bill of
lading together to the buyer to secure acceptance or
payment of the bill of exchange, the buyer is bound to
return the bill of lading if he does not honor the bill of
exchange, and if he wrongfully retains the bill of lading
he acquires no added right thereby. If, however, the
bill of lading provides that the goods are deliverable to
the buyer or to the order of the buyer, or is indorsed in
blank, or to the buyer by the consignee named therein,
one who purchases in good faith, for value, the bill of
lading, or goods from the buyer will obtain the
ownership in the goods, although the bill of exchange
has not been honored, provided that such purchaser
has received delivery of the bill of lading indorsed by
the consignee named therein, or of the goods, without
notice of the facts making the transfer wrongful.
GR: delivery, be it only constructive, passes title in the
thing sold (NCC 1496); and
delivery to carrier is deemed to be a delivery to the
buyer (NCC 1523[1])
 law considers the carrier as bailee
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Note: If the seller directs the carrier to
provided, that such purchaser has received
redeliver the goods at their destination to the
delivery (without notice of facts making the
seller himself/order
transfer wrongful):
 it indicates an intention that carrier shall
- of the bill of lading indorsed by the
be the bailee of the seller and that ownership
consignee named therein; or
shall remain with the seller
- of the goods
(1503[4])
Exceptions to rule that ownership passes to buyer
upon delivery:
6.2.2.3.4 Delivery to Carrier on Behalf of the Buyer
(NCC 1523)
(1) If the contrary intention appears by the terms
of the contract (1523[1]; 1503[1]; 1478)
Where, in pursuance of a contract of sale, the seller is
(2) If the seller omits to make such contract with
authorized or required to send the goods to the buyer
the carrier on behalf of the buyer (as may be
delivery of the goods to a carrier, whether named by
reasonable under the circumstances), the
the buyer or not, for the purpose of transmission to
buyer may (in case the goods are
the buyer is deemed to be a delivery of the goods to
lost/damaged in transit):
the buyer, except in the cases provided for in Article
 decline to treat the delivery to the carrier
1503 (1) (2) (3), or unless a contrary intent appears.
as delivery to himself (transfer of ownership
deemed to not have taken place); or
Unless otherwise authorized by the buyer, the seller
 the buyer may hold the seller responsible
must make such contract with the carrier on behalf of
for damages
the buyer as may be reasonable, having regard to the
(1523[2])
nature of the goods and the other circumstances of
(3) If the seller fails to give notice to buyer
the case. If the seller omits so to do, and the goods
regarding the necessity to insure the goods
are lost or damaged in course of transit, the buyer may
 the goods are deemed to be at the risk of
decline to treat the delivery to the carrier as a delivery
the seller during transit
to himself, or may hold the seller responsible for
Note: Seller should know/ought to know that it
damages.
is usual to insure
(1523[3])
Unless otherwise agreed, where goods are sent by the
(4) By the bill of lading, the goods are deliverable
seller to the buyer under circumstances in which the
to the seller/his agent/order
seller knows or ought to know that it is usual to insure,
 seller reserves ownership in the goods
the seller must give such notice to the buyer as may
But if, except for the form of the bill of lading,
enable him to insure them during their transit, and if
the ownership would have passed to the buyer
the seller fails to do so, the goods shall be deemed to
on shipment, the seller’s property in the goods
be at his risk during such transit.
shall be deemed to be only for the purpose of
securing performance by the buyer of his obli.
6.2.2.3.5 When Person Selling is not the Owner
(1503[2])
(NCC 1505)
(5) By the bill of lading, goods are deliverable to
the buyer/agent/order, BUT possession of the
Subject to the provisions of this Title, where goods are
bill of lading is retained by the seller/agent
sold by a person who is not the owner thereof, and
 seller reserves his right to possession of
who does not sell them under authority or with the
the goods
consent of the owner, the buyer acquires no better
(1503[3])
title to the goods than the seller had, unless the owner
(6) Where seller draws on the buyer for the price
of the goods is by his conduct precluded from denying
(seller = drawer/payee; buyer = drawee) and
the seller’s authority to sell.
transmits the BOE and the bill of lading
together to the buyer to secure acceptance of
Nothing in this Title, however, shall affect:
BOE
 seller retains title until the BOE is paid.
(1).
The provisions of any factors’ acts, recording
 buyer bound to return the bill of lading IF
laws, or any other provision of law enabling the
he does not honor the BOE (no added right if
apparent owner of the goods to dispose of them as if
he retains bill of lading)
he were the true owner thereof;
Note: If however, the bill of lading provides
that the goods are deliverable to the
buyer/order, or is indorsed in blank, or to the
buyer by the consignee named therein
 one who purchases in good faith, for value,
the bill of lading/goods from the buyer 
purchaser will obtain the ownership in the
goods (although the BOE has not been
honored)
(2).
The validity of any contract of sale under
statutory power of sale or under the order of a court of
competent jurisdiction;
(3).
Purchases made in a merchant’s store, or in
fairs, or markets, in accordance with the Code of
Commerce and special laws
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6.2.2.3.6 Seller’s Title is Voidable (NCC 1506)
within one year from the date of the certificate of title
in favour of Felix, when in this case, the properties
involved has not yet been registered?
Where the seller of goods has a voidable title thereto,
but his title has not been avoided at the time of the
Held: No.
sale, the buyer acquires a good title to the goods,
The Court finds the argument of Addison untenable.
provided he buys them in good faith, for value, and
Although under the Code, the thing is considered to be
without notice of the seller’s defect of title.
delivered when it is placed in the hands and
possession of the vendee, and in case of real
EDU V GOMEZ
property, the same article declares that the execution
of a public instrument is equivalent to delivery of the
Solicitor Vicente Torres, appearing for the herein
petitioners, submits that the car in question legally
thing which is the object of the contract, in order that
belongs to Lt. Walter A. Bala under whose name it is
there be symbolic delivery which may produce the
effect of tradition, it is necessary that the vendor shall
originally registered at Angeles City Land
have had such control over the thing sold at the
Transportation Commission Agency;
moment of sale. It is not enough to confer upon the
that it was stolen from him and, upon receipt by the
purchaser the ownership and the right of possession.
Land Transportation Commissioner of the report on
the theft case and that the car upon being recognized
The thing sold must be placed in his control. When
by the agents of the Anti-Carnapping Unit (ANCAR) in
there is no impediment to prevent the thing from
passing into the tenancy of the purchaser, symbolic
the possession of private respondent Lucila Abello,
delivery through execution of a public instrument is
said agents seized the car and impounded it as stolen
sufficient. However, when despite execution of the
vehicle.
public instrument, the purchaser cannot have the
With respect to the replevin filed by private
enjoyment and material tenancy of the thing sold,
respondent Lucila Abello, respondent Court of First
Instance Judge found that the car in question was
because such tenancy and enjoyment are opposed by
acquired by Lucila Abello by purchase from its
the interposition of another will, delivery has not been
effected.
registered owner, Marcelino Guansing, for the
valuable consideration of P9k under the notarial deed
In this case, Addison was only able to designate 2 of
of absolute sale, dated August 11, 1970.
the 4 parcels, because more than 2/3 of these were
found to be in possession of Juan Villafuerte, who
Held: There is no merit in the petition considering that
claimed to be the owner of the parts so occupied by
the acquirer or the purchaser in good faith of a chattel
him. Addison, in fact, admitted that the purchaser
of movable property is entitled to be respected and
protected in his possession as if he were the true
would have to bring suit to obtain possession of the
owner thereof until a competent court rules otherwise.
land. It is evident, then that the mere execution of the
instrument was not a fulfilment of the vendors'
DURAN V IAC
obligation to deliver the thing sold, and that from such
non-fulfillment arises the purchaser's right to demand,
Tiangco is a purchaser in good faith which made the
as she has demanded, the rescission of the sale and
sale valid.
the return of the price.
Tiangco relied on the certificate of title in the name of
PASAGUI V VILLABLANCA
Fe Duran in good faith.
Where innocent persons relying on the correctness of
the certificate of title issued acquire rights over the
property, the court cannot order the total cancellation
of the certificate. Otherwise, public confidence on the
certificate of title would be impaired.
In the absence of anything that excites suspicion,
mortgagee in this case has no obligation to look
beyond the certificate and investigate the title of the
mortgagor.
6.2.3
When Obligation to Deliver Arises (NCC 1524)
The vendor shall not be bound to deliver the thing
sold, if the vendee has not paid him the price, or if no
period for the payment has been fixed in the contract.
ADDISON V FELIX
Issue: WON the trial court erred in rescinding the
contract when the stipulation on rescission clearly
indicate that the said right may be exercised only
Issue: WON there was forcible entry on the part of the
defendants.
Held: No.
It is true that the execution of the deed of absolute
sale in a public instrument is equivalent to delivery of
the land subject of the sale. It can be negated by the
reality that the vendees actually failed to obtain
material possession of the land subject of the sale. It
appears from the records of the case at bar that
plaintiffs-appellants had not acquired physical
possession of the land since its purchase. In order
that an action may be considered as one for forcible
entry, it is not only necessary that the plaintiff should
allege his prior physical possession of the property but
also that he was deprived of his possession by any of
the following means: force, intimidation, threats,
strategy and stealth. It is true that the mere act of a
trespasser in unlawfully entering the land, planting
himself on the ground and excluding therefrom the
prior possessor would imply the use of force. In the
case at bar, no such inference could be made as
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SALES MIDTERMS OUTLINE | BY: SOLANO, Morris Medel F. | San Beda Law
plaintiffs-appellants had not claimed that they were in
writ shall therefore issue commanding respondent
actual physical possession of the property prior to the
court to forthwith restore petitioners to their
entry of the Villablancas. Moreover, it is evident that
possession of Lot 6, Block 176, covered by T.C.T.
plaintiffs-appellants are not only seeking to get the
8567 from which they have been removed by
possession of the property, but as an alternative
enforcement of said respondent court's enjoined
cause of action, they seek the return of the price and
order of demolition and writ of possession dated
payment of damages by the vendors "in case of
March 13, 1970. The court shall cause respondents
eviction or loss of ownership" of the said property.
Cardenases to restore the demolished building or pay
Banzon the determined value thereof. As to the fruits
BANZON V CRUZ
of possession of the land, with Cardenas
acknowledging that he has been leasing the same to
Issue: Whether the respondent court be enjoined from
a third person at P200.00 a month, respondents
enforcing a writ of possession and order of demolition
Cardenases shall forthwith pay to petitioners Banzons
over the two Caloocan City lot
the whole amount of rentals so received by them to
Held: Yes.
the time that possession of the lot is effectively
Where the debtor directly discharged his loan
restored to petitioners. By the very nature of this
obligation to the bank which in turn released
mandatory writ, the same shall be immediately
Associated from its suretyship liability without
executory upon promulgation of this decision.
Associated having incurred a centavo of liability, it is
EDCA PUBLISHING V SANTOS
indisputable that Associated in turn would necessarily
release Banzon as indemnitor. Associated’s
Issue: Whether the petitioner has been unlawfully
acquisition of the lots was clearly impressed with a
deprived of the books because the check issued by
trust character. Associated therefore stands legally
the impostor in payment therefor was dishonored.
bound by force of law to now discharge its implied
trust and return Banzon's properties to him as their
Held: No.
true and rightful owner. Associated not having paid
Ownership in the thing sold shall not pass to the buyer
anything to the bank could not hold Banzon
until full payment of the purchase only if there is a
answerable and therefore take Banzon's properties in
stipulation to that effect. Otherwise, the rule is that
execution and satisfaction thereof.
such ownership shall pass from the vendor to the
vendee upon the actual or constructive delivery of the
Likewise, Cardenas in levying in turn for satisfaction of
thing sold even if the purchase price has not yet been
his P5,100.00 — judgment against Associated on one
paid. Actual delivery of the books having been made,
of Banzon's lots acquired only whatever interest
Cruz acquired ownership over the books which he
Associated had in the lot. Cardenas could not claim
could then validly transfer to the private respondents.
actual or absolute ownership of the lot so titled but
The fact that he had not yet paid for them to EDCA
could only hold the same as trustee, like Associated
was a matter between him and EDCA and did not
as his causante or predecessor. Associated's rights, if
impair the title acquired by the private respondents to
they could be so denominated, over Banzon's
the books.
properties were merely those of a trustee, supra, and
Cardenas thereby acquired no absolute "rights,
Non-payment only creates a right to demand payment
interests, claim and title" at all but Associated's
or to rescind the contract, or to criminal prosecution in
obligation as trustee to restore Banzon's lawful
the case of bouncing checks. But absent the
properties to him.
stipulation above noted, delivery of the thing sold will
effectively transfer ownership to the buyer who can in
Article 2071 of the Civil Code regulates such relations
turn transfer it to another.
and provides that in such cases, the surety's right is
against the principal debtor and that "in all these
ALLIANCE TOBACCO CORP, INC. V PHILIPPINE
cases, the action of the guarantor is to obtain release
VIRGINIA TOBACCO ADMINISTRATION (PVTA),
from the guaranty, or to demand a security that shall
FARMER'S 'VIRGLNLA TOBACCO REDRYING
COMPANY, INC. (FVTR) AND IAC
protect him from any proceedings by the creditor and
from the danger of insolvency of the debtor."
Issue: WON petitioner's delivery of tobacco to the
Associated thus did not even have any valid cause of
respondent FVTR, a contractee of PVTA perfected the
action against Banzon as its indemnitor, but could
contract of sale between petitioner and the PVTA.
proceed only against Sta. Maria as the principal
debtor. And even as against such principal debtor, it
Held: Yes.
could not prematurely demand payment even before it
There is delivery when the thing sold is placed in the
had paid the creditor, its action being limited only for
control and possession of the vendee. Verily, the
the purpose of obtaining release from the guaranty or
tobacco trading procedure conceived and formulated
a security against an eventual insolvency of the
by the PVTA is akin to a contract of adhesion wherein
debtor.
only one party has a hand in the determination of the
terms. But observance of the procedure more often
There was established a clear and indubitable
than not renders a trader at a disadvantage. The
showing on the record that the petitioners are entitled
moment the shipment is placed in the hands of the
to a writ restoring the status quo ante. A mandatory
PVTA or its representative and it is lost, the trader is
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left empty-handed. Some personnel mishandle the
Hernandez.” There were two other previous sales to
different vendees.
shipment to the detriment of the trader. Some
demand grease money to facilitate the trading
Issue: WON NCC 1542 shall apply
process. Sadly, this is what happened in this case.
Held: YES
A strict interpretation of the provision of Article 1475
To hold the buyer to no more than the area recited on
may result in adverse effects to small planters who
the deed, it must be made clear therein that the sale
would not be paid for the lost products of their toil.
was made by unit of measure at a definite price for
Equity and fair dealing, the anchor of said case, must
each unit. “If the defendant intended to buy the meter
once more prevail. Since PVTA had virtual control over
he should have so stated in the contract” (Goyena v
Tambunting).
the lost tobacco bales, delivery thereof to the FVTR
should also be considered effective delivery to the
6.2.4.2 Sale of Real Estate made for a Lump Sum
PVTA.
(NCC 1542)
6.2.4 Other Rules on Delivery
In the sale of real estate, made for a lump sum and
6.2.4.1 Sale of Real Property by Unit of Measure or
not at the rate of a certain sum for a unit or measure
Number (NCC 1539-41)
or number, there shall be no increase or decrease of
the price, although there be a greater or lesser areas
NCC 1539. The obligation to deliver the thing sold
or number than that stated in the contract.
includes that of placing in the control of the vendee all
that is mentioned in the contract, in conformity with
The same rule shall be applied when two or more
the following rules:
immovables are sold for a single price; but if, besides
mentioning the boundaries, which is indispensable in
If the sale of real estate should be made with a
every conveyance of real estate, its area or number
statement of its area, at the rate of a certain price for
should be designated in the contract, the vendor shall
a unit of measure or number, the vendor shall be
be bound to deliver all that is included within said
obliged to deliver to the vendee, if the latter should
boundaries, even when it exceeds the area or number
demand it, all that may have been stated in the
specified in the contract; and, should he not be able
contract; but, should this be not possible, the vendee
to do so, he shall suffer a reduction in the price, in
may choose between a proportional reduction of the
proportion to what is lacking in the area or number,
price and the rescission of the contract, provided that,
unless the contract is rescinded because the vendee
in the latter case, the lack in the area be not less than
does not accede to the failure to deliver what has
1/10 of that stated.
been stipulated.
The same shall be done, even when the area is the
same, if any part of the immovable is not of the same
quality specified in the contract.
The rescission, in this case, shall only take place at
the will of the vendee, when the inferior value of the
thing sold exceeds 1/10 of the price agreed upon.
Nevertheless, if the vendee would not have bought the
immovable had he known of its smaller area or inferior
quality, he may rescind the sale.
NCC 1540. If, in the case of the preceding article,
there is a greater area or number in the immovable
than that stated in the contract, the vendee may
accept the area included in the contract and reject the
rest. If he accepts the whole area, he must pay for the
same at the contract rate.
NCC 1541. The provisions of the two preceding
articles shall apply to judicial sales.
STA ANA V HERNANDEZ
Case: Petitioner spouses owned a 115,850-square
meter parcel of land in Bulacan. On 28 May 1954,
they sold two separate portions of the land for
P11,000 to respondent. “Bahaguing nasa gawing
Silanganan. Humahanga sa Hilagaan, sa kay Rosa
BALANTAKBO V CA
Issue: In case of conflict between the area stipulated
and the actual boundaries of the land, which should
prevail?
Held: The rule is quite well-settled that what really
defines a piece of land is not the area, calculated with
more or less certainty mentioned in the description,
but the boundaries therein laid down, as enclosing the
land and indicating its limits.
The Court had repeatedly ruled that where land is sold
for a lump sum and not so much per unit of measure
or number, the boundaries of the land stated in the
contract determine the effects and scope of the sale,
not the area thereof.
Case: This is a case where the land was sold a cuerpo
cierto for a lump sum of P800.00 and not at the rate
of a certain sum per unit of measure or number, with
boundaries clearly delimited.
It is clear that the disputed parcel of unregistered land
was sufficiently identified and described.
Hence, the vendors are obligated to deliver all the
land included within the boundaries, regardless of
whether the real area should be greater or smaller
than that recited in the deed.
This is particularly true where the area is described as
"humigit kumulang," that is, more or less.
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HANOPOL V PILAPIL
6.2.4.3 Rules on Double Sale (NCC 1544)
If the same thing should have been sold to different
vendees, the ownership shall be transferred to the
person who may have first taken possession thereof
in good faith, if it should be movable property.
Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall
pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good
faith.
Requisites:
(1) 2/more valid sales transactions
(2) 2/more sales transactions pertains to
EXACTLY THE SAME OBJECT
(3) 2/more BUYERS at odds over the rightful
ownership of the subject matter MUST each
represent conflicting interest
(4) MUST each have bought from the VERY SAME
PERSON
Rules as to preference of ownership:
(1) If movable  ownership acquired by vendee
who first takes possession in good faith
(2) If immovable  ownership shall belong to:
a. Vendee who first registers the sale in
good faith in the Registry of Property
(Registry of Deeds);
b. In the absence of registration 
vendee who first takes possession in
good faith
c. In the absence of registration &
possession  vendee who presents
oldest title (who first bought the
property) in good faith
PAYLAGO V JARABE
Issue: Who has a better right in case of double sale:
the registered buyer or the prior but unregistered
buyer?
Held: The Court formulated the general principle
governing the matter: as between two purchasers, the
one who has registered the sale in his favor, in good
faith, has a preferred right over the other who has not
registered his title, even if the latter is in the actual
possession of the immovable property. (Art. 1544 of
the NCC)
In the case at bar, while petitioner-spouses do have a
registered title, both Courts below found that
petitioners knew beforehand that aforementioned
portion is owned by defendant for the same is
situated just across the road from the land in question
Moral of the story: First to register must also be in
good faith.
Doctrine: The "better right" that cannot be prejudiced
by the registration of a second sale of a parcel of land
referred to in Act No. 3344, is much more than the
mere prior deed of sale in favor of the first vendee. It
involves facts and circumstances — in addition to a
deed of sale — which, combined, would make it clear
that the first vendee has a better right than the
second purchaser.
BALATBAT V CA
Case: vendor Aurelio Roque sold 6/10 portion of his
share in TCT No. 135671 to private respondents
Repuyan on April 1, 1980. Subsequently, the same lot
was sold again by vendor Aurelio Roque (6/10) and
his children (4/10), represented by the Clerk of Court
pursuant to Section 10, Rule 39 of the Rules of Court,
on February 4, 1982. Undoubtedly, this is a case of
double sale contemplated under Article 1544 of the
New Civil Code.
This is an instance of a double sale of an immovable
property hence, the ownership shall vests in the
person acquiring it who in good faith first recorded it
in the Registry of Property. Evidently, private
respondents Repuyan's caused the annotation of an
adverse claim on the title of the subject property
denominated as Entry No. 5627/T-135671 on July
21, 1980. The annotation of the adverse claim on TCT
No. 135671 in the Registry of Property is sufficient
compliance as mandated by law and serves notice to
the whole world.
Doctrine: As between two purchasers, the one who
has registered the sale in his favor, has a preferred
right over the other who has not registered his title
even if the latter is in actual possession of the
immovable property.
CARAM V LAURETA
Issue: Whether or not Caram is bound by the acts of
his agents.
Whose is the land?
Held: Yes.
The facts of record show that Mata, the vendor, and
Caram, the second vendee had never met. During the
trial, Marcos Mata testified that he knows Atty.
Aportadera but did not know Caram. Thus, the sale of
the property could have only been through Caram's
representatives, Irespe and Aportadera.
Even if Irespe and Aportadera did not have actual
knowledge of the first sale, still their actions have not
satisfied the requirement of good faith. One who
purchases real estate with knowledge of a defect or
lack of title in his vendor cannot claim that he has
acquired title thereto in good faith.
Case: Irespe and Aportadera had knowledge of
circumstances which ought to have put them an
inquiry. Both of them knew that Mata's certificate of
title together with other papers pertaining to the land
was taken by soldiers under the command of Col.
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Claro L. Laureta.
guard and still claim to have acted in good faith.
Added to this is the fact that at the time of the second
Petitioner should have inquired whether Olizon had
sale Laureta was already in possession of the land.
other unsettled obligations and encumbrances that
Irespe and Aportadera should have investigated the
could burden the subject property. Any person
nature of Laureta's possession. If they failed to
engaged in business would be wary of buying from a
exercise the ordinary care expected of a buyer of real
company that is closing shop, because it may be
estate they must suffer the consequences.
dissipated its assets to defraud its creditors.
The rule of caveat emptor requires the purchaser to
be aware of the supposed title of the vendor and one
who buys without checking the vendor's title takes all
the risks and losses consequent to such failure.
Case: There is no doubt then that Irespe and
Aportadera, acting as agents of Caram, purchased the
property of Mata in bad faith.
Applying the principle of agency, Caram as principal,
should also be deemed to have acted in bad faith.
The first sale in favor of Laureta prevails over the sale
in favor of Caram. Article 1544 applies.
Since Caram was a registrant in bad faith, the
situation is as if there was no registration at all.
Definition: A possessor in good faith is one who is not
aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
Case: Laureta was first in possession of the property.
He is also a possessor in good faith. It is true that
Mata had alleged that the deed of sale in favor of
Laureta was procured by force. Such defect, however,
was cured when, after the lapse of four years from the
time the intimidation ceased, Marcos Mata lost both
his rights to file an action for annulment or to set up
nullity of the contract as a defense in an action to
enforce the same.
TANEDO V CA
Although the deed of sale in favor of private
respondents was later than the one in favor of
petitioners, ownership would vest in the former
because of the undisputed fact of registration. On the
other hand, petitioners have not registered the sale to
them at all.
Petitioners contend that they were in possession of
the property and that private respondents never took
possession thereof. As between two purchasers, the
one who registered the sale in his favor has a
preferred right over the other who has not registered
his title, even if the latter is in actual possession of
the immovable property.
TANONGON V SAMSON
Held: Petitioner not a buyer in good faith or for value.
A purchaser in good faith or an innocent purchaser for
value is one who buys property and pays a full and fair
price for it at the time of the purchase or before any
notice of some other person’s claim on or interest in
it.
The judgment favoring respondents against Cayco and
Olicon was rendered on July 18, 1996. The writ of
execution was issued by the labor arbiter on July 24,
1997. The sale of the levied tanker, however, was
made only on July 29, 1997. The CA correctly ruled
that the act of Olizon was a cavalier attempt to evade
payment of the judgment debt. She obviously got word
of the issuance of the Writ and disposed of the tanker
to prevent its sale on execution. Despite knowledge of
these antecedents, petitioner brought the tanker
barely ten days before it was levied upon on August 8,
1997.
CONSOLIDATED RURAL BANK V CA
The provision is not applicable in the present case. It
contemplates a case of double or multiple sales by a
single vendor. More specifically, it covers a situation
where a single vendor sold one and the same
immovable property to two or more buyers. According
to a noted civil law author, it is necessary that the
conveyance must have been made by a party who has
an existing right in the thing and the power to dispose
of it. It cannot be invoked where the two different
contracts of sale are made by two different persons,
one of them not being the owner of the property sold.
And even if the sale was made by the same person, if
the second sale was made when such person was no
longer the owner of the property, because it had been
acquired by the first purchaser in full dominion, the
second purchaser cannot acquire any right.
Doctrine: In a situation where not all the requisites are
present which would warrant the application of Art.
1544, the principle of prior tempore, potior jure or
simply “he who is first in time is preferred in right,”
should apply.
Case: In the case at bar, the subject property was not
transferred to several purchasers by a single vendor.
In the first deed of sale, the vendors were Gamiao and
Dayag whose right to the subject property originated
from their acquisition thereof from Rizal Madrid with
the conformity of all the other Madrid brothers in
1957, followed by their declaration of the property in
its entirety for taxation purposes in their names. On
the other hand, the vendors in the other or later deed
were the Madrid brothers but at that time they were
no longer the owners since they had long before
disposed of the property in favor of Gamiao and
Dayag.
Principle that no one can give what one does not have
nemo dat quod non habet.
DELA MERCED V GSIS
The Court emphasize that one cannot close one’s
eyes to facts that should put a reasonable person on
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Issue: WON petitioners (dela Merced) have
the property and were in fact in possession of the
preferential rights over respondents
lands.
Held: Yes.
Petitioners’ rights of ownership over the properties in
dispute, albeit unregistered, are superior to the
registered mortgage rights of GSIS over the same. The
execution and validity of the contract to sell executed
by the Zulueta spouses, as the former subdivision
owner, in favor of Francisco dela Merced, are beyond
cavil. There is also no dispute that the contract to sell
was entered into by the parties before the third
mortgage was constituted by the Zuluetas in favor of
GSIS on the property, which included the subject lots.
Francisco dela Merced was able to fully pay the
purchase price to the vendor, who later executed a
deed of absolute sale in his favor. However, the
Zuluetas defaulted on their loans; hence, the
mortgage was foreclosed and the properties were sold
at public auction to GSIS as the highest bidder.
Therefore, the registered right of GSIS as mortgagee
of the property is inferior to the unregistered right of
Francisco dela Merced. The unrecorded sale between
Francisco dela Merced as the vendee of the property
and the Zuluetas, the original owners, is preferred for
the same reason stated above.
SAN LORENZO DEV CORP V CA
Issue: Did the registration of the sale after the
annotation of the notice of lis pendens obliterate the
effects of delivery and possession in good faith which
admittedly had occurred prior to SLDC’s knowledge of
the transaction in favor of Babasanta?
Held: NO
It must be stressed that as early as 11 February
1989, the Spouses Lu executed the Option to Buy in
favor of SLDC upon receiving P316,160.00 as option
money from SLDC. After SLDC had paid more than
one half of the agreed purchase price, the Spouses Lu
subsequently executed on 3 May 1989 a Deed of
Absolute Sale in favor or SLDC. At the time both deeds
were executed, SLDC had no knowledge of the prior
transaction of the Spouses Lu with Babasanta. Simply
stated, from the time of execution of the first deed up
to the moment of transfer and delivery of possession
of the lands to SLDC, it had acted in good faith and
the subsequent annotation of lis pendens has no
effect at all on the consummated sale between SLDC
and the Spouses Lu.
A purchaser in good faith is one who buys property of
another without notice that some other person has a
right to, or interest in, such property and pays a full
and fair price for the same at the time of such
purchase, or before he has notice of the claim or
interest of some other person in the property.
The Court rules that SLDC qualifies as a buyer in good
faith since there is no evidence extant in the records
that it had knowledge of the prior transaction in favor
of Babasanta. At the time of the sale of the property to
SLDC, the vendors were still the registered owners of
In assailing knowledge of the transaction between him
and the Spouses Lu, Babasanta apparently relies on
the principle of constructive notice incorporated in
Section 52 of the Property Registration Decree (P.D.
No. 1529) which reads, thus:
Sec. 52. Constructive notice upon
registration. – Every conveyance,
mortgage, lease, lien, attachment,
order, judgment, instrument or entry
affecting registered land shall, if
registered, filed, or entered in the
office of the Register of Deeds for the
province or city where the land to
which it relates lies, be constructive
notice to all persons from the time of
such registering, filing, or entering.
However, the constructive notice operates as such by
the express wording of Section 52 from the time of
the registration of the notice of lis pendens which in
this case was effected only on 2 June 1989, at which
time the sale in favor of SLDC had long been
consummated insofar as the obligation of the
Spouses Lu to transfer ownership over the property to
SLDC is concerned.
CARUMBA V CA
Issue: Whether or not Balbuena has a superior title
over Carumba.
Held: No.
While under the invoked Article 1544, registration in
good faith prevails over possession in the event of a
doubt sale by the vendor of the same piece of land to
different vendees, said article is of no application to
the case at bar, even if Balbuena, the later vendee,
was ignorant of the prior sale made by his judgment
debtor in favor of petitioner Carumba.
The reason is that the purchaser of Unregistered land
at a sheriff's execution sale only steps into the shoes
of the judgment debtor, and merely acquires the
latter's interest in the property sold as of the time the
property was levied upon.
The fact that the buyer (petitioner Carumba) had
taken possession of the unregistered land sold,
sufficed to vest ownership on the said buyer. When
the levy was made by the Sheriff, therefore, the
judgment debtor no longer had dominical interest nor
any real right over the land that could pass to the
purchaser at the execution sale. Hence, the latter
must yield the land to petitioner Carumba.
6.3 DELIVERY OF FRUITS AND ACCESSORIES
(NCC 1537)
The vendor is bound to deliver the thing sold and its
accessions and accessories in the condition in which
they were upon the perfection of the contract.
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All the fruits shall pertain to the vendee from the day
on which the contract was perfected.
6.4 PAYMENT OF EXPENSES FOR EXECUTION AND
REGISTRATION (NCC 1487)
The expenses for the execution and registration of the
sale shall be borne by the vendor, unless there is a
stipulation to the contrary.
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affirmation of the value of the thing, nor any
6.5 CONDITIONS AND WARRANTIES
statement purporting to be a statement of the seller’s
opinion only, shall be construed as warranty, unless
6.5.1 Condition; Concept (NCC 1545)
the seller made such affirmation or statement as an
expert and it was relied upon by the buyer.
Where the obligation of either party to a contract of
sale is subject to any condition which is not
Definition: Express warranty is any affirmation of fact/
performed, such party may refuse to proceed with the
any promise by the seller relating to the thing  the
contract or he may waive performance of the
natural tendency is to induce the buyer to purchase
condition. If the other party has promised that the
the thing  and buyer makes the purchase
condition should happen or be performed, such first
mentioned party may also treat the nonperformance
1340: Usual exaggerations in trade,
of the condition as a breach of warranty.
when other party had an opportunity
to know the facts, are not in
Where the ownership in the thing has not passed, the
themselves fraudulent
buyer may treat the fulfillment by the seller of his
obligation to deliver the same as described and as
warranted expressly or by implication in the contract
of sale as a condition of the obligation of the buyer to
perform his promise to accept and pay for the thing.
1341: Mere expression of an opinion
does not signify fraud, unless made by
an expert and the other party has
relied on the former’s special
knowledge
Definition: Condition (in 1545) means an uncertain
event or contingency on the happening of which the
obligation of the contract depends.
Effect of non-fulfillment: May either REFUSE TO
PROCEED with the contract // proceed, WAIVING THE
PERFORMANCE OF THE CONDITION.
If nature of condition is of a PROMISE THAT IT
SHOULD HAPPEN  non-performance of condition ~~
breach of warranty
6.5.2 Warranty; Concept
Definition: Warranty means any representation made
by the seller of the thing with respect to its
character/quality/ownership, by which he induces the
buyer to purchase the same relying on said
representation.
 A warranty is a part of the contract of sale 
therefore, immaterial WON the seller knew that it was
false or true
 A warranty is NOT an essential element of a
contract of sale  may be
increased/diminished/suppressed by agreement of
the parties (1548[3])  WARRANTY WAIVABLE
Kinds:
6.5.3
Express warranties (1546)
Implied warranties of title (1547)
Absence of hidden defects (1547)
Fitness or merchantability (1562)
Description (1481, 1562)
Sample (1481, 1565)
Express Warranty (NCC 1546)
Any affirmation of fact or any promise by the seller
relating to the thing is an express warranty if the
natural tendency of such affirmation or promise is to
induce the buyer to purchase the same, and if the
buyer purchases the thing relying thereon. No
1343: Misrepresentation made in
good faith is not fraudulent but may
constitute error
If representation not the inducing cause of the
purchase  no action for breach of warranty
6.5.4
Implied Warranties (NCC 1547)
In a contract of sale, unless a contrary intention
appears, there is:
1.
An implied warranty on the part of the seller
that he has a right to sell the thing at the time when
the ownership is to pass, and that the buyer shall from
that time have and enjoy the legal and peaceful
possession of the thing;
2.
An implied warranty that the thing shall be free
from any hidden faults or defects, or any charge or
encumbrance not declared or known to the buyer.
This article shall not, however, be held to render liable
a sheriff, auctioneer, mortgagee, pledgee, or other
person professing to sell by virtue of authority in fact
or law, for the sale of a thing in which a third person
has a legal or equitable interest.
Definition: Implied warranties are those which the law
derives by implication or inference from the nature of
the transaction or the relative situation or
circumstance of the parties irrespective of any
intention of the seller to create it.
Kinds: (1) Warranty against eviction; (2) Warranty
against hidden defects
When implied warranty N/A:
 “As is and where is” sale  the vendor makes
no warranty as to the quality or workable
condition of the goods
 the vendee takes them in the conditions in
which that they are found and from the place
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where they are located.
vendee have made the waiver with knowledge of the
 does NOT EXTEND to liens/encumbrances
risks of eviction and assumed its consequences, the
unknown to the vendee and could not be
vendor shall not be liable.
disclosed by a physical examination of the
NCC 1555. When the warranty has been agreed upon
goods sold
or nothing has been stipulated on this point, in case
 Sale of secondhand articles  no implied
eviction occurs, the vendee shall have the right to
warranty as to the
demand of the vendor:
condition/adaptation/fitness or suitability for
the purpose for which made/ the quality of an
1.
The return of the value which the thing sold
article sold as and for a secondhand article.
had at the time of the eviction, be it greater or less
However: A certification issued by the vendor
than the price of the sale;
that a secondhand machine was in A-1
condition is an express warranty binding the
2.
The income or fruits, if he has been ordered to
vendor (MOLES v IAC)
deliver them to the party who won the suit against him;
 Sale by virtue of authority in fact/law  rule
on implied warranty n/a to a
3.
The costs of the suit which caused the
sheriff/auctioneer/mortgagee/pledgee/other
eviction, and, in a proper case, those of the suit
person who sells.
brought against the vendor for the warranty;
 There is no warranty on the part of the State
Rule of CAVEAT EMPTOR (BUYER BEWARE) applies to
execution sales since sheriff does not warrant the title
to real property sold by him as sheriff.
6.5.4.1 Warranty on Seller’s Title; Liability in Case
of Eviction (NCC 1548-1559)
NCC 1548. Eviction shall take place whenever by final
judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of the
whole or of a part of the thing purchased.
The vendor shall answer for the eviction even though
nothing has been said in the contract on the subject.
The contracting parties, however, may increase,
diminish, or suppress this legal obligation of the
vendor.
NCC 1549. The vendee need not appeal from the
decision in order that the vendor may become liable
for eviction.
NCC 1550. When adverse possession had been
commenced before the sale but the prescriptive
period is completed after the transfer, the vendor
shall not be liable for eviction.
NCC 1551. If the property is sold for nonpayment of
taxes due and not made known to the vendee before
the sale, the vendor is liable for eviction.
NCC 1552. The judgment debtor is also responsible
for eviction in judicial sales, unless it is otherwise
decreed in the judgment.
NCC 1553. Any stipulation exempting the vendor from
the obligation to answer for eviction shall be void, if he
acted in bad faith.
NCC 1554. If the vendee has renounced the right to
warranty in case of eviction, and eviction should take
place, the vendor shall only pay the value which the
thing sold had at the time of the eviction. Should the
4.
The expenses of the contract, if the vendee
has paid them;
5.
The damages and interests, and ornamental
expenses, if the sale was made in bad faith.
NCC 1556. Should the vendee lose, by reason of the
eviction, a part of the thing sold of such importance,
in relation to the whole, that he would not have bought
it without said part, he may demand the rescission of
the contract; but with the obligation to return the thing
without other encumbrances than those which it had
when he acquired it.
He may exercise this right of action, instead of
enforcing the vendor’s liability for eviction.
The same rule shall be observed when two or more
things have been jointly sold for a lump sum, or for a
separate price for each of them, if it should clearly
appear that the vendee would not have purchased
one without the other.
NCC 1557. The warranty cannot be enforced until a
final judgment has been rendered, whereby the
vendee loses the thing acquired or part thereof.
NCC 1558. The vendor shall not be obliged to make
good the proper warranty, unless he is summoned in
the suit for eviction at the instance of the vendee.
NCC 1559. The defendant vendee shall ask within the
time fixed in the Rules of Court for answering the
complaint, that the vendor be made a co-defendant.
Concept: Eviction is the deprivation of the vendee of
the whole or part of the thing sold by virtue of a final
judgment based on a right prior to the sale or an act
imputable to the vendor.
 refers to trespass in law  requires that a person
go to courts claiming the thing sold/part and giving
reasons.
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Note: Trespass in fact does not make vendor liable;
3. COST OF SUIT which
caused the eviction,
vendee has a direct action against the trespasser in
and in a proper case,
the same way as the lessee has such right.
those of the suit
Requisites:
brought against the
vendor for the
 The purchaser has been DEPRIVED of the
warranty
whole or part of the thing sold
4. EXPENSES OF THE
 The eviction is by FINAL JUDGMENT
CONTRACT, if the
1549: appeal not needed in order that
vendee has paid
vendor will be liable
them
 The deprivation is based on a RIGHT PRIOR to
5. DAMAGES AND
INTERESTS, AND
the sale // an ACT IMPUTABLE to the vendor
ORNAMENTAL
 The vendor must have been NOTIFIED of the
EXPENSES
suit for eviction at the instance of the vendee.
Vendor
acted in good
Vendor acted in good
1559: vendor as co-defendant; to
faith
faith
enable the vendor to defend his title; and
1.
WAIVER
1.
VALUE
show that the suit for eviction against the
CONSCIENTE. If
2. INCOME OR FRUITS
buyer is unjust
vendee made a
3. COST OF SUIT
 There is no waiver on the part of the vendee
waiver without
4. EXPENSES OF
knowledge
of
the
CONTRACT
Types of eviction:
risks of eviction;
Total  1548: when vendee is deprived of the whole
ONLY THE VALUE of
NO DAMAGES
the thing sold at the
thing purchased
time of eviction.
Partial  1548: vendee deprived of part of the thing
2. WAIVER
purchased
INTENCIONADA. If
vendee made a
 1556[3]: vendee deprived of some items that were
waiver with
jointly sold with other items
knowledge of the
risks of eviction and
 immovable encumbered with non-apparent burden
assumed the
or servitude (e.g. right of way), not mentioned in
consequences;
agreement, of such nature that it must be presumed
VENDOR NOT LIABLE.
that vendee would not have acquired it had he been
1553: Vendor acted in bad faith when he had
aware thereof.
knowledge at the time of the sale of the existence of a
fact that may give rise to eviction; WAIVER VOID.
Instances where seller not liable for breach of
warranty
VENDEE’S REMEDIES IN CASE OF PARTIAL EVICTION
Instances where seller liable for breach of warranty
against eviction
May demand RESCISSION of contract or
ENFORCEMENT of vendor’s liability for eviction.
1551: Sale of property for non-payment of taxes; not
made known to vendee before sale
Requisites (in case of partial eviction):
1552: Judicial sales; judgment debtor liable unless
otherwise decreed
VENDOR’S LIABILITY IN CASE OF EVICTION:
If there is a stipulation
exempting the vendor
from the obligation to
answer for eviction
Where no warranty has
been agreed upon or
there was no stipulation
exempting the vendor
from liability
Vendor acted in bad
Vendor acted in bad
faith
faith (same)
 waiver void  vendor 1. VALUE
liable for:
2. INCOME OR FRUITS
1. VALUE of the thing at 3. COST OF SUIT
the time of eviction
4. EXPENSES OF
2. INCOME OR FRUITS,
CONTRACT
if the vendee has
5. DAMAGES AND
been ordered to
INTERESTS, AND
deliver them to the
ORNAMENTAL
party who won the
EXPENSES
suit against him
(1) Vendee loses, by reason of eviction, part of
the thing sold
(2) Part of the thing sold of such importance that
he would not have bought the whole without
said part
Note: The same rule shall be observed when
TWO/MORE THINGS have been JOINTLY SOLD for a
lump sum/separate price for each, IF it should clearly
appear that the vendee would not have bought one
without the other
CASES:
JM TUAZON & CO., INC. VS. CA, 94 SCRA 413
Doctrine: Without being shown to be vendees in good
faith, herein respondents are not entitled to the
warranty against eviction, nor are they entitled to
recover damages (Article 1555 of the Civil Code).
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Relying on a provision in the compromise agreement,
nature that it must be presumed that the vendee
petitioner believed in good faith that the land sold to
would not have acquired it had he been aware thereof,
the De Leons would not be adversely affected.
he may ask for the rescission of the contract, unless
he should prefer the appropriate indemnity. Neither
“Good faith consists in an honest intention to abstain
right can be exercised if the non-apparent burden or
from taking any unconscientious advantage of
servitude is recorded in the Registry of Property,
another. Good faith is opposite of fraud and bad faith
unless there is an express warranty that the thing is
and its non-existence must be established by
free from all burdens and encumbrances.
competent proof.”
Private respondents, on the other hand, were lacking
in good faith for knowing beforehand, at the time of
the sale, the presence of an obstacle to their taking
over the possession of the land, which, in effect,
would amount to eviction from said land, and still they
bought the land without first removing that obstacle.
One who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim that
he has acquired title thereto in good faith, as against
the true owner of the land or of an interest therein;
and the same rule must be applied to one who has
knowledge of facts which should have put him upon
such inquiry and investigation as might be necessary
to acquaint him with the defects in the title of his
vendor. A purchaser cannot close his eyes to facts
which should put a reasonable man upon his guard
and then claim that he acted in good faith under the
belief that there was no defect in the title of the
vendor.
ESCALER V CA
Doctrine: The requisites for Art 1558 and 1559 are:
a) there must be a final judgment;
b) the purchaser has been deprived of the whole
or part of the thing sold;
c) said deprivation was by virtue of a right prior
to the sale made by the vendor; and
d) the vendor has been summoned and made
co-defendant in the suit for eviction at the
instance of the vendee.
In the case at bar, Spouses Reynoso, the vendors,
sold to spouses Escaler a parcel of land through a
Deed of Sale which warrants valid title to and
ownership of said parcel of land and further warrants
to defend the property from any and all claims of any
persons.
The vendors were not made parties to the suit and
were only given by the petitioners a copy of the
opposition. This in turn hinders the fulfillment of the
last requisite for such. Therefore, lacking the last
requisite there would be no violation of Art.1558 and
1559.
6.5.4.2 Warranty against Hidden Defects of or
Encumbrances upon the Thing Sold;
Vendor’s Responsibility in Case of Breach
(NCC 1560-61, 1566)
NCC 1560. If the immovable sold should be
encumbered with any non-apparent burden or
servitude, not mentioned in the agreement, of such a
Within one year, to be computed from the execution
of the deed, the vendee may bring the action for
rescission, or sue for damages.
One year having elapsed, he may only bring an action
for damages within an equal period, to be counted
from the date on which he discovered the burden or
servitude.
NCC 1561. The vendor shall be responsible for
warranty against the hidden defects which the thing
sold may have, should they render it unfit for the use
for which it is intended, or should they diminish its
fitness for such use to such an extent that, had the
vendee been aware thereof, he would not have
acquired it or would have given a lower price for it; but
said vendor shall not be answerable for patent defects
or those which may be visible, or for those which are
not visible if the vendee is an expert who, by reason of
his trade or profession, should have known them.
NCC 1566. The vendor is responsible to the vendee
for any hidden faults or defects in the thing sold, even
though he was not aware thereof.
This provision shall not apply if the contrary has been
stipulated, and the vendor was not aware of the
hidden faults or defects in the thing sold.
RULES ON EASEMENT OR SERVITUDE (1560)
Concept: Easement/servitude is an encumbrance
imposed upon an immovable for the benefit of
another immovable belonging to a different owner
(NCC 613); “right of way”
Kinds: (NCC 615)
1. Apparent – made known and continually kept
in view by external signs
2. Non-apparent – shows no external indication
of its existence
Requisites (vendor’s liability in case of
easement/servitude): (NCC 1560)
1. Easement must be non-apparent
2. Must not have been mentioned in the
agreement
3. Such a nature that vendee would not have
acquired the immovable had he been aware
thereof
Vendee’s remedies:
1. Within 1yr from the execution of the deed of
sale
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for which the goods are
a. Rescission, or
acquired
b. Damages
ii.
Buyer has relied upon the
2. After 1yr  Damages within a period of 1yr
seller’s skill/judgment
from the discovery of the easement/servitude
b. Sale of goods under their patent or
Vendor NOT LIABLE when:
trade name  No warranty (1563)
c. Usage of trade (1564)
1. Easement/servitude is APPARENT
2. Implied warranty of merchantable quality
2. Non-apparent easement is RECORDED in the
a. Warranty that the goods are fit for
Registry of Property, unless there is an
GENERAL PURPOSE of the thing, and
express warranty that the thing is free from all
NOT necessarily for the purpose of the
burdens and encumbrances
buyer (1562)
b. Warranty present when the goods are
3. Vendee had KNOWLEDGE at the time of the
bought by such description from the
sale of the existence of the
seller who deals in goods of such
easement/servitude (though non-apparen
description (1562)
RESPONSIBILITY FOR HIDDEN DEFECTS
3. Implied warranty of merchantability
a. In sale by sample  if seller is a
GR: CAVEAT VENDITOR  vendor shall be LIABLE to
dealer in goods of that kind 
the vendee for any hidden faults/defects in the thing
warranty that it shall be free from any
sold, EVEN THOUGH HE WAS NOT AWARE THEREOF.
defect rendering them
UNMERCHANTABLE which would NOT
E: vendor shall NOT BE LIABLE if there is a stipulation
BE APPARENT UPON REASONABLE
exempting him from such defects and he was not
EXAMINATION of the sample (1565)
aware thereof (1566)
CASES:
CAVEAT EMPTOR (buyer beware)
MOLES VS. IAC, 169 SCRA 777
 applies WRT third persons; one who buys real
property without checking the vendor’s title where
Doctrines:
persons other than the vendor are in possession,
takes all the risks and loses
Fact: Petitioner claimed that he felt he was cheated
because the expert of the Linotype machine from
WARRANTY AGAINST HIDDEN DEFECTS OF THE THING
Manila says that the most he will buy the machine is
SOLD
at P5,000 only, but private respondent sold the same
to petitioner for P40,000.
Requisites: (1561)
1. The defect must be IMPORTANT/SERIOUS
Must render the thing UNFIT FOR USE for
which it is intended or DIMINISHES ITS
FITNESS for such use  extent that had the
vendee been aware thereof, he would not
have acquired it or would have given a lower
price for it
2. Must be HIDDEN
Note: Vendor NOT LIABLE if vendee is an
EXPERT who, by reason of this trade or
profession, should have known them.
3. The defect must EXIST AT THE TIME OF SALE
4. Vendee must give NOTICE OF DEFECT TO THE
VENDOR within a reasonable time (1586)
5. Action must be made within the period
prescribed by law.
Action for rescission/reduction in price 
within 6mos from the delivery of the thing sold
(1571) / within 40days from the date of
delivery in case of animals (1577[1])
6. Must be NO WAIVER OF WARRANTY on the
part of the vendee (1548[3])
Warranties included:
1. Implied warranties of fitness for a particular
purpose
a. Requisites: (1562)
i.
Buyer makes known to the
seller the particular purpose
1. Whether or not a sales invoice is a contract
evidencing the sale between the parties.
 NO. A sales invoice is not the contract
evidencing the sale in the case at bar, it
being merely a preliminary memorandum of
a proposal to buy one linotype machine,
using for such purpose a printed form used
for printing job orders in private respondent’s
printing business. The sales invoice is merely
a pro forma memorandum. Consequently,
the printed provisions therein, especially
since the printed form used was for
purposes of other types of transactions,
could not have been intended by the parties
to govern their transaction on the printing
machine. It is obvious that a venue
stipulation, in order to bind the parties, must
have been intelligently and deliberately
intended by them to exclude their case from
the reglementary rules on venue.
2. Whether or not there is an implied warranty of
quality and fitness when an article is sold as a
secondhand item.
 YES. It is generally held that in the sale of a
designated and specific article sold as
secondhand, there is no implied warranty as
to its quality or fitness for the purpose
intended, at least where it is subject to
inspection at the time of the sale. On the
other hand, there is also authority to the
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effect that in a sale of a secondhand article
4. Defect must be important (renders thing unfit
there may be, under some circumstances, an
or considerably decreases fitness)
implied warranty of fitness for the ordinary
5. Action must be instituted with the statute of
limitations.
purpose of the article sold or for the
particular purpose of the buyer. Article 1562
In the sale of animal feeds, there is an implied
of our Civil Code, which was taken from the
warranty that it is reasonably fit and suitable to be
Uniform Sales Act, provides:
used for the purpose which both parties
Art. 1562. In a sale of goods, there
contemplated. Three things required to prove liability
is an implied warranty or condition
on the basis of breach of implied warranty are as
follows:
as to the quality or fitness of the
goods, as follows:
1. They sustained injury because of the product;
(1) Where the buyer, expressly or
2. Injury occurred because the product was
by implication, makes known to
defective or unreasonably unsafe; and
the seller the particular purpose
3. Defect existed when the product left the
hands of the petitioner.
for which the goods are acquired,
and it appears that the buyer relies
There is no evidence to prove that animal feeds
on the seller's skill or judgment
examined were the same animal feeds given to
(whether he be the grower or
respondents by petitioner. Respondents had the
manufacturer or not), there is an
animal feed examined barely three months after their
implied warranty that the goods
animals had died. If indeed the feeds were identical, it
shall be reasonably fit for such
could have already been contaminated by outside
purpose; xxx
factors beyond the control of the petitioner in the
span of three months.
3. Whether the hidden defects in the machine is
sufficient to warrant a rescission of the contract
6.5.4.3 Quality or Fitness of Goods (NCC 1562)
between the parties
 The redhibitory defect contemplated in
In a sale of goods, there is an implied warranty or
Article 1561 of the Civil Code must be an
condition as to the quality or fitness of the goods, as
imperfection or defect of such nature as to
follows:
engender a certain degree of importance. An
imperfection or defect of little consequence
1.
Where the buyer, expressly or by implication
does not come within the category of being
makes known to the seller the particular purpose for
redhibitory.
which the goods are acquired, and it appears that the
4. Whether or not the prescriptive period of six
buyer relies on the seller’s skill or judgment (whether
months for redhibitory action applies in the case
he be the grower or manufacturer or not), there is an
at bar.
implied warranty that the goods shall be reasonably fit
 NO. While it is true that Article 1571 of the
for such purpose;
Civil Code provides for a prescriptive period
of six months for a redhibitory action a
2.
Where the goods are bought by description
cursory reading of the ten preceding articles
from the seller who deals in goods of that description
to which it refers will reveal that said rule
(whether he be the grower or manufacturer or not),
may be applied only in case of implied
there is an implied warranty that the goods shall be of
warranties. The present case involves one
merchantable quality.
with express warranty. Consequently, the
general rule on rescission of contract, which
6.5.4.3.1 Merchantability and fitness distinguished
is four years shall apply.
Warranty of merchantability
NUTRIMIX FEEDS CORPORATION VS. CA, 25
Warranty that goods are REASONABLY FIT FOR THE
OCTOBER 2004
GENERAL PURPOSE for which they are sold.
Doctrine: Respondents failed to prove that the
Goods are bought by description.
petitioner is guilty of breach of warranty due to hidden
defects. A hidden defect is one which is unknown or
Requires IDENTITY BETWEEN:
could not have been known to the vendee.
 what is described in the contract and
The requisites to recover on account of hidden defects
 what is tendered, in the sense that the latter
are as follows:
is of such quality to have some value
1. Defect is hidden;
2. Defect must exist at the time the sale was
made;
3. Defect must ordinarily have been excluded
from the contract;
Warranty of fitness
Warranty that goods are SUITABLE FOR THE SPECIAL
PURPOSE of the buyer which will not be satisfied by
mere fitness for general purpose.
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GR: no implied warranty of quality/fitness for any
6.5.4.4 Alternative Remedies of Buyer to Enforce
particular purpose, except:
the Warranties under 1561, 1562, 1564,
1565, & 1566; Prescriptive Period (NCC
Requisites:
1567 & 1571)
1. Buyer expressly/impliedly, manifests to the
NCC 1567. In the cases of Articles 1561, 1562, 1564,
seller the PARTICULAR PURPOSE for which the
1565, and 1566, the vendee may elect between
goods are acquired, and
withdrawing from the contract and demanding a
2. Buyer RELIES UPON THE SELLER’S
proportionate reduction of the price, with damages in
SKILL/JUDGMENT whether he be the
either case.
grower/manufacturer/not
6.5.4.3.2 Rule in case of Sale under a Patent or
Trade Name (NCC 1563)
In case of contract of sale of a specified article under
its patent or other trade name, there is no warranty as
to its fitness for any particular purpose, unless there
is a stipulation to the contrary.
Limits the application of 1562
By exactly DEFINING WHAT HE WANTS, the buyer has
exercised his own judgment instead of relying upon
that of the seller.
This definition may be given by means of a trade
name or in any other ways.
Description must be the BUYER’S CHOICE // the
goods must not only be DESCRIBED AND DEFINITE but
KNOWN, in order to preclude warranty of fitness.
There is still implied warranty of fitness where the
BUYER RELIED UPON THE SELLER’S JUDGMENT
rather than the patent/trade name.
6.5.4.3.3 Effect of Usage of Trade (NCC 1564)
An implied warranty or condition as to the quality or
fitness for a particular purpose may be annexed by the
usage of trade.
The usage is relied on for the purpose of showing the
intention of the parties.
6.5.4.3.4 Rule in Case of Goods Sold by Sample
(NCC 1565)
In the case of a contract of sale by sample, if the seller
is a dealer in goods of that kind, there is an implied
warranty that the goods shall be free from any defect
rendering them unmerchantable which would not be
apparent on reasonable examination of the sample.
GR: all the buyer is entitled to is that the GOODS BE
LIKE THE SAMPLE
IF: sample is subject to LATENT DEFECT  goods of
such character that inspection will not reveal it
 and buyer reasonably relies on seller’s
skill/judgment
 buyer entitled to GOODS LIKE THOSE WHICH THE
SAMPLE SEEMS TO REPRESENT (merchantable goods
of that kind and character; not simply to goods like
the sample)
NCC 1571. Actions arising from the provisions of the
preceding ten articles shall be barred after six months,
from the delivery of the thing sold.
Options of vendee (w/ right to damages in either
case):
1. ACCION REDHIBITORIA  withdraw from the
contract
2. ACCION QUANTI MINORIS  demand a
proportionate reduction of the price
Same right given to vendee in sale of animals with
redhibitory defects (1580)
6.5.4.5 Loss of Thing Sold Due to Hidden Defects
(NCC 1568-69)
NCC 1568. If the thing sold should be lost in
consequence of the hidden faults, and the vendor was
aware of them, he shall bear the loss, and shall be
obliged to return the price and refund the expenses of
the contract, with damages. If he was not aware of
them, he shall only return the price and interest
thereon, and reimburse the expenses of the contract
which the vendee might have paid.
NCC 1569. If the thing sold had any hidden fault at the
time of the sale, and should thereafter be lost by a
fortuitous event or through the fault of the vendee, the
latter may demand of the vendor the price which he
paid, less the value which the thing had when it was
lost.
If the vendor acted in bad faith, he shall pay damages
to the vendee.
RULES IN CASE OF LOSS OF THING WITH HIDDEN
DEFECTS
The cause of the loss is the defect: (1568)
1. IF VENDOR WAS AWARE OF DEFECT, he is
obliged to:
a. Return the price
b. Refund the expenses of the contract
c. Pay damages
2. NOT AWARE OF DEFECT, vendor obliged to:
a. Return the price
b. Pay interest thereon
c. Refund the expenses of the contract
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The cause of the loss is a fortuitous event/fault of the
A contract of sale of animals shall also be void if the
vendee: (1569)
use or service for which they are acquired has been
stated in the contract, and they are found to be unfit
1. AWARE OF DEFECT, vendor obliged to:
therefor.
a. Return the price paid LESS the value
NCC 1576. If the hidden defect of animals, even in
of the thing at the time of loss
case a professional inspection has been made, should
b. Pay damages
be of such a nature that expert knowledge is not
2. NOT AWARE OF DEFECT, vendor obliged to:
sufficient to discover it, the defect shall be considered
a. Return the price paid LESS the value
as redhibitory.
of the thing at the time of loss
But if the veterinarian, through ignorance or bad faith,
should fail to discover or disclose it, he shall be liable
6.5.4.6 Applicability of Warranty on Judicial Sales
for damages.
(NCC 1570)
The preceding articles of this subsection shall be
applicable to judicial sales, except that the judgment
debtor shall not be liable for damages.
NCC 1577. The redhibitory action, based on the faults
or defects of animals, must be brought within forty
days from the date of their delivery to the vendee.
In judicial sales  judgment debtor really makes the
sale (not sheriff)
This action can only be exercised with respect to faults
and defects which are determined by law or by local
custom.
However, since he is forced to sell  not liable for
damages
6.5.4.7 Prescriptive Period of Action (NCC 1571)
Actions arising from the provisions of the preceding
ten articles shall be barred after six months, from the
delivery of the thing sold.
Accion redhibitoria and accion quanti minoris (15611567); and all other actions to enforce seller’s liability
for hidden defects when the thing is lost (1568-1569);
and judicial sales (1570)  barred after 6mos from
delivery of thing sold
6.5.4.8 Rules on Animals (NCC 1572-1581)
NCC 1572. If two or more animals are sold together,
whether for a lump sum or for a separate price for
each of them, the redhibitory defect of one shall give
rise to its redhibition, and not that of the others;
unless it should appear that the vendee would not
have purchased the sound animal or animals without
the defective one.
The latter case shall be presumed when a team, yoke,
pair, or set is bought, even if a separate price has
been fixed for each one of the animals composing the
same.
NCC 1573. The provisions of the preceding article with
respect to the sale of animals shall in like manner be
applicable to the sale of other things.
NCC 1574. There is no warranty against hidden
defects of animals sold at fairs or at public auctions,
or of livestock sold as condemned.
NCC 1575. The sale of animals suffering from
contagious diseases shall be void.
NCC 1578. If the animal should die within three days
after its purchase, the vendor shall be liable if the
disease which cause the death existed at the time of
the contract.
NCC 1579. If the sale be rescinded, the animal shall
be returned in the condition in which it was sold and
delivered, the vendee being answerable for any injury
due to his negligence, and not arising from the
redhibitory fault or defect.
NCC 1580. In the case of animals with redhibitory
defects, the vendee shall also enjoy the right
mentioned in Article 1567; but he must make use
thereof within the same period which has been fixed
for the exercise of the redhibitory action.
NCC 1581. The form of sale of large cattle shall be
governed by special laws.
RULES IN SALE OF ANIMALS WITH DEFECTS/DISEASE
Sale of animals with redhibitory defects
1. Redhibitory vice or defect (1576)
 defect in the article sold against which
defect the seller is bound to warrant
 not only hidden, but also, the defect is of
such nature that EXPERT KNOWLEDGE, even
after a professional inspection has been
made, is NOT SUFFICIENT to discover it.
 If the VETERINARIAN, through
ignorance/bad faith should fail to
discover/disclose it  he shall be liable for
damages
2. Remedies of vendee in case of sale of animals
with redhibitory defects (1572, 1567, 1580)
GR: If two or more animals are sold together
(for lump sum/separate price for each)
 redhibitory defect of one shall ONLY give
rise to its redhibition (not affecting other
sound animals)
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 vendee may ONLY ask for:
Sale without warranty against hidden defects of
a. Rescission of the sale of the
animals (1574)
defective animal (accion redhibitoria), or
There is NO WARANTY against hidden defects of
b. Ask for a proportionate reduction in
animals SOLD AT FAIRS/PUBLIC AUCTIONS
its price (accion quanti minoris)
(judicial/extrajudicial) // of LIVESTOCK SOLD AS
E: IF the vendee WOULD NOT HAVE BOUGHT
CONDEMED.
the sound animals without the defective one
Limitation on 1570.
 redhibitory defect of one shall give rise to
Based on the assumption that the defects must have
been clearly known to the buyer.
the redhibition of all the animals sold,
including sound ones  vendee may ask for
1581: The form of sale of large cattle governed by Act
rescission of whole contract.
4117, now found in Sections 511 to 536 of the
note: this intention by the vendee is
Revised Administrative Code, as amended, providing
presumed when a TEAM/YOKE/PAIR/SET is
for the registration/branding/conveyance/ and
bought, even if a separate price has been
slaughter of large cattle.
fixed for each one of the animals composing
The Administrative Code of 1987, has superseded the
the same (1572).
Revised Administrative Code.
note: above rule and exception apply
Under PD 533 (Anti-Cattle Rustling Law of 1974):
in like manner to the sale of other things
 no
(1573)
person/partnership/association/corporation/entity
3. When action must be filed (1577)
shall engage in the business of buy and sell of large
Within 40days from the date of delivery to the
cattle without first securing a permit for the said
vendee
purpose from the Provincial Commander of the
This action can only be exercised WRT faults
province where it shall conduct such business and the
and defects which are determined by
city/municipal treasurer of the place of residence of
law/local customs
such
If the defects are PATENT  NO WARRANTY
person/partnership/association/corporation/entity.
against such defects although there exists a
 the permit shall only be valid in such province
redhibitory vice
NCC 1356: The sale must appear in a public
4. Effect of the rescission (1579)
document
Animal shall be returned in the condition in
which it was sold and delivered
Vendee answerable for any injury due to his
negligence (not arising from the redhibitory
fault/defect), but this would be no obstacle to
the rescission due to redhibitory defect (see
1569)
Note: 1556  buyer may not ask for
rescission where he has created new
encumbrances upon the thing sold
When sale of animals is void (1575)
Sale of the following is void as against public interest
(not merely subject to rescission/reduction of the
price:
1. When the animals are suffering from
CONTAGIOUS DISEASES
2. When the animals are found to be UNFIT FOR
THE USE/SERVICE FOR WHICH THEY WERE
ACQUIRED as stated in the contract
Vendor’s liability in case the animal sold dies of
disease (1578)
Vendor liable for death WON defect is redhibitory, if
the following requirements are present:
1. The disease existed at the time of sale;
2. The disease is the cause of death of the
animal; and
3. The animal dies within 3days from time of
purchase (not date of delivery)
Note: if loss is caused by fortuitous event/fault of
vendee, and animal has vices  1567 applies
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