1 CHAPTER 1: INTRODUCTION CONTRACT OF SALE One of the contracting parties obligates himself to transfer the ownership of and to deliver

r a determinate thing, and the other to pay therefor a price certain money or its equivalent. A contract of sale may be absolute or conditional. SALES 1.Contract of sale (absolute) real obligation obligation to give remedies available: a.specific performance b.rescission c.damages 2.Contract to sell (conditional) personal obligation obligation to do remedies available: a.resolution b.damages ESSENTIAL REQUISITES OF A CONTRACT OF SALE 1.consent 2.subject matter 3 . p r i c e CHARACTERISTICS OF CONTRACT OF SALE: 1.Nominate - law gave it a name 2.Principal - can stand on its own; unlike accessory contract 3.Bilateral - imposes obligation on both parties a.obligation of seller transfer ownership & deliver b.obligation of buyer pay for price Consequence: power to rescind is implied in bilateral contracts 4.Onerous with valuable consideration Consequence: all doubts in construing contract to be resolved in greater reciprocity of interest

5.Commutative equal value is exchanged for equal value Test: subjective as long as parties in all honesty that he is receiving equal value then it complies with test & would not be deemed a donation; but must not be absurd. Inadequacy of price or aleatory character not sufficient ground to cancel contract of sale; inadequacy can show vitiation of consent & sale may be annulled based on vice but not on inadequacy 6.Consensual meeting of minds makes a perfect contract of sale but needs delivery to consummate. 7.Title & not a mode gives rise to an obligation to transfer; it is delivery w/c actually transfer ownership; mode which actually transfer ownership. STAGES IN LIFE OF CONTRACT OF SALE: 1.negotiation 2.perfection by mere consent; performance may be demanded ( s p e c i f i c performance ) 3.consummation DISTINGUISHED FROM OTHER CONTRACTS: 1.Donation donation is gratuitous; sale is onerous donation is formal contract; sale is consensual donation is governed by law on donation; sale is governed by law on sales 2.Barter in barter, the consideration is the giving of a thing; in sale, it is giving of money as payment both are governed by law on sales; both are species of the genus sales if consideration consists party in money & partly by thing look atmanifest intention; if intention is not clear (1468 ): a.value of thing is equal or less than amount of money sale b.value of thing is more than amount of money barter 3.Contract for piece of work

test in article 1467: a.contract for delivery of an article which the vendor in the ordinary course of business manufactures or procures for general market ( whether on hand or not ) sale b.goods are to be manufactured specially for a customer and upon special order and not for the general market contract for piece of work. jurisprudence: a.Timing test under art 1467; Inchausti; whether the thing transferred would have never existed but for the order contract for piece of work (abandoned) b.Habituality test enunciated in C e l e s t i n o v C I R ; c o n t r a c t o f s a l e i f manufacturer engages in activity without need to employ extraordinary skills and equipment; contract for piece of work is sale of service; contract of sale is sale of things. c.Nature of the object test enunciated in EEI v CIR; each products nature of execution differs from the others; products are not ordinary products of manufacturer. main factor in decision of the SC: essence of why parties enter into it: a.essence is object contract of sale b.essence is service contract for piece of work 4.Agency to sell in sale, buyer pays for price of object; in agency to sell, agent not obliged to pay for price, merely obliged to deliver price received from buyer. in sale, buyer becomes owner of thing; in agency; principal remains owner even if object delivered to him in sale, seller warrants; in agency, agent assumes no risk/liability as long as within authority given in sale, not unilaterally revocable; in agency, may be revoked unilaterally because fiduciary & even w/o ground in sale, seller receives profit; in agency, agent not allowed to profit

TEST: essential clauses of whole instrument ( art 1466 motherhoodstatement, not good law ) Agency is a personal contract; sale is real contract ( to give ) rescissionnot available in agency 5.Dacion en pago dacion:contract where property is alienated to satisfy/extinguish obligation to pay debt in dacion:novates creditor-debtor relationship into seller-buyer in dacion:delivery is required ( real contract ) 6.Lease in sale: obligation to absolutely transfer ownership of thing; in lease: useof thing is for specified period only with obligation to return in sale: consideration is price; in lease: consideration is rent in sale: seller needs to be owner of thing to transfer ownership; in lease: lessor need not be owner lease with option to by: really a contract of sale but designated as leasein name only; it is a safe by installments 4 CHAPTER 2: PARTIES TO A CONTRACT OF SALE G ENERAL R ULE : All parties with capacity to contract can enter into a valid contract of sale1 . N a t u r a l 2.Judicial - corporation/partnership/associations/Cooperatives Status of contract valid Remedies available therefore are:a . s p e c i f i c performanceb . r e s c i s s i o n c . d a m a g e s E XCEPTION TO G ENERAL

R ULE :1 . M i n o r s status of contract: voidable only, therefor ratifiable remedy is action for annulment (with partial restitution in so far as the minor is benefited)2.SALE BY & BETWEEN SPOUSES a. Contract with 3 rd parties status of contract is validb . S a l e b e t w e e n p a r t i e s Status not provided for by law but VOID according to case law Reason:i.prevent defraudation of creditors ii.avoid situation where dominant spouse take advantage of othersiii.avoid circumvention on prohibition of donation between spouses Exceptioni.separation of property agreed (marriage settlement)ii.judicial separation of property c . C o m m o n L a w S p o u s e s ( P a r a m o u r s ) Status of contract: VOID (per case law) Rationale: evil sought to be avoided is present3.OTHERS PER SPECIFIC PROVISIONS OF LAWa . G u a r d i a n w i t h r e g a r d s t o p r o p e r t y o f w a r d d u r i n g p e r i o d o f guardianshipb . A g e n t w i t h r e g a r d s t o p r o p e r t y o f p r i n c i p a l c.Executor/administrator with regards to the estate of the deceasedd.Public officers with regards to the property of the estatee.Officer of court & employee with regards to property in litigationL EGAL S TATUS OF C ONTRACT :1.VOID (PER CASE LAW) guardian/ executor/public officers / officers of the court2.VOIDABLE (PER CIVIL CODE) agent; and if with consent, VALIDT WO G ROUPS

OF P ROHIBITED P ARTIES FROM E NGAGING IN C ONTRACT OF S ALE :1.Guardian / Agent / Executors ratifiable in the sense that only private wrong isinvolved2.Public Officials / Officers of Court not ratifiable in the sense that public wrong isconcernedG UARDIAN /A GENT /A DMINISTRATOR 1.Legal status of contract: VOID (case law)2 . D i r e c t o r i n d i r e c t 3.If mediator no need to prove collusion; inutile4.Even if court approved sale 5.Reason: fiduciary relationship is based on trust

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5 A TTORNEYS R EQUISITES :1.Lawyer-client relationship exists 2.Subject matter property in litigation (all types)3.Duration while in litigation (from filing of complaint to final judgment); may be futurelitigation Reason: due to public policy; ground for mal practicea . C l i e n t i s a t t h e m e r c y o f t h e l a w y e r b . L a w i s a n o b l e p r o f e s s i o n c.2 Masters 2 interest; one cannot serve 2 masters at the same time Exception: CONTINGENT FEE ARRANGEMENTa . A m o u n t o f l e g a l f e e s i s b a s e d on a value of propertyb . P r o p e r t y i t s e l f i s i n v o l v e d Not a sale but service contract

I give that you may do (innominate contract) so has to be governed by law onsales but because of public policy, considered VALID Reason why contingent fee is followed:i.constitutional prohibition v impairment of contractii.subject to control of courts (may be reduced if unconscionable or nullified)iii.canons of legal ethics iv.higher public policy litigants CHAPTER 3: SUBJECT MATTER OF SALE T O BE A V ALID &B INDING S UBJECT M ATTER , THE F OLLOWING MUST C ONCUR :1. Existing, Future & Contingent2. Licit3. Determinate or determinableE XISTING ,F UTURE ,C ONTINGENT Refers to subject matter that are existing & not existing but capable of existence(pursuant to present, technology)1.if this is present, status of contract: VALID2.if absent : NO CONTRACT SITUATION, THEREFORE NO CAUSE OF ACTION3.if mere pipe dream : VOID a. SALE OF THINGS HAVING POTENTIAL EXISTENCE ( Emptio Rei Speratae ) Sale of future things; no physical existence yet A resolutory condition that thing will come into existence

 N o n h a p p e n i n g o f c o n d i t i o n : R E S U L U T O R Y : E X T I N G U I S H T H E CONTRACT Remedy: can recover what has been paidb . S A L E O F H O P E ( Emptio Spei ) Every sale of future thing is subject to condition that they will come intoexistence If hope does not come true NO RECOVERY OF P A Y M E N T / N O RESCISSION Aleatory character but validL ICIT &V ENDOR MUST HAVE A R IGHT TO T RANSFER S UBJECT M ATTER 1.LICIT must be within the commerce of men VOID SUBJECT MATTER:a . C o n t r a r y t o l a w b.Simulated/fictitiousc.Did not exist at a time of transactiond.Outside commerce of men e . I m p o s s i b l e s e r v i c e f.Intention can not be ascertained g . B y p r o v i s i o n o f l a w

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6 2.SELLER MUST BE OWNER only at a time of consummation since t r a d i t i o n transfers ownership but to have a perfected contract of sale, Vendor need not beowner of thing; can be validated/ratified by subsequent acquisition of title by seller D ETERMINATE &D ETERMINABLE

Absence: VOID; there is subject matter but Intention regarding subject matter can not be ascertained VOID Kinds of subject matter:1 . S p e c i f i c - D e t e r m i n a t e Particularly designated or segregated from all others of the same class2 . G e n e r i c Determinable Test: reach a point of description where both minds concur At the time the contract is entered in to the thing is capable of being madedeterminate without the necessity of a new or further agreement between parties Exact quantity not essential Sale of generic things VALID; still executory There can only be contract of sale when subject is finally chosen for delivery already segregated or designated; but before designation, valid Kof sale already exists3.Undivided interest (BUYER becomes co-owner)4.Undivided share in mass of fungible goods (BUYER becomes co-owner) CHARTER 4: PRICE signifies the sum stipulated as equivalent of the thing sold C HARACTERISTICS OF V ALID P RICE 1 . M u s t b e r e a l 2.Must be in money or its e q u i v a l e n t 3.Must be certain or ascertainable at the time of the perfection of the contract 4 . M a n n e r o f p a y m e n t p r o v i d e d f o r R EAL 1.When price stated is one intended by parties If fictitious: no intention with respect to price - VOID If False/simulated: what appears in contract is not the true pricea.VALID if there is true considerationb.VOID but if none (because it is fictitious)2 . V a l u a b l e When not valuable VOID When contract is onerous, presumed to have valuable consideration

Nominal consideration w/c is common law concept does not apply (P1.00) Gross inadequacy of price in ordinary sale does not render contract voidunless it is shocking to conscience of man. Except: a.Judicial sale Shocking to conscience of man Higher price can be obtained at re-saleb.Rescissible contracts due to lesionc.Sales with right to repurchase (raises presumption of equitable mortgage) Remedy is reformationC ERTAIN OR A SCERTAINABLE CERTAIN1 . S u f f i c i e n t t h a t i t i s f i x e d w i t h r e f e r e n c e t o a n o t h e r t h i n g certain That thing will 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 insuch exchange or market provided said amount be certain

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7 2.Determination be left to judgment of specified person/s If contract states that price is to be determined by 3 rd party, contract isalready perfected (there is just a suspensive condition actual fixing of price) 3 rd party fixes price in bad faith or mistake court remedy can be made 3 rd party is unable or unwilling to fix price parties have no cause of action Reason:a.suspensive condition does not happen yet courts have no jurisdictionb.enforceable contract have not yet arisen court with no jurisdiction tocreate contract between parties Result: INEFFICACIOUS

When price can not be determined in accordance with any of t h e preceding rules, contract of sale in INEFFICACIOUS However, when SM delivered, BUYER must pay reasonable rice therefore court can fix priceM ANNER OF P AYMENT M UST B E A GREED U PON Deemed to be an essential requisite because it is part of the presentation of thecontract Integral part of concept of price If there is failure to meet minds as regards term of payment: CASH BASIS Must be certain or at least ascertainable Effect is absent: NO CONTRACT SITUATION CHAPTER 5: FORMATION OF CONTRACT OF SALE 3S TAGES IN L IFE OF A C ONTRACT OF S ALE 1. Policitacion

/negotiation Stage offer is floated, acceptance is floated but they do notmeet; time parties indicate their interest but no concurrence of offer & acceptance2.Perfection concurrence of all requisites; meeting of the minds3.Consummation parties perform their respective undertakings P OLITIACION 1.offer is floated but not absolute 2.acceptance is likewise floated but conditionalR ULES :1.offer is floated prior to acceptance, may be withdrawn at will by offeror 2.offer floated with a period without acceptance, extinguished when period hasended & maybe withdrawn at will by offeror; right to withdrawn must not be arbitraryotherwise, liable to damage under Art 19, 20, 21 of civil code3 . o f f e r f l o a t e d with a condition extinguished by happening/non -happening of condition4.offer floated without period/without condition continues to be valid depending uponcircumstances of time, place & person5.offer is floated & there is counter-offer original offer is destroyed, there is a newoffer; can not go back to original offer 6.offer is floated no authority of offeror to modify offer 7.offer is accepted absolutely proceed to perfected stageO PTION C ONTRACT floats in the policitacion stage offer with a period but founded upon a separate consideration distinct from the price no presumption of consideration, needs to be proven Characteristics:a . n o t t h e c o n t r a c t o f s a l e b y i t s e l f , d i s t i n c t b . n o m i n a t e c.principal; but can be attached to other principal contracts

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8 d . o n e r o u s e . c o m m u t a t i v e f. unilateral vs contract of sale which is bilateral to be perfected & give rise to action, the following must concur a . s u b j e c t m a t t e r o f s al e m u s t be ag r e e d u p on b.price of sale & manner of payment

must be agreed uponc.consideration separate & distinct from priced.period as per contract; if period not provided p r e s c r i b e s i n 1 0 y e a r s (written contract)e . h o w e x e r c i s e d : n o t i c e o f a c c e p t a n c e s h o u l d b e c o m m u n i c a t i v e t o o f f e r o r without actual payment as long as there is delivery of payment in consummationstage2 S ITUATIONS IN AN O PTION CONTRACT :1.with separate consideration Legal consequence:a.option contract is valid b.offeror can not withdrawn offer until after expiry periodc.subject to rescission, damages but not to specific performance becausethis is not an obligation to give2.without separate consideration Legal consequence: OLD RULE:a . o f f e r i s s t i l l v a l i d , b u t b . o p t i o n i s v o i d c.not subject to rescission, damages contract

NEW RULE: Right if first refusal recognizedR IGHT OF F IRST R EFUSAL : creates a promise to enter into a contract of sale and it has no s e p a r a t e consideration, not subject to specific performance because there is no contractualrelationship here & it is not an obligation to give (not a real contract) New doctrine: may be subject to specific performance Effect of new doctrine: turned the world of policitacion upside down because whilevalid option contract is not subject to specific performance, right of first refusal whichdoes not even have a separate consideration may be subject to specific performanceO PTION

C ONTRACT &R IGHT OF F IRST R EFUSAL D ISTINGUISHED O P T I O N C O N T R A C T R I G H T O F F I R S T R E F U S A L Principal contract; stands on its ownAccessory; can not stand on its ownN e e d s s e p a r a t e considerationDoes not need separate c o n s i d e r a t i o n Subject matter & price must be validThere m u s t b e s u b j e c t m a t t e r b u t p r i c e n o t importantN o t c o n d i t i o n a l C o n d i t i o n a l Not subject to specific performanceSubject to specific performance Recognizes recovery of damage based on abuse of rights doctrineP ERFECTION :O FFER &A CCEPTANCE P ERFECTION Sale is a consensual contract, perfected by meeting of minds regarding subjectmatter & price Meeting of Minds:1 . O f f e r c e r t a i n 2 . A c c e p t a n c e absolute Qualified acceptance merely a counter-offer which needs to be absolutely accepted to give rise to perfected contract of sale Business ads are mere invitations to make an offer except when it appears to be otherwise

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9

Acceptance by letter/telegram binds only at time it came to knowledgeof SELLER; prior thereto offer may still be withdrawn Must be exact terms to be considered absolute When deviations allowed:a.anything that refers to price is materialb . s m a l l i t e m s a r e i n s i g n i f i c a n t , d o e s n o t m a k e a c c e p t a b l e unconditional when sale is subject to suspensive condition, no perfected contract of sale yet;becomes perfected only upon happening of condition In sales at auction, perfected when auctioneer announces its perfection by the fall of the hammer or in other customary manner may impose terms under bidder mayretract his bid; owner of property sold at auction may impose terms under w/c theauction will proceed & it shall be binding w/n the bidders are aware Place of perfection: where the meeting of minds happen; when acceptance sent bymail, perfection is deemed where the offer is made Performance has nothing to do with perfection stageE ARNEST M ONEY 1.money given as part of purchase price2.its acceptance is proof that contract of sale exists nothing in law prevents parties from treating earnest money differently old concept: subject to forfeiture when BUYER backs out new concept: can not be forfeited part of purchase price; must be restored qualification: if old concept is stipulated VALID presumption of perfection of contract of sale and such earnest money asart of purchase price is disputableF ORM OF S ALES 1.Form not important in validity of sale Sale being consensual, may be oral or written, perfected by mere consentas to price & subject matter

 If particular form is required under the statute of frauds:a.valid & binding between parties b. not binding to 3 rd persons only Reason: purposes of convenience only & not for validity & enforceability;cause of action is granted to sue & compel other party to execute the document2.When form is important for validity; exception by specific provision of law;a . p o w e r t o s e l l a p i e c e o f l a n d granted to an agent otherwise VOID b . s a l e o f l a r g e c a t t l e ; m u s t a l s o b e r e g i s t e r e d w i t h M u n i c i p a l t r e a s u r e r otherwise VOIDc . s a l e o f l a n d b y n o n - C h r i s t i a n i f n o t a p p r o v e d b y G o v e r n o r V O I D 3.When form is important for enforceability (STATUTE OF FRAUDS)a . s a l e t o b e p e r f o r m e d 1 y e a r a f t e r b.Agreement to sell things with value of 500 and upc .S al e of r e a l p r o p e r ty or i n te r e s t th e r e i n Exception:i.When there is a note or memorandum in writing & subscribe by party or hisagent (contains essential terms of the contract)ii.When there has been partial performance/execution (seller delivers with intent to transfer title/receives price)iii.when there has been failure to object to presentation of evidence (oral)(constitute waiver) CHAPTER 6: CONCUMMATION STAGE/PERFORMANCE STAGE Stage where parties both comply with their obligation Nature of diligence required: diligence of good father of family unless other requirement is stipulated

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10 Consequence: Seller will guilty of breach if thing is lost through his fault

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11 D ELIVERY OF THE T

HING Transfer ownership ( tradicion ) twin obligation:1 . t r a n s f e r t i t l e ( o w n e r s h i p ) S E L L E R m u s t b e o w n e r o f t h i n g a t t h e t i m e o f consummation to validly transfer title2 . d e l i v e r y o f the thing Different kinds of delivery:1 . A c t u a l when thing sold is placed in the control & possession of the buyer 2 . C o n s t r u c t i v e D IFFERENT FORMS OF C ONSTRUCTIVE D ELIVERY : 1.Traditio Longa Manu Delivery of thing by mere agreement; when SELLER points to the property without need of actually delivering 1.Traditio Brevi Manu 1.Before contract of sale, the would be buyer was already in possession of thewould be subject matter of sale (ex: as lessee)2 . S y m b o l i c d e l i v e r y As to movables ex: delivery of the keys to a car 3.Constitutum possessarium at the time of perfection of contract, seller continues to hols possession merelyas a holder 4 . E x e c u t i o n : Exception:a.when there is stipulation to contrary, execution does not produce effect of deliveryb . w h e n a t t h e t i m e o f e x e c u t i o n o f i n s t r u m e n t , s u b j e c t m a t t e r w a s n o t subject to control of the seller subject matter should be within control of seller; he should havecapacity to deliver at the time of execution of public instrument when hewants to effect actual delivery such capacity should subsist for reasonable time after executionof instrument (reason time depends on circumstances of persons, places& things)

Effect when 2 requisites do not concur: no constructive delivery; nocompliance on part of SELLER to deliver Even when thing is mortgaged, seller can still deliver because naked title stillbelongs to him & can still do acts of ownership including conveyance5.Negotiable documents of title & non negotiable instruments transferee acquires title of transferor when delivered without negotiation, it is a mere assignment6.Intangibles/ incorporeal property through public instrument execution is equivalent to delivery if from the deed, contrary does not appear D ELIVERY OF F RUITS &A CCESSIONS /A CCESSORIES Right to fruits & accessions/accessories accrue from time sale is perfected but no real right over it until it is deliveredD ELIVERY T HROUGH C ARRIER 1. FAS FREE ALONG SIDE When goods delivered alongside the ship, there is already delivery to thebuyer (twin effects deemed fulfilled)2. FOB-FREE ON BOARDa.Shipment when goods are delivered at ship at point of shipment; delivery tocarrier by placing goods on vessel is delivery to buyer

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12 b.Destination when goods reach the port even if not d i s e m b a r k e d y e t from the vessel, there is delivery to the buyer 3. CIF COST,

INSURANCE, FREIGHTa . w h e n b u y e r s p a y s f o r s e r v i c e s o f c a r r i e r d e l i v e r y t o c a r r i e r i s d e l i v e r y t o buyer; carrier is agent of the buyer b . w h e n b u y e r p a y s s e l l e r t h e p r i c e f r o m m o m e n t t h e v e s s e l i s a t p o r t o f destination, there is already delivery to buyer.C OMPLETENESS OF D ELIVERY 1. MOVABLES delivery of thing plus accessories & accessions in the condition inwhich they were upon the perfection of the contract including the fruitsa . L E S S b u y e r h a s 2 o p t i o n s : i . r e j e c t i i . a c c e p t (1)when a c c e p t s w i t h k n o w l e d g e t h a t s e l l e r i s n o t g o i n g t o p e r f o r m contract in full, he must pay at price stipulated( 2 ) w h e n a c c e p t s & c o n s u m e s b e f o r e k n o w l e d g e t h a t b u y e r w i l l b o t h perform contract in full, liable only for fair value of goods deliveredb . L A R G E R b u y e r h a s 2 o p t i o n s ; i.accepts per contract & reject the restii.accept the whole pay price stipulatediii.reject whole if subject matter is indivisiblec . M I X E D W I T H G O O D S O F D I F F E R E N T D E S C R I P T I O N b u y e r h a s 2 options:i.accepts good w/c are in accordance with contract & reject the restii.reject goods entirely if indivisible2 . I M M O V A B L E S a . s o l d p e r u n i t o r n u m b e r with statement of its area, rate at certain price deliver all that may heave been stated in the contract if impossible, remedies of buyer: LESS IN AREAi . r e s c i s s i o n ii.proportional reduction of price LACK IN AREA SHLD NOT BE LESSTHAN 1/10 OF AREA AGREED UPON GREATER IN AREAi.accept per stipulation & reject the restii.accept whole area pay at contract rate Not applicable to judicial salesb . s o l d f o r l u m p s u m When price per unit not indicated Is area delivered is either greater or lesser price will not be adjustedaccordinglyT IME &P LACE OF D ELIVERY

1. follow stipulation in contact, or 2. follow usage of trade, or 3. sellers place of business or his residence4. specific goods place where the thing is5. at reasonable hour E FFECTS OF D ELIVERY : Title to thing is transferred/ownership is transferred Except: contrary is stipulated as in the case of:1. contract to sell2. sale on acceptance/approval3. sale or return4. there is implied reservation of ownership

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13 W HO B EARS E XPENSES OF D ELIVERY Seller Sale by description/sample1.Sample goods must correspond with sample shown2.Description goods must correspond with description or sample Effect if there is no compliance: RESCISSION may be availed of by the buyer O BLIGATION OF B UYER 1. Pay the price Buyer is obligated to pay price according to terms agreed upon regarding time,place & amount If payment of interest is stipulated must pay; if amount of interest n o t mentioned apply legal rate When buyer defaults constitutes breach: subject to s p e c i f i c performance/rescission & damages ; interest to be paid also from of default2. Accept delivery of thing sold

 Where to accept: at time & place stipulated in the contract; if none specified atthe time & place of delivery Goods; there is acceptance when:a.He intimates to seller that he has acceptedb. When delivered & does any act inconsistent with ownership of seller c. Retains without intimating to seller that he has rejected Sale of Goods on installment:a. Goods must be delivered in full, except when stipulatedb. When not examined by buyer not accepted until examined or at least hadreasonable time to examine Acceptance of goods in general, absent contrary express stipulation, does notdischarges seller from liability in case of breach of warranties (unless no notice or failure to give it within reasonable time) When buyer has a right to refuse goods, no need to return; shall be consideredas depositary; unless there is stipulation to contraryD OUBLE S ALE General Rule: FIRST IN TIME, PRIORITY IN RIGHTWhen does it apply: when not all requisites embodied in 1544 concur S PECIAL R ULE : 1544 Requisites;1 . e x a c t l y s a m e s u b j e c t m a t t e r 2 . e x a c t l y s a m e i m m e d i a t e s e l l e r 3.they buyers represent conflicting interest4 . b o t h s a l e s a r e v a l i d R ULES A CCORDING TO 1544:1. MOVABLE owner is first to posses in good faith2. IMMOVABLE First to register in good faith No inscription, first to possess in good faith

No inscription & no possession in good faith Person who presents oldest title ingood faithG OOD F AITH 1.one who buys property without notice that another person has a right or interest insuch property2.one who has paid price before notice that another has claim or interest lis pendens notice that subject matter is in litigation adverse claim notice that somebody is claiming better right

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14 P OSSESSION Both actual or constructiveR EGISTRATION 1.registered under Torrens system 1544 applies2.not registered under the Torrens system 1544 still applies decided case which excluded unregistered land dealt with judicial sale whereby buyer acquires right of transferor; outside of such situation must applyto conflicting sale over same unregistered parcel of land3.when situation is sale 1 deals with land when not yet registered & sale 2 is done when land already registered apply FIRST IN TIME, PRIORITY IN RIGHT CHAPTER 7: DOCUMENTS OF TITLE D OCUMENTS OF T ITLE not creations of law but by merchants to allow them to deal with merchandisewithout having to physically carry them around

 pertains to specific type of movables only : GOODS2 F UNCTIONS 1. evidence of existence & possession of goods described therein2. medium by which seller is able to transfer possession of goods2 F ORMS 1. negotiablea. deliver to bearer (negotiation by mere delivery)b. deliver to specific person or his order (negotiation by endorsement + delivery) even if face of instrument says NON-NEGOTIABLE it is s t i l l NEGOTIABLE; limiting words not to destroy negotiability if order instrument & no endorsement was made equivalent t o assignmentI MPORTANT C ONSIDERATIONS 1. Negotiation gives better right than assignmentN E G O T I A T I O N A S S I G N M E N T transferor/holder acquires title t o g o o d s a c q u i r e s t i t l e t o g o o d s a g a i n s t t r a n s f e r o r bailee has direct obligation to holder as if directly dealt with himacquires right to notify bailee so that heacquires obligation of bailee to hold goodsfor him2. Assignee takes document with defects of the assignor 3. Obligation of bailee bailee is immediately bound to the documentW ARRANTIES ON N EGOTIATION /A SSIGNMENT THE SAME 1.the document is genuine 2.he has legal right to negotiate or transfer it3.he has knowledge of no fact which would impair the validity or worth of thedocument4.he has right to transfer title to goods and goods are merchantable/fitR ULES OF L EVY /G ARNISHMENT OF G

OODS C OVERED BY D OCUMENTS OF T ITLE 1.Non negotiable Notification is operative act to transfer title/possession of goods in favor assignee Before notification can be garnished but not when there is notification already2 . N e g o t i a b l e Can not be levied or garnished when docs already with purchaser in good faith,unless:a.Document is first surrendered

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15 b.Document is pounded by court c . N e g o t i a t i o n i s e n j o i n e d CHAPTER 8: SALE BY NON-OWNER OR BY ONE HAVING VOIDABLE TITLE 1. S ALE BY N

ON -O WNER Perfection Stage a.s ale by o w ne r v ali db.sale by non-owner valid; because ownership is necessary only transfer title to goods; at perfectionstage, no obligation on part of seller to transfer ownership law on estoppel further bolster it: title passes by operation of law tograntee when person who is not owner of goods sold delivers it and later onacquires title thereto since valid, action to annul is improper; there is perfected contract Consummation Stage Contract of sale is valid because it has passed perfected stage, despite:a . s e l l e r i s n o t o w n e r b . s e l l e r h a s n o a u t h o r i t y t o s e l l What is void is the transfer of title/ ownership did not pass Effect: buyer acquired no better right than transferor Legal effect: CAVEAT EMPTOR BUYER BEWAREa . c o - o w n e r s e l l s w h o l e p r o p e r t y p r i o r t o p a r t i t i o n sale is void as to his spiritual shareb . c o - o w n e r s e l l s d e f i n i t e p o r t i o n t o p a r t i t i o n s a l e i s void as to other co-owner but valid as to his spiritual share Exception:a . o w n e r b y h i s c o n d u c t i s p r e c l u d e d f r o m d e n y i n g s e l l e r s a u t h o r i t y (ESTOPPEL)b . c o n t r a r y i s p r o v i d e d f o r i n recording laws (pd 1529)c.sale is made under statutory p o w e r o f s a l e o r u n d e r a c o u r t o f competent jurisdictiond . s a l e i s made under merchants store in accordance with code of commerce & special laws2. S ALE BY S ELLER WITH V OIDABLE

T ITLE Perfection Stage Valid sale buyer acquires title of goods Consummation Stage Valid sale if title has not yet been avoided buyer buys goods under followingcondition:a . i n g o o d f a i t h b . f o r v a l u e c.without notice of sellers defect of titleT ITLE AS TO M OVABLE P ROPERTIES Rule: POSSESSION IS EQUIVALENT TO TITLE Requisites:a . P o s s e s s i o n o f a m o v a b l e b . I n g o o d f a i t h Exception:a . O w n e r l o s t m o v a b l e o w n e r c a n r e c o v e r w / o r e i m b u r s i n g priceb.Owner is unlawfully deprived owner can recover w/o reimbursing price Exception to Exception:a . m o v a b l e i s b o u g h t a t p u b l i c s a l e o w n e r c a n o n l y r e c o v e r a f t e r reimbursing priceb . i n g o o d faith & for value

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