!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !

"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
CnA1Lk 1: NA1UkL CI SALL

I. Def|n|t|on (Art|c|e 14S8)

Art|c|e 14S8.
8y the contract of sa|e one of the contract|ng part|es ob||gates h|mse|f
to transfer the ownersh|p and to de||ver a determ|nate th|ng, and the
other to pay therefor a pr|ce certa|n |n money or |ts equ|va|ent.

A contract of sa|e may be abso|ute or cond|t|ona|. (144Sa)

ConLracL whereby one of Lhe conLracLlng parLles (seller)
obllgaLes hlmself Lo...
o 1ransfer Lhe ownershlp
1

o uellver Lhe possesslon
o Cf a deLermlnaLe Lhlng
1o Lhe oLher parLy, Lhe 8uyer, who obllgaLes hlmself
o 1o pay a prlce cerLaln
o ln money or lLs equlvalenL
!"#$% '( )*#+,+-./ 011 2"34 516 7899:;(
2


1
Cwnershlp ls Lhe lndependenL and general power of a person over a Lhlng for
purposes recognlzed by law and wlLhln Lhe llmlLs esLabllshed Lhereby.
Accordlng Lo ArLlcle 428 of Lhe Clvll Code, Lhls means LhaL: 1he owner has Lhe
rlghL Lo en[oy and dlspose of a Lhlng, wlLhouL oLher llmlLaLlons Lhan Lhose
esLabllshed by law. x x x Aslde from Lhe jos oteoJl and Lhe jos oboteoJl lnherenL
ln Lhe rlghL Lo en[oy Lhe Lhlng, Lhe rlghL Lo dlspose, or Lhe jos JlspooeoJl, ls Lhe
power of Lhe owner Lo allenaLe, encumber, Lransform and even desLroy Lhe
Lhlng owned. llooclo v. coott of Appeols, 437 SC8A 224 (2003).
2
AlfteJo v. 8ottos, 404 SC8A 143 (2003), Moollo Metol cootoloet cotp. v. lN8,
311 SC8A 444 (2006), kobetts v. loplo, 313 SC8A 346 (2007).

A. L|ements of Sa|e
1. ConsenL or meeLlng of Lhe mlnds
2. ueLermlnaLe sub[ecL maLLer
3. rlce cerLaln ln money or lLs equlvalenL.
!<,',##, '( =>,+?*#@ A*'( B,+C/ :81 2"34 :D8 78991;(
3

Sale belng a consensual conLracL, lLs essenLlal elemenLs musL be
proven. !EF>>,+$*', '( ".$#? .G 4HH*,>@/ 8D1 2"34 IJ 75JJ1;(
Absence of any essenLlal elemenLs negaLes a sale !AF%.+ '(
".$#? .G 4HH*,>@/ 698 2"34 8II 75JJJ;/
4
even when earnesL
money has been pald. !K,+F>, K*?,> ".+?,F+*# ".#H( '( =<B/
:55 2"34 000 7899D;(
8uL once all elemenLs are proven, a sale's valldlLy ls noL affecLed
by a prevlously execuLed flcLlLlous deed of sale. !=*L,>.@, '(
2,+?.@/ 6D6 2"34 :0: 78995;M nelLher ls lL affecLed by non-
performance LhereafLer.

3
Iovoo looJ, loc. v. coott of Appeols, 268 SC8A 160 (1997), OoljoJo v. coott of
Appeols, 299 SC8A 693 (1998), co v. coott of Appeols, 312 SC8A 328 (1999),
5oo AoJtes v. koJtlqoez, 332 SC8A 769 (2000), koble v. Atboso, 362 SC8A 69
(2001), lolytecbolc uolvetslty v. coott of Appeols, 368 SC8A 691 (2001),
kotlpoooo v. kotlpoooo, 373 SC8A 199 (2002), looJtes v. coott of Appeols, 394
SC8A 133 (2002), Mooooqsooq v. stlmo, 404 SC8A 683 (2003), Ilmeoez, It. v.
IotJooo, 444 SC8A 230 (2004), 5oo loteozo uev. cotp. v. coott of Appeols, 449
SC8A 99 (2003), osoo v. Atcloqo, 449 SC8A 438 (2003), kobetts v. loplo, 313
SC8A 346 (2007), Novotto v. llootets uev. 8ook, 327 SC8A 362 (2007), kepobllc
v. lloteoJo, 349 SC8A 327 (2008), C5l5 v. lopez, 392 SC8A 436 (2009), 8oloJoJ
v. kobllco, 393 SC8A 123 (2009), uel ltoJo v. cobolleto, 614 SC8A 102 (2010),
Mootecolvo v. nelts of oqeolo 1. ltlmeto, 624 SC8A 373 (2010).
4
kobetts v. loplo, 313 SC8A 346 (2007), \51 cotp. v. uMc utboo ltopettles
uev., loc., 394 SC8A 398 (2009).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1he burden ls on Lhe oLher parLy Lo prove oLherwlse. !N*F#@ .G
O#+*@?. BF.+, '( ".$#? .G 4HH*,>@/ 6D8 2"34 8J 78995;(
o Genera| ku|e: Pe who alleges exlsLence of a sale musL
show lL by compeLenL proof.
! Lxcept|on: ArLlcle 1332 of Lhe Clvll Code

8. Stages of Contract of Sa|e
SLrlcLly speaklng, only Lwo: perfecLlon and consummaLlon
8U1 Lhe Supreme CourL has consldered 1hree (3):
1. =.>FPF?,PF.+ " covers Lhe perlod from Lhe Llme Lhe prospecLlve
conLracLlng parLles lndlcaLe lnLeresL ln Lhe conLracL Lo Lhe Llme
Lhe conLracL ls perfecLed.
2. =*#G*P?F.+ " Lakes place upon Lhe concurrence of Lhe essenLlal
elemenLs, whlch are Lhe meeLlng of Lhe mlnds of Lhe parLles as
Lo Lhe ob[ecL of Lhe conLracL and upon Lhe prlce.
3. ".+@$QQ,?F.+ " beglns when Lhe parLles perform Lhelr
respecLlve underLaklngs, culmlnaLlng ln Lhe exLlngulshmenL
Lhereof. !2,+ KFR$*> =#.H*#?F*@ =SF>FHHF+*@/ T+P( '( N$,+R/ 66D
2"34 161 78999;.
1


C. Sa|e Creates kea| Cb||gat|ons "1o G|ve" (Art|c|e 116S)

Art|c|e 116S.

1
llmketkol 5oos Mlllloq, loc. v. coott of Appeols, 230 SC8A 323 (1993), Iovoo
looJ, loc. v. coott of Appeols, 268 SC8A 160 (1997), 8oqottl v. coott of Appeols,
343 SC8A 333 (2000), Moteoo, It. v. ltlvote Moooqemeot Offlce, 307 SC8A 63
(2006), Moollo Metol cootoloet cotp. v. lN8, 311 SC8A 444 (2006), Novotto v.
llootets uev. 8ook, 327 SC8A 362 (2007), ltovloce of cebo v. nelts of kofloo
Motoles, 346 SC8A 313 (2008), C5l5 v. lopez, 392 SC8A 436 (2009), \51 cotp.
v. uMc utboo ltopettles uev., loc., 394 SC8A 398 (2009).
When what |s to be de||vered |s a determ|nate th|ng, the cred|tor, |n
add|t|on to the r|ght granted h|m by art|c|e 1170, may compe| the
debtor to make the de||very.

If the th|ng |s |ndeterm|nate or gener|c, he may ask that the ob||gat|on
be comp||ed w|th at the expense of the debtor.

If the ob||gor de|ays, or has prom|sed to de||ver the same th|ng to two
or more persons who do not have the same |nterest, he sha|| be
respons|b|e for any fortu|tous event unt|| he has effected the de||very.
(1096)

1. Nature of Cb||gat|on Created |n a Sa|e
erfecLlon brlng abouL.
o CbllgaLlons of Lhe Seller
! 1ransfer ownershlp
! uellver Lhe ossesslon of Lhe Sub[ecL MaLLer
o CbllgaLlon of Lhe 8uyer
! ay Lhe rlce
1hese are real obllgaLlons (obllgaLlons Lo glve)
o 1hls means LhaL Lhey can be sub[ecL for acLlons of
speclflc performance.
o 1hus, one who defaulLs can'L lnslsL on [usL paylng
damages.

D. Lssent|a| Character|st|cs of Sa|e:
1. Nom|nate and r|nc|pa|
nomlnaLe " slnce lL has been glven a name by law
rlnclpal " ln conLrasL Lo accessorles llke morLgage conLracLs
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o lL can sLand on lLs own
o lndependenL of oLher conLracLs for valldlLy and
exlsLence
o arLles enLer lnLo a sale Lo achleve a sale
! noL ln preparaLlon for anoLher conLracL
Supreme Court Doctr|ne: 8eal characLer of conLracL ls lndlcaLed
by Lhe subsLance, noL by Lhe name glven Lo lL by Lhe parLles.
o A conLracL of sale ls whaL Lhe law deflnes lL Lo be, Laklng
lnLo conslderaLlon lLs essenLlal elemenLs, and noL whaL
Lhe conLracLlng parLles call lL. !2,+?.@ '( ".$#? .G
4HH*,>@/ 661 2"34 D1 78999;.
1

o CourLs musL look aL Lhe lnLenL of Lhe parLles ln order Lo
deLermlne Lhe naLure of a conLracL noL aL Lhe
nomenclaLure used Lo descrlbe lL. 1rue alm and purpose
can be shown by conducL, words, acLlons of Lhe parLles.
U,. '( ".$#? .G 4HH*,>@ 781: 2"34 861;
o ConLracLs are noL deflned by parLles buL by Lhe
prlnclples of law. ",'F?* A*'*>.HQ*+? B,+C '( UFQ 7680
2"34 80D;
1hus, all oLher conLracLs whlch have for Lhelr ob[ecLlve (1)
Lransfer of ownershlp and (2) possesslon of a deLermlnaLe
sub[ecL (3) for a valuable conslderaLlon wlll be governed by Lhe
law on Sales

2. Consensua| (Art|c|e 147S)


1
8owe v. coott of Appeols, 220 SC8A 138 (1993), kometo v. coott of Appeols,
230 SC8A 223 (1993), loo v. coott of Appeols, 273 SC8A 237 (1997), covlte
uevelopmeot 8ook v. llm, 324 SC8A 346 (2000).
Art|c|e 147S.
1he contract of sa|e |s perfected at the moment there |s a meet|ng of
m|nds upon the th|ng wh|ch |s the ob[ect of the contract and upon the
pr|ce.

Irom that moment, the part|es may rec|proca||y demand performance,
sub[ect to the prov|s|ons of the |aw govern|ng the form of contracts.
(14S0a)

Sale ls perfecLed by mere consenL " a conLracL of sale ls noL a
real, buL a consensual conLracL, and becomes valld and blndlng
upon Lhe meeLlng of Lhe mlnds of Lhe parLles as Lo Lhe ob[ecL
and Lhe prlce,
2
consequenLly:
o upon lLs perfecLlon, Lhe parLles may reclprocally
demand performance. !N*F#@ .G E*+,+PF. B*V*+?F+R '(
B,L*%/ :98 2"34 :65 7899D;M
6
sub[ecL only Lo Lhe
provlslons of Lhe law governlng Lhe form of conLracLs.
!"#$% '( )*#+,+-./ 011 2"34 516 7899:;(

2
kometo v. coott of Appeols, 230 SC8A 223 (1993), 8olotbot v. coott of
Appeols, 261 SC8A 128 (1996), cotooel v. coott of Appeols, 263 SC8A 13 (1996),
clty of cebo v. nelts of cooJlJo kobl, 306 SC8A 408 (1999), Aqoseo v. coott of
Appeols, 323 SC8A 304 (2000), lofottezo v. Mocboco, 333 SC8A 643 (2000),
looJtes v. coott of Appeols, 394 SC8A 133 (2002), Alcoototo-uoos v. Je leoo,
404 SC8A 74 (2003), 8oeooveototo v. coott of Appeols, 416 SC8A 263 (2003),
5oo loteozo uev. cotp. v. coott of Appeols, 449 SC8A 99 (2003), osoo v.
Atcloqo, 449 SC8A 438 (2003), Alozo v. loJoo, 462 SC8A 614 (2003), kobetts v.
loplo, 313 SC8A 346 (2007), Mcc loJosttlol 5oles cotp. v. 5sooqyooq cotp., 336
SC8A 408 (2007), costlllo v. keyes. 339 SC8A 193 (2007), \51 cotp. v. uMc
utboo ltopettles uev., loc., 394 SC8A 398 (2009), uel ltoJo v. cobolleto, 614
SC8A 102 (2010).
3
ltovloce of cebo v. nelts of kofloo Motoles, 346 SC8A 313 (2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
lL remalns valld even lf parLles have noL afflxed Lhelr slgnaLures
Lo lLs wrlLLen form, !W,X*>. '( ".$#? .G 4HH*,>@/ 65D 2"34 6ID
75JJJ;/ or Lhe manner of paymenL ls breached. !=F>FHF+,@ 2S*>>
=*?#.>*$Q ".#H '( W.X.+@*+R/ 0JD 2"34 69: 7899D;(
o 1he acLual dellvery of Lhe sub[ecL maLLer or paymenL of
Lhe prlce agreed upon are noL necessary componenLs Lo
esLabllsh Lhe exlsLence of a valld sale. 1hus, non-
dellvery or non-paymenL does noL lnvalldaLe or vold a
perfecLed sale. 1hese merely become legal basls for
remedles.
o ln an LxLra[udlclal SeLLlemenL of LsLaLe wlLh AbsoluLe
Sale, lL would be lmmaLerlal LhaL Lhe buyer's slgnaLure
does noL appear Lhereon slnce Lhe conLracL of sale ls
consensual and perfecLed by mere consenL. !B,>,-,- '(
3$X>FP./ :J: 2"34 58: 7899J;(
o lallure of Lhe subdlvlslon developer Lo obLaln a llcense
Lo sell Lhe subdlvlslon loLs does noL render Lhe sales
vold on LhaL ground alone especlally LhaL Lhe parLles
have lmplledly admlLLed LhaL Lhere was already a
meeLlng of Lhe mlnds as Lo Lhe sub[ecL of Lhe sale and
prlce of Lhe conLracL. ",+?*QH#,?* '( "32 3*,>?Y A*'(
".#H( :I1 2"34 0J8 7899J;(

",+?*QH#,?* '( "32 3*,>?Y A*'( ".#H(

Iacts: eLlLloners boughL on an lnsLallmenL basls subdlvlslon loLs from
respondenL C8S 8ealLy and had pald ln full Lhe agreed purchase prlces,
buL noLwlLhsLandlng Lhe full paymenL and desplLe demands,
respondenLs falled and refused Lo dellver Lhe correspondlng cerLlflcaLes
of LlLle Lo peLlLloners. 1hey alleged LhaL respondenL Casal was Lhe owner
of a parcel of land slLuaLed ln Ceneral Marlano Alvarez, CavlLe known as
Lhe C8S larm LsLaLe whlle respondenL Salvador was Lhe presldenL of
respondenL C8S 8ealLy, Lhe developer of C8S larm LsLaLe. eLlLloners
averred LhaL respondenLs falled Lo dellver Lhe LlLles Lo Lhelr respecLlve
properLles. Casal averred LhaL desplLe hls wllllngness Lo dellver Lhem,
peLlLloners refused Lo accepL Lhe cerLlflcaLes of LlLle wlLh noLlce of lls
pendens coverlng Lhe subdlvlslon loLs. 8espondenL Salvador alleged LhaL
Lhe fallure by respondenL Casal Lo comply wlLh hls obllgaLlon under Lhe
flrsL agreemenL Lo dellver Lo C8S or Lhe buyers Lhe cerLlflcaLes of LlLle
was caused by Lhe annoLaLlon of Lhe noLlce of lls pendens on Lhe
cerLlflcaLe of LlLle coverlng Lhe subdlvlslon properLy.

PLu88 ArblLer Ma. erpeLua ?. Aqulno declared LhaL Lhe regular courLs
and noL Lhe PLu88 had [urlsdlcLlon over peLlLloners' complalnL, Lhus,
Lhe complalnL for quleLlng of LlLle could noL be glven due course. 1he
Pelrs of Laudlza and Llgon were dropped as parLles on Lhe ground of
lack of cause of acLlon. Powever, she found respondenLs C8S 8ealLy,
Casal and Salvador llable on Lhelr obllgaLlon Lo dellver Lhe cerLlflcaLes of
LlLle of Lhe subdlvlslon loLs Lo peLlLloners who had pald ln full Lhe
purchase prlce of Lhe properLles. She also found as fraudulenL and
consequenLly nulllfled Lhe subsequenL Lransfer of a porLlon of Lhe
subdlvlslon Lo respondenLs Ang and Cuason.
1


Issue: WheLher or noL Lhe absence of a llcense Lo sell has rendered Lhe
sales vold

1
(2012, AugusL 12). Iojo's bloq-o-Joq. 8eLrleved from
hLLp://[ca[oLe.blogspoL.com/2012/08/vlcenLa-canLempraLe-eL-al-vs-crs-
realLy.hLml
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

ne|d: nC. lallure of Lhe subdlvlslon developer Lo obLaln a llcense Lo sell
Lhe subdlvlslon loLs does noL render Lhe sales vold on LhaL ground alone
especlally LhaL Lhe parLles have lmplledly admlLLed LhaL Lhere was
already a meeLlng of Lhe mlnds as Lo Lhe sub[ecL of Lhe sale and prlce of
Lhe conLracL.

Doctr|ne: See above.

1he blndlng effecL of sale ls based on Lhe prlnclple LhaL Lhe
obllgaLlons arlslng Lherefrom have Lhe force of law beLween Lhe
parLles. !E*?*#,+@ )*-*#,?F.+ .G ?S* =SF>FHHF+*@ '( ".$#? .G
4HH*,>@/ 60: 2"34 60I 78999;(
noncompllance wlLh formal requlremenLs does noL affecL
valldlLy of conLracL.
o ArLlcle 1338 requlrlng Lhe embodlmenL of cerLaln
conLracLs ln a publlc lnsLrumenL ls only for convenlence,
and reglsLraLlon of Lhe lnsLrumenL only adversely affecLs
Lhlrd parLles. lormal requlremenLs are for Lhe beneflL of
Lhlrd parLles. )$>* '( ".$#? .G 4HH*,>@/ 8ID 2"34 DJI
75JJI;
Moda||t|es that Affect Character|st|c of Consensua||ty.
Consensual characLerlsLlc may be affecLed by cerLaln modallLles
added by sLlpulaLlon
o Lxample: Suspenslve Lerm or condlLlon
erfect|on D|st|ngu|shed from Demandab|||ty.
o noL all conLracLs of sale become auLomaLlcally and
lmmedlaLely effecLlve. ln sales wlLh assumpLlon of
morLgage, Lhere ls a condlLlon precedenL Lo Lhe seller's
consenL and wlLhouL Lhe approval of Lhe morLgagee, Lhe
sale ls noL perfecLed. !BFL,+ 2?**> ".#H( '( ".$#? .G
4HH*,>@/ 6J5 2"34 J9 78998;(
o Lven dellvery and Laklng possesslon of sub[ecL maLLer,
wlLh consenL of Lhe seller, does noL perfecL sale when
meeLlng of mlnds ls lncompleLe. ln Lhls case, Lhere was
no agreemenL yeL on flnal prlce. <N4 '@( W#,P* B,H?F@?
"S$#PS 76J5 2"34 J9;
"No Contract S|tuat|on" versus "Vo|d Contract".
o Vo|d Contract " Absence of consenL (l.e., compleLe
meeLlng of mlnds) negaLes Lhe exlsLence of a perfecLed
sale( !)F#Q* '( B$C,> O+?*#H#F@*@ ,+- A*'( ".#H(/ 050
2"34 5J9 78996;( 1he conLracL Lhen ls null and vold ob
loltlo, absoluLely wanLlng ln clvll effecLs, hence, lL does
noL creaLe, modlfy, or exLlngulsh Lhe [urldlcal relaLlon Lo
whlch lL refers. !",X.?,V* '( =$-$+,+/ 06D 2"34 086
78990;(
o No Contract " When Lhere ls no meeLlng of Lhe mlnds
on prlce, Lhe conLracL ls noL perfecLed" and does noL
serve as a blndlng [urldlcal relaLlon beLween Lhe parLles.
!K,+F>, K*?,> ".+?,F+*# ".#H( '( =<B/ :55 2"34 000
7899D;/
5
and should be more accuraLely denomlnaLed as
lnexlsLenL, as lL dld noL pass Lhe sLage of generaLlon Lo
Lhe polnL of perfecLlon. !<N4 '( W#,P* B,H?F@? "S$#PS/
080 2"34 501 78990;(

3. 8||atera| and kec|proca| (Art|c|es 1169 and 1191)

1
kobetts v. loplo, 313 SC8A 346 (2007).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

Art|c|e 1169.
1hose ob||ged to de||ver or to do someth|ng |ncur |n de|ay from the
t|me the ob||gee [ud|c|a||y or extra[ud|c|a||y demands from them the
fu|f|||ment of the|r ob||gat|on.

nowever, the demand by the cred|tor sha|| not be necessary |n order
that de|ay may ex|st:

(1) When the ob||gat|on or the |aw express|y so dec|are, or

(2) When from the nature and the c|rcumstances of the ob||gat|on |t
appears that the des|gnat|on of the t|me when the th|ng |s to be
de||vered or the serv|ce |s to be rendered was a contro|||ng mot|ve for
the estab||shment of the contract, or

(3) When demand wou|d be use|ess, as when the ob||gor has rendered
|t beyond h|s power to perform.

In rec|proca| ob||gat|ons, ne|ther party |ncurs |n de|ay |f the other does
not comp|y or |s not ready to comp|y |n a proper manner w|th what |s
|ncumbent upon h|m. Irom the moment one of the part|es fu|f|||s h|s
ob||gat|on, de|ay by the other beg|ns. (1100a)

Art|c|e 1191.
1he power to resc|nd ob||gat|ons |s |mp||ed |n rec|proca| ones, |n case
one of the ob||gors shou|d not comp|y w|th what |s |ncumbent upon
h|m.

1he |n[ured party may choose between the fu|f|||ment and the
resc|ss|on of the ob||gat|on, w|th the payment of damages |n e|ther
case. ne may a|so seek resc|ss|on, even after he has chosen fu|f|||ment,
|f the |atter shou|d become |mposs|b|e.

1he court sha|| decree the resc|ss|on c|a|med, un|ess there be [ust
cause author|z|ng the f|x|ng of a per|od.

1h|s |s understood to be w|thout pre[ud|ce to the r|ghts of th|rd
persons who have acqu|red the th|ng, |n accordance w|th art|c|es 138S
and 1388 and the Mortgage Law. (1124)

8llaLeral " lL lmposes obllgaLlons on boLh parLles
o CbllgaLlon/promlse of each parLy ls Lhe cause for Lhe
obllgaLlon of Lhe oLher.
o lL ls a requlslLe for a valld and enforceable sale LhaL lL ls
muLually obllgaLory. =.>Y?*PS+FP Z+F'*#@F?Y .G ?S*
=SF>FHHF+*@ '( ".$#? .G 4HH*,>@/ 6DI 2"34 DJ5 78995;
8eclprocal CbllgaLlons " each parLy ls slmulLaneously a debLor
and credlLor of Lhe oLher
o A conLracL of sale glves rlse Lo reclprocal obllgaLlons",
whlch arlse from Lhe same cause wlLh each parLy belng
a debLor and credlLor of Lhe oLher, such LhaL Lhe
obllgaLlon of one ls dependenL upon Lhe obllgaLlon of
Lhe oLher, and Lhey are Lo be performed
slmulLaneously, so LhaL Lhe performance of one ls
condlLloned upon Lhe slmulLaneous fulflllmenL of Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
oLher. ".#?*@ '( ".$#? .G 4HH*,>@/ 0J0 2"34 :19
7899D;(
5


".#?*@ '( ".$#? .G 4HH*,>@

Iacts: lor Lhe purchase prlce of 3.7M, vllla Lsperanza uevelopmenL
CorporaLlon (vendee) and AnLonlo CorLes (vendor) enLered lnLo a
conLracL of sale over Lhe loLs locaLed aL 8aclaran, aranaque, MeLro
Manlla. 1he CorporaLlon advanced Lo CorLes Lhe LoLal sum of
1,213,000.00. ln SepLember 1983, Lhe parLles execuLed a deed of
absoluLe sale on Lhe followlng Lerms:
1he CorporaLlon shall advance 2.2 M as downpaymenL, and
CorLes shall llkewlse dellver Lhe 1C1 for Lhe 3 loLs.
1he balance of 1.3M shall be payable wlLhln a year from Lhe
daLe of Lhe execuLlon.
1he CorporaLlon flled Lhe lnsLanL case for speclflc performance seeklng
Lo compel CorLes Lo dellver Lhe 1C1s and Lhe orlglnal copy of Lhe ueed
of AbsoluLe Sale. Accordlng Lo Lhe CorporaLlon, desplLe lLs readlness and
ablllLy Lo pay Lhe purchase prlce, CorLes refused dellvery of Lhe soughL
documenLs. lL prayed for damages, aLLorney's fees and llLlgaLlon
expenses. CorLes clalmed LhaL Lhe owner's dupllcaLe copy of Lhe Lhree
1C1s were surrendered Lo Lhe CorporaLlon and lL ls Lhe laLLer whlch
refused Lo pay ln full Lhe agreed down paymenL.

1
Ooq v. coott of Appeols, 310 SC8A 1 (1999), Mottel v. kA55cO, 348 SC8A 391
(2000), Aqto cooqlometotes, loc. v. coott of Appeols, 348 SC8A 430 (2000),
velotJe v. coott of Appeols, 361 SC8A 36 (2001), cottoscoso, It. v. coott of
Appeols, 477 SC8A 666 (2003), nelts of Aotoolo l. 8etoobe v. coott of Appeols,
339 SC8A 33 (2008), nelts of Aotoolo l. 8etoobe v. coott of Appeols, 339 SC8A
33 (2008).
Issue: WheLher or noL Lhere ls delay ln Lhe performance of Lhe parLles'
obllgaLlon LhaL would [usLlfy Lhe resclsslon of Lhe conLracL of sale

ne|d: 8C1P A8L ln uLLA?. CorLes avers LhaL he dellvered Lhe 1C1's
Lhrough Lhe broker's son. Pe furLher avers LhaL Lhe broker's son
dellvered lL Lo Lhe broker, who ln Lurn dellvered Lhem Lo Lhe
CorporaLlon. Marcosa Sanchez's unrebuLLed LesLlmony ls LhaL, she dld
noL recelve Lhe 1C1s. She also denled knowledge of dellvery Lhereof Lo
her son, Manny.

WhaL furLher sLrengLhened Lhe flndlngs LhaL CorLes dld noL surrender
Lhe sub[ecL documenLs was Lhe offer of CorLes' counsel aL Lhe pre-Lrlal
Lo dellver Lhe 1C1s and Lhe ueed of AbsoluLe Sale lf Lhe CorporaLlon wlll
pay Lhe balance of Lhe down paymenL. lndeed, lf Lhe sald documenLs
were already ln Lhe hands of Lhe CorporaLlon, Lhere was no need for
CorLes' counsel Lo make such offer.

Conslderlng LhaL Lhelr obllgaLlon was reclprocal, performance Lhereof
musL be slmulLaneous. 1he muLual lnacLlon of CorLes and Lhe
CorporaLlon Lherefore gave rlse Lo a compensaLlon morae or defaulL on
Lhe parL of boLh parLles because nelLher has compleLed Lhelr parL ln
Lhelr reclprocal obllgaLlon. CorLes ls yeL Lo dellver Lhe orlglnal copy of
Lhe noLarlzed ueed and Lhe 1C1s, whlle Lhe CorporaLlon ls yeL Lo pay ln
full Lhe agreed down paymenL of 2,200,000.00. 1hls muLual delay of
Lhe parLles cancels ouL Lhe effecLs of defaulL, such LhaL lL ls as lf no one
ls gullLy of delay.

under ArLlcle 1169 of Lhe Clvll Code, from Lhe momenL one of Lhe
parLles fulfllls hls obllgaLlon, delay by Lhe oLher beglns. Slnce CorLes dld
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
noL perform hls parL, Lhe provlslon of Lhe conLracL requlrlng Lhe
CorporaLlon Lo pay ln full Lhe down paymenL never acqulred obllgaLory
force.
1


Doctr|ne:

A perfecLed conLracL of sale carrles Lhe correlaLlve duLy of Lhe
seller Lo dellver Lhe properLy and Lhe obllgaLlon of Lhe buyer Lo
pay Lhe agreed prlce. ".+R#*R,?F.+ .G ?S* 3*>FRF.$@ .G ?S*
EF#RF+ K,#Y '( [#.>,/ ::6 2"34 :1I 7899I;(

".+R#*R,?F.+ .G ?S* 3*>FRF.$@ .G ?S* EF#RF+ K,#Y '( [#.>,

Iacts: Cn Aprll 1999, peLlLloner, acLlng Lhrough Sr. le Lnhenco, and
respondenLs meLs Lo Lalk abouL Lhe sale of Lhe properLy of respondenLs
ad[acenL Lo SL. Mary's Academy. Sald properLy ls LoL 1398-2 whlch ls
reglsLered ln Lhe name of Manuel Laserna. !osepehlne Crola wenL Lo
Manlla on May, 1999 for Lhe sub[ecL properLy and was eneLerLalned by
Ma. ClarlLa 8alleque. A conLracL Lo sale was made beLween Lhe parLles
where peLlLloners are bounde Lo pay Lhe properLy for 3,333,000.00
wlLh 10 of Lhe LoLal conslderaLlon payable upon Lhe execuLlon of Lhe
conLracL. 1hls was slgned by Sr. Lnhenco as wlLness. Cn !une 7, 1999,
!osephlne and AnLonlo recelved Lhe 8C8C check bearlng Lhe amounL of
333,330.00 as down paymenL by peLlLloner. An exLra[udlclal seLLlemenL
was execuLed for Lhe esLaLe of 1rlnldad Andrada Laserna ad[udlcaLlng Lo
Lhemselves Lhe sub[ecL properLy. 1ransfer CerLlflcaLes were now under

1
(!une 2010). 1he SLray ueclslon noLes. 8eLrleved from
hLLp://LhesLraydeclslon.wordpress.com/2010/06/21/corLes-vs-courL-of-
appeals/
Lhelr names. WlLh an undaLed AbsoluLe ueed of Sale, respondenLs
scheduled Lo meeL wlLh peLlLloner for Lhe remalnlng balance. eLlLloner
dld noL arrlve. 1hey lnsLead refused Lo pay respondenLs due Lo
unreasonable grounds. 1hls made respondenLs flle a complalnL before
Lhe 81C wlLh alLernaLlve causes of acLlon or resclsslon. 81C granLed
respondenLs. Cn appeal, Lhe maLLer was resolved by Lhe appellaLe courL
Lhrough ArLlcle 1378 of Lhe new Clvll Code.

Issue: WheLher or noL ArLlcle 1191 should be applled lnsLead of ArLlcle
1378 of Lhe new Clvll Code.

ne|d: ?LS. Such case falls under ArLlcle 1191 because lL applles Lo breach
of reclprocal obllgaLlons. ArLlcle1191 speaks of Lhe remedy of resclsslon
ln reclprocal obllgaLlons. ln Lhe presenL case, when 8vM refused Lo pay
Lhe balance whlch breached Lhe conLracL, respondenLs have avalled of
Lhe remedles granLed by ArLlcle 1191. 1hey are enLlLled Lo damages
regardless of Lhe rellef LhaL would be granLed by Lhe CourL. Pence, Lhe
courL should apply ArLlcle 1191 of Lhe new Clvll Code,
2


Doctr|ne:

1he power Lo resclnd ls lmplled ln reclprocal ones ln case one of
Lhe obllgors should noL comply wlLh whaL ls lncumbenL upon
hlm, and wlLhouL need of prlor demand. Almoceto v. Ooq, 346
SC8A 164 (2008).
3



2
urex Mendez. (2012 !uly 16). Obll coses 2. 8eLrleved from
hLLp://www.scrlbd.com/doc/100162338/Cbll-Cases-2
3
vJo. ue Ooltloo v. lolotco, 29 SC8A 1 (1969)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
4. Cnerous
Cnerous " lL lmposes a valuable conslderaLlon.
o ldeally, a prlce cerLaln ln money or lLs equlvalenL.
ku|es Cf Interpretat|on: we lnLerpreL ln favor of Lhe greaLer
reclproclLy of lnLeresLs. W,F?* '( ).+,PF*#/ 8 2"34 I69 75JD5;(

W,F?* '( ).+,PF*#

Iacts: lonacler owned lron lode mlneral clalms. 1hrough a deed of
asslgnmenL, he made CalLe as hls aLLorney-ln-facL Lo explore and
develop Lhe mlnlng clalms. CalLe Lhen developed Lhem. LaLer lonacler
declded Lo revoke Lhe deed of asslgnmenL. CalLe agreed provlded LhaL
he be pald hp73,000. lonacler agreed, buL only on Lhe condlLlon LhaL
hp 10,000 wlll be pald afLer Lhe slgnlng of Lhe revocaLlon of power of
aLLorney and conLracL" agreemenL and Lhe php63,000 wlll be pald from
and ouL of Lhe flrsL leLLer of credlL coverlng Lhe flrsL shlpmenL of lron
ores and of Lhe flrsL amounL derlved from Lhe local sale of lron ore made
by Lhe Larap Mlnes & SmelLlng Co. CalLe agreed Lo such condlLlon afLer
a sureLy bond, underwrlLLen by lar LasLern SureLy and lnsurance Co.
(lLSlC), was execuLed ln favour of CalLe Lo secure Lhe paymenL of Lhe
balance. 1he llablllLy of lLSlC would however, aLLach only when Lhere
had been an acLual sale of lron ore amounLlng Lo aL leasL php63,000. 1
year laLer Lhe bond explred wlLhouL any sale belng made. When CalLe
demanded paymenL, fonacler wasn'L able Lo pay. ln hls defense, he
clalmed LhaL lL was a condlLlon LhaL Lhe balance wlll be pald ouL of Lhe
flrsL leLLer of credlL. Slnce Lhey sLlll haven'L sold any lron ore, Lhe
condlLlon has noL yeL been fulfllled.

Issue: WheLher Lhe obllgaLlon of appellanL lonacler Lo pay appellee
CalLe Lhe 63,000.00 (balance of Lhe prlce of Lhe lron ore ln quesLlon)ls
one wlLh a perlod or Lerm or one wlLh a suspenslve condlLlon

ne|d: lL ls a perlod. 1he Supreme CourL sald LhaL lL was noL Lhe case as
Lhe wordlng of Lhe conLracL lmplles LhaL whaL was uncerLaln was Lhe
daLe/maLurlLy of Lhe paymenL and noL Lhe paymenL lLself. 8elng so lL ls a
perlod and noL a condlLlon. Also, Sale ls normally commuLaLlve and
onerous LhaL each parLy anLlclpaLe performance by Lhe oLher from Lhe
very sLArLlcle AlLhough a person can assume rlsk of recoverlng noLhlng
(l.e Lhrough a suspenslve condlLlon) for whaL he glves, lL ls noL usually ln
Lhe course of buslness Lo do so. lurLhermore, Lhe clvll code sLaLes lf Lhe
conLracL ls onerous, Lhe doubL shall be seLLled ln favor of Lhe greaLesL
reclproclLy of lnLeresLs. A sales conLracL ls an onerous conLracL, belng so,
Lhe lnLerpreLaLlon whlch favour Lhe greaLesL reclproclLy of lnLeresLs shall
be applled. 1here can be no quesLlon LhaL greaLer reclproclLy obLalns lf
Lhe buyer' obllgaLlon ls deemed Lo be acLually exlsLlng, wlLh only lLs due
daLe posLponed or deferred. ln accordance wlLh Lhe clvll code, slnce Lhe
securlLy was lmpalred and lonacler dld noL replace lL wlLh a new one,
lalnLlff losL Lhe rlghL Lo use Lhe perlod Lhus Lhe 63,000 ls due already.

Doctr|ne:

S. Commutat|ve (8U1 SLL\ Art|c|es 13SS and 1470)
CommuLaLlve " a Lhlng of value ls exchanged for equal value
o ldeally, Lhe value of Lhe sub[ecL maLLer ls equlvalenL Lo
Lhe prlce pald.

Art|c|e 13SS.
Lxcept |n cases spec|f|ed by |aw, |es|on or |nadequacy of cause sha||
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
not |nva||date a contract, un|ess there has been fraud, m|stake or
undue |nf|uence. (n)

Art|c|e 1470.
Gross |nadequacy of pr|ce does not affect a contract of sa|e, except as
|t may |nd|cate a defect |n the consent, or that the part|es rea||y
|ntended a donat|on or some other act or contract. (n)

no sLrlcL requlremenL Lhough
o ln a conLracL of sale, Lhere ls no requlremenL LhaL Lhe
prlce be equal Lo Lhe exacL value of Lhe sub[ecL maLLer
of sale, all LhaL ls requlred ls LhaL Lhe parLles belleved
LhaL Lhey wlll recelve good value ln exchange for whaL
Lhey wlll glve. B$*+,'*+?$#, '( ".$#? .G 4HH*,>@/ 05D
2"34 8D6 78996;.

B$*+,'*+?$#, '( ".$#? .G 4HH*,>@

Iacts: Spouses Leonardo and lellclano !oaquln execuLed deeds of sale
Lo some of Lhelr chlldren. 1he remalnlng chlldren flled a case because
Lhey belleve LhaL such sale (1) would lmpalr Lhelr leglLlme and (2) was
vold for lack of conslderaLlon.

Issue: WheLher or noL Lhe deeds of sale are vold for lack of
conslderaLlon and gross lnadequacy of prlnce.

ne|d: nC. 1he CourL held LhaL Lhelr rlghLs Lo Lhelr parenLs' properLles
would vesL only upon Lhelr parenLs' deaLh, and whlle Lhey are sLlll allve,
Lhey may dlspose of lL even wlLhouL Lhe consenL of Lhe helrs. Cn Lhe
lssue of conslderaLlon, Lhe Supreme CourL held LhaL a conLracL of sale ls
a consensual conLracL. As long as Lhe prlce of Lhe properLy was agreed
upon, Lhe conLracL ls valld. lallure of paymenL would noL resulL ln an
lnvalld conLracL, buL merely glves a rlghL Lo demand paymenL. Also,
lnadequaLe conslderaLlon does noL lnvalldaLe a conLracL.

Doctr|ne: Sale over sub[ecL maLLer ls noL real, buL consensual. lL
becomes valld and blndlng upon meeLlng of Lhe mlnds as Lo Lhe prlce.
1here ls no sLrlcL requlremenL as Lo Lhe prlce. All LhaL ls requlred ls LhaL
Lhe parLles belleved LhaL Lhey wlll recelve good value ln exchange for
whaL Lhey wlll glve.

W,F?* '( ).+,PF*#/ 8 2"34 I69 75JD5; " obllgaLlons ln a sale can
be subordlnaLed Lo a suspenslve condlLlon. 1hus,
commuLaLlveness ls noL ob[ecLlve, buL sub[ecLlve.
o Lx. Seller selllng old car for 200,000. Lven lf a more
ob[ecLlve revlew would say LhaL Lhe car ls worLh
300,000, Lhe conLracL would sLlll be a sale, as seller
really belleves LhaL he's recelvlng approprlaLe value
Powever, sub[ecLlve naLure cannoL be pushed Lo absurdlLy
o Seller, knowlng full well LhaL hls car ls worLh 200,000
sLlll opLs Lo sells lL for 100. Such could be consldered
more of a donaLlon, and Lherefore reformaLlon of Lhe
lnsLrumenL may be had Lo express parLles' Lrue lnLenL.
Sub[ecLlve naLure supporLed by prlnclple LhaL lnadequacy of
prlce does noL affecL ordlnary sale.
o noL a sufflclenL ground for cancelllng a volunLary
conLracL of sale.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
6. Sa|e Is 1|t|e And Not Mode
Sale ls noL a mode, buL merely a LlLle. A mode ls Lhe legal means
by whlch domlnlon or ownershlp ls creaLed, Lransferred or
desLroyed, buL LlLle ls only Lhe legal basls by whlch Lo affecL
domlnlon or ownershlp. Sale by lLself does noL Lransfer or affecL
ownershlp, Lhe mosL LhaL sale does ls Lo creaLe Lhe obllgaLlon Lo
Lransfer ownershlp. lL ls LradlLlon or dellvery, as a consequence
of sale, LhaL acLually Lransfers ownershlp. !2,+ U.#*+%. A*'(
".#H( '( ".$#? .G 4HH*,>@/ 00J 2"34 JJ 7899:;/
5
PF?F+R
EF>>,+$*',/ =SF>FHHF+* U,] .+ 2,>*@/ 5JJ: *-(/ ,? H( :(
Sale perfecLed by consenL buL ownershlp passes only upon
dellvery.
o [Sale] 8eal rlghL over a Lhlng arlslng from a [urldlcal acL
ls noL sufflclenL Lo glve rlse Lo ownershlp.
o [uellvery] .Such rlghL musL be compleLed by fulfllllng
cerLaln condlLlons lmposed by law. 4P,H '( ".$#? .G
4HH*,>@ 78:5 2"34 69;

Sa|e De||very
1lLle Mode
ConsLlLuLes Lhe legal basls
by whlch Lo affecL
ownershlp
Legal means by whlch ownershlp ls
creaLed, Lransferred, or desLroyed (e.g.
Successlon, uonaLlon, ulscovery)

Seller's ownershlp of Lhe Lhlng sold ls noL an elemenL of
perfecLlon, whaL Lhe law requlres ls LhaL seller has Lhe rlghL Lo

1
Acop v. coott of Appeols, 231 SC8A 30 (1993).
Lransfer ownershlp aL Lhe Llme of dellvery. !^$FV,-, '( ".$#? .G
4HH*,>@/ 8JJ 2"34 DJ: 75JJI;(
8

8U1 SLL: _F?.+R '( ".$#? .G 4HH*,>@/ 8I1 2"34 598 75JJI;/
whlch deflned a sale" as o coottoct ttoosfettloq Jomloloo ooJ
otbet teol tlqbts lo tbe tbloq solJ."

II. Sa|e D|st|ngu|shed from S|m||ar Contracts
Under|y|ng r|nc|p|e: lnLenL of parLles and elemenLs of
relaLlonshlp are more lmporLanL Lhan Lhe nomenclaLure used Lo
descrlbe a cerLaln conLracL.
o A conLracL ls whaL Lhe law deflnes lL Lo be, Laklng lnLo
conslderaLlon lLs essenLlal elemenLs, and Lhe LlLle glven
Lo lL by Lhe parLles ls noL as much slgnlflcanL as lLs
subsLance.
3
1he Lransfer of ownershlp ln exchange for a
prlce pald or promlsed ls Lhe very essence of a conLracL
of sale. !2,+?.@ '( ".$#? .G 4HH*,>@/ 661 2"34 D1
78999;(
o ln deLermlnlng Lhe real characLer of sale, courLs look aL
Lhe lnLenL of Lhe parLles, Lhelr Lrue alm and purpose ln
enLerlng lnLo Lhe conLracL, as well as by Lhelr conducL,
words, acLlons and deeds prlor Lo, durlng and
lmmedlaLely afLer execuLlng Lhe agreemenL," and noL aL
Lhe nomenclaLure used Lo descrlbe lL. !U,. '( ".$#? .G
4HH*,>@/ 81: 2"34 861 75JJ1;(

2
poototlol keolty uev. loc. v. Moyfolt 1beotet, loc., 370 SC8A 36 (2001),
Alcoototo-uoos v. Je leoo, 404 SC8A 74 (2003), nelts of Iesos M. Moscoooo v.
coott of Appeols, 461 SC8A 186 (2003).
3
kometo v. coott of Appeols, 230 SC8A 223 (1993), loo v. coott of Appeols, 273
SC8A 237 (1997), OtJeo v. Aoteo, 362 SC8A 660 (2008), vet keyes v. 5olvoJot,
5t., 364 SC8A 436 (2008)..
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

A. Donat|on (Art|c|es 72S and 1471)

Art|c|e 72S.
Donat|on |s an act of ||bera||ty whereby a person d|sposes gratu|tous|y
of a th|ng or r|ght |n favor of another, who accepts |t. (618a)

Art|c|e 1471.
If the pr|ce |s s|mu|ated, the sa|e |s vo|d, but the act may be shown to
have been |n rea||ty a donat|on, or some other act or contract. (n)

unllke a donaLlon, sale ls a dlsposlLlon for valuable
conslderaLlon wlLh no dlmlnuLlon of Lhe esLaLe buL merely
subsLlLuLlon of values, wlLh Lhe properLy sold replaced by Lhe
equlvalenL moneLary conslderaLlon, unllke donaLlon, a valld sale
cannoL have Lhe legal effecL of deprlvlng Lhe compulsory helrs
of Lhelr leglLlmes. !K,+.+R@.+R '( O@?FQ./ 090 2"34 DI6
78996;(
1he rules on double sales under ArLlcle 1344 flnd no relevance
Lo conLracLs of donaLlon. !N*Q*-*@ '( ".$#? .G 4HH*,>@/ 65D
2"34 601 75JJJ;(

1. Sa|e v. Donat|on

Sa|e Donat|on
LssenLlally onerous Cenerally graLulLous
Consensual ConLracL l.e. perfecLed by
consenL
Solemn ConLracL l.e.
requlrlng formallLles
(requlres consenL and
oLher formallLles requlred
by law ln order Lo be valld)
" Art|c|e 74S
uoes nC1 cause dlmlnuLlon of Lhe seller's
esLaLe, buL merely subsLlLuLlon of values,
wlLh Lhe properLy sold replaced by Lhe
equlvalenL moneLary conslderaLlon
Causes dlmlnuLlon of Lhe
seller's esLaLe and may
pre[udlce Lhe leglLlmes of
hls helrs. As such, lL can be
sub[ecL Lo resclsslon. A valld sale cannoL have Lhe legal effecL of
deprlvlng Lhe compulsory helrs of Lhelr
leglLlmes. K,+.+R@.+R '( O@?FQ.
7090 2"34 DI6;

2. Needs for be|ng ab|e to d|st|ngu|sh
When ls lL lmporLanL Lo know Lhe dlsLlncLlon? When Lhe
conslderaLlon for Lhe Lransfer ls noL clear.
When prlce of sale ls slmulaLed, Lhe sale ls vold, buL Lhe acL may
be shown Lo be a donaLlon or some oLher acL.
o ConLracL may be ln Lhe form of a sale" buL wlll end up
belng governed by some oLher provlslons of law.
Cn Lhe oLher hand, a supposed donaLlon may acLually have
dlfferenL conslderaLlons raLher Lhan llberallLy
o 8urdens placed upon Lhe donee
o ln LhaL case, lL becomes lmporLanL Lo deLermlne whaL
Lhe appllcable rule ls (Law on Sales vs. Law on uonaLlon)
o ArLlcle 726 of Lhe Clvll Code: Lven lf a burden ls lmposed
on donee, lL ls sLlll a donaLlon when such burden ls less
Lhan Lhe value of Lhe Lhlng glven.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o Legal lmpllcaLlon - when Lhe burden ls more valuable
Lhan Lhe Lhlng glven, lL ls an onerous donaLlon", and
may be a barLer or a sale.

8. 8arter (Art|c|es 1468, 1638 to 1641)

Art|c|e 1468.
If the cons|derat|on of the contract cons|sts part|y |n money, and
part|y |n another th|ng, the transact|on sha|| be character|zed by the
man|fest |ntent|on of the part|es. If such |ntent|on does not c|ear|y
appear, |t sha|| be cons|dered a barter |f the va|ue of the th|ng g|ven as
a part of the cons|derat|on exceeds the amount of the money or |ts
equ|va|ent, otherw|se, |t |s a sa|e. (1446a)

Art|c|e 1638.
8y the contract of barter or exchange one of the part|es b|nds h|mse|f
to g|ve one th|ng |n cons|derat|on of the other's prom|se to g|ve
another th|ng. (1S38a)

Art|c|e 1639
If one of the contract|ng part|es, hav|ng rece|ved the th|ng prom|sed
h|m |n barter, shou|d prove that |f d|d not be|ong to the person who
gave |t, he cannot be compe||ed to de||ver that wh|ch he offered |n
exchange, but he sha|| be ent|t|ed to damages. (1S39a)

Art|c|e 1640
Cne who |oses by ev|ct|on the th|ng rece|ved |n barter may recover
that wh|ch he gave |n exchange w|th a r|ght to damages. nowever, he
can on|y make use of the r|ght to recover the th|ng wh|ch he has
de||vered wh||e the same rema|ns |n the possess|on of the other party,
and w|thout pre[ud|ce to the r|ghts acqu|red |n good fa|th |n the
meant|me by a th|rd person. (1S40a)

Art|c|e 1641.
As to a|| matters not spec|f|ca||y prov|ded for |n th|s 1|t|e, barter sha||
be governed by the prov|s|ons of the preced|ng 1|t|e re|at|ng to sa|es.
(1S41a)

1. Def|n|t|ons
8arLer " Cne of Lhe parLles blnds hlmself Lo glve one Lhlng ln
conslderaLlon for Lhe oLher's promlse Lo glve anoLher Lhlng
Sale " Cne of Lhe parLles blnds hlmself Lo dellver a Lhlng ln
conslderaLlon of Lhe oLher's underLaklng Lo pay Lhe prlce ln
money or lLs equlvalenL.

2. ku|es 1o D|fferent|ate Sa|e from 8arter (Art|c|e 1468)
ManlfesL lnLenLlon of Lhe arLles
o Lven lf acqulslLlon of a Lhlng ls pald for by anoLher
ob[ecL LhaL's worLh more Lhan Lhe money componenL
o lL may sLlll be a sale lf such was Lhe lnLenLlon of Lhe
parLles.
When lnLenLlon uoes noL Appear and ConslderaLlon ConslsLs
arLly ln Money and arLly ln AnoLher 1hlng
o lL ls barLer when value of Lhe Lhlng glven as parL of Lhe
conslderaLlon exceeds Lhe amounL of money glven
o lL ls sale when Lhe value of Lhe Lhlng glven as parL of
conslderaLlon equals or ls less Lhan Lhe amounL of
money glven.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
AcLually, Lhese dlsLlncLlons are merely academlc
Aslde from Lwo separaLe rules appllcable Lo barLer, ArLlcle 1641
say LhaL barLer ls governed by Lhe Law on Sales
WhaL are Lhe Lwo separaLe rules? See ArLlcle 1639 and 1640

3. 1wo Instances Where D|fference Is Cr|t|ca|
o SLaLuLe of lrauds does noL apply Lo barLer.
o 8lghL of legal redempLlon granLed by law Lo an ad[olnlng
owner of an urban land does noL cover exchanges of
properLles.

C. Contract for |ece-of-Work (Art|c|es 1467, 1713 to 171S)

Art|c|e 1467
A contract for the de||very at a certa|n pr|ce of an art|c|e wh|ch the
vendor |n the ord|nary course of h|s bus|ness manufactures or
procures for the genera| market, whether the same |s on hand at the
t|me or not, |s a contract of sa|e, but |f the goods are to be
manufactured spec|a||y for the customer and upon h|s spec|a| order,
and not for the genera| market, |t |s a contract for a p|ece of work. (n)

Art|c|e 1713.
8y the contract for a p|ece of work the contractor b|nds h|mse|f to
execute a p|ece of work for the emp|oyer, |n cons|derat|on of a certa|n
pr|ce or compensat|on. 1he contractor may e|ther emp|oy on|y h|s
|abor or sk|||, or a|so furn|sh the mater|a|. (1S88a)

Art|c|e 1714.
If the contractor agrees to produce the work from mater|a| furn|shed
by h|m, he sha|| de||ver the th|ng produced to the emp|oyer and
transfer dom|n|on over the th|ng. 1h|s contract sha|| be governed by
the fo||ow|ng art|c|es as we|| as by the pert|nent prov|s|ons on
warranty of t|t|e and aga|nst h|dden defects and the payment of pr|ce
|n a contract of sa|e. (n)

Art|c|e 171S.
1he contract sha|| execute the work |n such a manner that |t has the
qua||t|es agreed upon and has no defects wh|ch destroy or |essen |ts
va|ue or f|tness for |ts ord|nary or st|pu|ated use. Shou|d the work be
not of such qua||ty, the emp|oyer may requ|re that the contractor
remove the defect or execute another work. If the contract fa||s or
refuses to comp|y w|th th|s ob||gat|on,the emp|oyer may have the
defect removed or another work executed, at the contractor's cost. (n)

1. Def|n|t|ons
lece of Work ConLracL ueflned:
o ConLracLor blnds hlmself Lo execuLe a plece of work for
Lhe employer, ln conslderaLlon of a cerLaln prlce or
compensaLlon.
o ConLracLor may elLher employ only hls labor or sklll, or
also furnlsh Lhe maLerlal.
"#$!\ lnelucLably, wheLher Lhe conLracL be one of sale or one
for a plece of work, a Lransfer of ownershlp ls lnvolved and a
parLy necessarlly walks away wlLh an ob[ecL." !".QQF@@F.+*# .G
T+?*#+,> 3*'*+$* '( ".$#? .G 4HH*,>@/ 815 2"34 D9: 75JJ1;/
PF?F+R EF>>,+$*',/ U,] .+ 2,>*@/ HH( 1`J 75JJ:;( ln boLh, Lhe
provlslons on warranLy of LlLle agalnsL hldden defecLs applles.
!AFL. '( ".$#? .G 4HH*,>@/ 6:J 2"34 J5 78995;(
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

2. Statutory ku|es 1o D|st|ngu|sh Sa|e Irom A |ece Cf Work
Contract (Art|c|e 1467)
a. "nab|tua||ty 1est"
o ManufacLurlng ln Lhe ordlnary course of buslness "
sales conLracLs
o ManufacLurlng upon speclal order for cusLomers "
plece of work
! upon speclal order" " based on Lhe ablllLy of
producer Lo manufacLure Lhe goods wlLhouL
walLlng for speclflc orders
o When a person sLlpulaLes for Lhe fuLure sale of arLlcles
whlch he ls hablLually maklng, and whlch aL Lhe Llme are
noL made or flnlshed, lL ls essenLlally a conLracL of sale
and noL a conLracL for labor !T+PS,$@?F a ".( '(
"#.Q]*>>/ 89 =SF>( 60: 75J55;M even when he execuLes
producLlon Lhereof only afLer an order ls placed by
cusLomers. "*>*@?F+. a ".( '( ".>>*P?.#/ JJ =SF>( I05
75J:D;.

"*>*@?F+. a ".( '( ".>>*P?.#

Iacts: Company used Lo pay sales Lax on lLs producLs as a manufacLurer-
seller. 1hey began clalmlng LhaL Lhey should only be assessed a
conLracLor's Lax, because Lhey manufacLured Lhelr producLs only upon
speclal cusLomers' speclal orders, ln accordance wlLh speclflcaLlons.
1hus, Lhelr servlces consLlLuLe a plece-of-work conLracL.

Issue: WheLher or noL Lhe Company's work consLlLuLe plece-of-work

ne|d: nC. CourL held LhaL company can'L clalm Lhe conLracLor's Lax -
Lhey were sellers. (1) 1hey hablLually made Lhe producLs. (2) 1haL Lhey
made producLs only upon order dld noL alLer Lhan naLure of Lhe
esLabllshmenL - Lhey would manufacLure Lhe producLs as Lhey always
had. Any bullder could order such producLs. 1hus Lhey dld noL serve
speclal cusLomers only. 1he essence of conLracL of plece of work ls sale
of servlce." 1hus, Lhe company musL accepL a [ob whlch requlres use of
servlces noL generally performed by lL.

Doctr|ne:

o lf Lhe Lhlng ls speclally done only upon Lhe speclflc order
of anoLher, Lhls ls a conLracL for a plece of work, lf Lhe
Lhlng ls manufacLured or procured for Lhe general
markeL ln Lhe ordlnary course of buslness, lL ls a
conLracL of sale. ".QQF@@F.+*# .G T+?*#+,> 3*'*+$* '(
O+RF+**#F+R Ob$FHQ*+? a 2$HH>Y ".(, D0 2"34 :J9
75J1:;.
1


".QQF@@F.+*# .G T+?*#+,> 3*'*+$* '( O+RF+**#F+R Ob$FHQ*+? a 2$HH>Y
".(

Iacts: LLl was engaged ln deslgn and lnsLallaLlon of alr-condlLlonlng
sysLems. An anonymous leLLer was senL Lo Lhe CollecLor, now Lhe
Commlsslon of lnLernal 8evenue (Cl8) denounclng Lnglneerlng for Lax

1
commlsslooet of lotetool keveooe v. AtoolJos cotpeotty 5bop, 139 SC8A 199
(1988), uel Moote lblllpploes, loc. v. Atoqooes, 461 SC8A 139 (2003).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
evaslon by mlsdeclarlng lLs lmporLed arLlcles and for connlvlng wlLh
forelgn suppllers. 1he assessed Lax deflclency ls 480, 912.01 from
mlsdeclared lmporLaLlon of alr-condlLlon unlLs and parLs and lLs
accessorles sub[ecL Lo SecLlon 183(m) of Lhe 1ax Code (as manufacLurer
and seller of alrcon unlLs, company ls sub[ecL Lo 30 advance sales Lax).
1he company clalmed LhaL lL ls noL a manufacLurer buL a seller of alr-
condlLlonlng unlLs and spare parLs and accessorles Lhereof, buL a
conLracLor whlch deslgns, supplles and lnsLalls alr-condlLlonlng sysLems,
and Lhus Lhe Lax appllcable Lo Lhelr buslness ls on Lhe sale of servlce or
labor raLher Lhan on Lhe sale of arLlcles.

Issue: WheLher or noL LLl ls a conLracLor of alr-condlLlonlng unlLs

ne|d: ?LS. 1he CourL held LhaL LLl was a conLracLor. lf Lhe arLlcle
ordered by Lhe purchaser ls exacLly such as [vendor] makes and keeps
on hand for sale Lo anyone, and no change ls made aL defendanL's
requesL, lL ls a conLracL of sale." ln Lhls case, LLl underLook negoLlaLlons
and execuLlon of lndlvldual conLracLs - each conLracL [ob was dlfferenL,
no Lwo were ldenLlcal.

Doctr|ne:

b. 1he test of "spec|a| orders" |s not one of t|m|ng
o 8aLher, lL ls done by deLermlnlng Lhe naLure of Lhe work
Lo be performed and Lhe producLs Lo be made.
o 1he producLs musL noL be ordlnary producLs of Lhe
manufacLurer.
o 1hey should requlre speclal skllls or equlpmenL.
o 1o 1olenLlno, tbe Jlstloctloo JepeoJs oo tbe loteotloo of
pottles: lf parLles lnLended LhaL aL some fuLure daLe an
ob[ecL has Lo be dellvered, wlLhouL conslderlng Lhe
work or labor of Lhe parLy bound Lo dellver, Lhe conLracL
ls one of sale, buL lf one of Lhe parLles accepLs Lhe
underLaklng on Lhe basls of some plan, Laklng lnLo
accounL Lhe work he wlll employ personally or Lhrough
anoLher, Lhe conLracL ls for a plece of work.
!O+RF+**#F+R a K,PSF+*#Y ".#H( '( ".$#? .G 4HH*,>@/
8:8 2"34 5:D 75JJD;(

3. ract|ca| Needs Ior 8e|ng Ab|e 1o D|st|ngu|sh
1ax rovlslons
Sale " real obllgaLlon
o CbllgaLlon Lo glve
o 8emedy: AcLlon for Speclflc erformance
lece of work " sub[ecL maLLer ls servlce rendered
o CbllgaLlon Lo do
o 8emedy: CannoL be sub[ecL Lo speclflc performance
lece of work ls noL governed by SLaLuLe of lrauds.

D. Agency 1o Se|| (Art|c|e 1466)

Art|c|e 1466.
In constru|ng a contract conta|n|ng prov|s|ons character|st|c of both
the contract of sa|e and of the contract of agency to se||, the essent|a|
c|auses of the who|e |nstrument sha|| be cons|dered. (n)

1. Def|n|t|on
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Agency " a person blnds hlmself Lo render some servlce or Lo
do someLhlng ln represenLaLlon or on behalf of Lhe prlnclpal,
wlLh Lhe consenL or auLhorlLy of Lhe laLLer.
Agency esLabllshes a represenLaLlve capaclLy ln Lhe agenL
o Plghly flduclary
o lnvolves obllgaLlons Lo do

2. D|st|ngu|sh|ng Sa|e from Agency

Sa|e Agency
noL unllaLerally revocable LssenLlally revocable by prlnclpal
8uyer hlmself pays for Lhe sub[ecL,
whlch ls hls maln obllgaLlon
AgenL noL obllged Lo pay Lhe prlce,
merely obllged Lo dellver prlce
whlch he may recelve from buyer
8uyer becomes owner of sub[ecL
maLLer afLer dellvery
AgenL never becomes owner
Seller warranLs AgenL assumes no personal
llablllLy as long as he acLs wlLhln
auLhorlLy and ln name of prlnclpal
1he seller recelves personal proflL
from Lhe sale
Agency ls a flduclary relaLlonshlp
and Lhus Lhe agenL dlsquallfled
from recelvlng personal proflL

3. Statutory ku|e (Art|c|e 1466)
AssumpLlon by agenL" of Lhe rlsk perLalnlng Lo Lhe cosL or prlce
of Lhe sub[ecL maLLer makes Lhe relaLlonshlp LhaL of buyer-
seller, for Lhe agenL does noL assume rlsk wlLh respecL Lo Lhe
prlce or Lhe properLy sub[ecL of Lhe relaLlonshlp. !c*# a ".(/ U?-(
'( UF+R,-/ 6I 2"34 :80 75J15;( ConsequenLly:
o 1he conLracLual relaLlonshlp ls noL lnherenLly revocable.
^$F#.R, '( =,#@.+@, 6I =SF>( :95 75J5I;, C8

^$F#.R, '( =,#@.+@

Iacts: lalnLlff Culroga granLed Lo arsons Lhe rlghL Lo sell as an agenL"
Lhe Culroga beds" ln vlsayas. under Lhe conLracL, arsons was obllged
Lo pay for Lhe beds wlLhln a speclfled perlod afLer dellvery even when lL
has noL been sold. LaLer, Culroga soughL Lhe resclsslon of Lhe
agreemenL clalmlng arsons vlolaLed hls obllgaLlon noL Lo sell Lhe beds
aL hlgher prlces Lhan Lhose of Lhe lnvolces, and oLhers. Culroga clalms
LhaL arsons ls hls agenL.

Issue: WheLher or noL arson ls Culroga's agenL.

ne|d: nC. 1he CourL found Lhe arrangemenL Lo be one of sale slnce Lhe
essenLlal clause provldes LhaL paymenL was Lo be made aL Lhe end of
60 days" Such feaLure exclude Lhe legal concepLlon of an agency or
order Lo sell whereby Lhe mandaLory or agency recelved Lhe Lhlng Lo sell
lL, and does noL pay lLs prlce, buL dellvers Lo Lhe prlnclpal Lhe prlce he
obLalns from Lhe sale of Lhe Lhlng Lo a Lhlrd person, and lf he does noL
succeed ln selllng Lhe Lhlng, he reLurns lL. 1he essenLlal clause provlded
for a Lransfer of ownershlp upon paymenL - preclsely Lhe essenLlal
feaLures of a sale.

Doctr|ne:

o 1he purporLed agenL does noL have Lo accounL for Lhe
proflL margln earned from acqulrlng Lhe properLy for
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lhe purporLed prlnclpal. =$Y,? '( 4#P. 4Q$@*Q*+? ".(,
18 =SF>( 098 75J05;.

=$Y,? '( 4#P. 4Q$@*Q*+? ".(

Iacts: Conzalo uyaL & Sons ls Lhe excluslve agenL of SLarr lano
Company. WanLlng Lo purchase sound equlpmenL from SLarr, Arco
approached Conzalo. 1hey agreed LhaL upon purchase, Conzalo would
recelve 10 commlsslon. 1wo LransacLlons happened - $1,700 and $
1,600 each. 3 years afLer Lhe LransacLlons, Arco dlscovered LhaL Lhey
pald Conzalo Lhe llsL prlce and noL Lhe neL prlce of Lhe equlpmenL.
WanLlng Lo geL relmbursemenL, Lhey flled a case ln courL clalmlng LhaL
Conzalo was Lhelr agenL. 1rlal courL absolved Conzalo sLaLlng LhaL Lhe
agreemenL was one of sale and noL agency. CCu81 Cl ALALS on Lhe
oLher hand ruled LhaL lL was one of agenL and prlnclpal.

Issue: WheLher or noL Lhe conLracL was one of agency.

ne|d: nC. 1he Supreme CourL held LhaL Lhe relaLlonshlp LhaL Lhe
conLracL was one of sale. Conzalo could noL have been Lhe agenL of Arco
for he was already SLarr's agenL. Cne could noL be boLh Lhe agenL of
buyer and seller. SC also sald LhaL slnce Conzalo would be llable for any
unforeseen evenLs, he ls lndeed noL an agenL for Lhls goes agalnsL Lhe
prlnclple of agency LhaL an agenL ls exempL from llablllLy as menLloned
by SecLlon 234, Code of Commerce:

Doctr|ne:

Cne facLor LhaL mosL clearly dlsLlngulshes agency from oLher
legal concepLs, lncludlng sale, ls coottol, one person - Lhe agenL
- agrees Lo acL under Lhe conLrol or dlrecLlon of anoLher - Lhe
prlnclpal( !EFP?.#F,@ KF>>F+R ".(/ T+P( '( ".$#? .G 4HH*,>@/ 666
2"34 DD6 78999;(
o Commerclal broker, commlsslon merchanL or lndenLor
ls a mlJJlemoo octloq lo bls owo oome, and acLs as
agenL for boLh seller and buyer Lo effecL a sale beLween
Lhem. AlLhough he ls nelLher seller nor buyer Lo Lhe
conLracL effecLed he may volunLarlly assume warranLles
of seller. !2PSQF- ,+- [X*#>Y/ T+P( '( 3dU K,#?F+*%/ 5DD
2"34 0J6 75JII;(

4. Va|ue for be|ng ab|e to d|st|ngu|sh
Genera| ku|e: ConLracL of Agency ls valld and enforceable ln any
form - noL under Lhe SLaLuLe of lrauds.
o Lxcept|on: AuLhorlLy Lo sell land musL be ln wrlLlng.

L. A,PF.+ O+ =,R. (Art|c|es 124S and 1934)

Art|c|e 124S.
Dat|on |n payment, whereby property |s a||enated to the cred|tor |n
sat|sfact|on of a debt |n money, sha|| be governed by the |aw of sa|es.
(n)

Art|c|e 1934.
An accepted prom|se to de||ver someth|ng by way of commodatum or
s|mp|e |oan |s b|nd|ng upon part|es, but the commodatum or s|mp|e
|oan |tse|f sha|| not be perfected unt|| the de||very of the ob[ect of the
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
contract. (n)

CovetoeJ by tbe low oo soles, daLlon ln paymenL ls a LransacLlon
LhaL Lakes place when properLy ls allenaLed Lo Lhe credlLor ln full
saLlsfacLlon of a debL ln money - lL lnvolves Lhe dellvery and
Lransmlsslon of ownershlp of a Lhlng as an accepLed equlvalenL
of Lhe performance of Lhe obllgaLlon. e$@.+ '( EF?,+/ 0JD 2"34
:09 78991;(

e$@.+ '( EF?,+

Iacts: ALLy. vlLan helped ?uson and hls wlfe buy a Laxl, buL he borrowed
100,000 from Lhem. Pe execuLed several posLdaLed checks Lo
guaranLee paymenL buL all were dlshonored. vlLan execuLed a ueed of
AbsoluLe Sale over hls properLy ln 8ulacan so ?uson can elLher sell or
morLgage lL, whlle vlLan clalmed Lhey were Lo reLurn Lo hlm Lhe excess
of Lhe proceeds afLer obLalnlng Lhe money represenLed by Lhe
dlshonored checks. 1hey execuLed a Second ueed of Sale whlch vlLan
clalmed was CounLer ueed of Sale as a collaLeral for Lhe accounL of a
cerLaln Lvelyn LsLur.

Issue: WheLher or noL Lhere was a daclon en pago

ne|d: nC. 1he CourL agreed, saylng he falled Lo honor hls debLs and hls
obllgaLlon was noL exLlngulshed because he dld noL mean Lo sell or
Lransfer ownershlp of hls properLy Lo Lhe ?usons. Pe also defrauded
complalnanL by lssulng posLdaLed checks.

Doctr|ne:

ln lLs modern concepL, whaL acLually Lakes place ln Jocloo eo
poqo ls an ob[ecLlve novaLlon of Lhe obllgaLlon where Lhe Lhlng
offered as an accepLed equlvalenL of Lhe performance of an
obllgaLlon ls consldered as Lhe ob[ecL of Lhe conLracL of sale,
whlle Lhe debL ls consldered as Lhe purchase prlce. !4b$F+?*Y '(
_FX.+R :55 2"34 050 7899D;(
5

o uaclon exlsLs ln Lhe sLage of consummaLlon.
o lL ls a speclal mode of paymenL.

1. L|ements of -,?F.+ |n payment:
a. erformance of Lhe presLaLlon ln lleu of paymenL
(oolmo solveoJl) whlch may conslsL ln Lhe dellvery of a
corporeal Lhlng or a real rlghL or a credlL agalnsL Lhe
Lhlrd person,
b. Some dlfference beLween Lhe presLaLlon due and LhaL
whlch ls glven ln subsLlLuLlon (olloJ pto ollo),
c. AgreemenL beLween Lhe credlLor and debLor LhaL Lhe
obllgaLlon ls lmmedlaLely exLlngulshed by reason of Lhe
performance of a presenLaLlon dlfferenL from LhaL due.
U. '( cd2 OP.`).#Q].#C 2Y@?*Q =SF>(/ T+P(, 056 2"34
5I8 78996;.
2



1
uoo neoq 8ook, loc. (oow 8ooco Je Oto uolvetsol 8ook) v. lolqo, 371 SC8A
434 (2008), 1ecbooqos lblllpploes Mfq. cotp. v. lN8, 331 SC8A 183 (2008),
Ocompo v. looJ 8ook of tbe lblllpploes, 391 SC8A 362 (2009), u.8.1. Mot-8oy
coosttoctloo, loc. v. looes, 394 SC8A 378 (2009).
2
Apolotey v. 1lbooq 311 SC8A 414 (2006), kockvllle xcel lotetootloool xlm
cotp. v. collo, 602 SC8A 124 (2009).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
U. '( cd2 OP.`).#Q].#C 2Y@?*Q =SF>(/ T+P(

Iacts: Lo purchased sLeel scaffoldlng from k!S on a monLhly lnsLallmenL
basls. When he falled Lo make paymenLs, he execuLed a ueed of
AsslgnmenL wlLh k!S so LhaL Lhe laLLer can collecL Lhe recelvables LhaL Lo
had from !omero. When k!S Lrled Lo collecL, !omero sald LhaL Lo's
prevlous debL wlLh Lhem compensaLed hls recelvables. k!S Lhen flled a
money clalm agalnsL !omero.

Issue: WheLher or noL Lhe ueed of AsslgnmenL exLlngulshed peLlLloner's
obllgaLlon.

ne|d: nC. 1he Supreme CourL ruled LhaL Lhough a ueed of AsslgnmenL,
as ln Lhls case, may exLlngulsh an obllgaLlon, lL ls lncumbenL on Lhe
Asslgnor Lo ensure Lhe exlsLence and legallLy of Lhe credlL. Lo falled Lo
do Lhls as he asslgned non-exlsLenL credlL.

Doctr|ne:

1here ls no daLlon ln paymenL where Lhere ls no Lransfer of
ownershlp ln Lhe credlLor's favor, as when Lhe possesslon of Lhe
Lhlng ls merely glven Lo Lhe credlLor by way of securlLy. ).#?
B.+FG,PF. A*'( ".#H( '( e>>,@ U*+-F+R ".#H(/ :D1 2"34 0:0
7899I;M as when Lhe possesslon ls only by way of securlLy. !=<B
'( =F+*-,/ 5J1 2"34 5 75JJ5;(
lor Jocloo Lo arlse, Lhere musL be acLual dellvery of Lhe
properLy Lo Lhe credlLor by way of exLlngulshmenL of Lhe pre-
exlsLlng debL. =SF>FHHF+* U,]F+ B$@ ".( '( ".$#? .G 4HH*,>@/ 610
2"34 668 78998;(
5

o 8U1 SLL C8I1Lk\ 222 '( ".$#? .G 4HH*,>@/ ::6 2"34
D11 7899I;(
ln a Lrue Jocloo eo poqo, Lhe asslgnmenL of Lhe properLy
exLlngulshes Lhe moneLary debL. [+R '( 3.X,+ U*+-F+R ".#H(/
::1 2"34 :5D 7899I;(
A credlLor, especlally a bank, whlch enLers lnLo Jocloo eo poqo,
should know and musL accepL Lhe legal consequence Lhereof,
LhaL Lhe pre-exlsLlng obllgaLlon ls LoLally exLlngulshed.
!O@?,+F@>,. '( O,@? f*@? B,+CF+R ".#H(/ :00 2"34 6DJ 7899I;(
A properLy sub[ecL Lo a real esLaLe morLgage, whlch has noL
been foreclosed, may valldly be Lhe sub[ecL of Jocloo eo poqo,
for a morLgage does noL Lake away Lhe properLy rlghLs of Lhe
morLgagor, however, Lhe credlLor who becomes Lhe buyer of
Lhe properLy ls sub[ecL Lo Lhe real esLaLe morLgage llen.
!_YHF+RP. '( UFQ/ D90 2"34 6JD 7899J;(

I. Lease (Art|c|es 1484 and 148S)

Art|c|e 1484.
In a contract of sa|e of persona| property the pr|ce of wh|ch |s payab|e
|n |nsta||ments, the vendor may exerc|se any of the fo||ow|ng
remed|es:

(1) Lxact fu|f|||ment of the ob||gat|on, shou|d the vendee fa|| to pay,

1
llllovest cteJlt cotp. v. lblllpploe Acetyleoe co., loc. 111 SC8A 421 (1982),
vJo. Je Ioyme v. coott of Appeols, 390 SC8A 380 (2002), Ooq v. koboo leoJloq
cotp., 337 SC8A 316 (2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

(2) Cance| the sa|e, shou|d the vendee's fa||ure to pay cover two or
more |nsta||ments,

(3) Iorec|ose the chatte| mortgage on the th|ng so|d, |f one has been
const|tuted, shou|d the vendee's fa||ure to pay cover two or more
|nsta||ments. In th|s case, he sha|| have no further act|on aga|nst the
purchaser to recover any unpa|d ba|ance of the pr|ce. Any agreement
to the contrary sha|| be vo|d. (14S4-A-a)

Art|c|e 148S.
1he preced|ng art|c|e sha|| be app||ed to contracts purport|ng to be
|eases of persona| property w|th opt|on to buy, when the |essor has
depr|ved the |essee of the possess|on or en[oyment of the th|ng.
(14S4-A-a)

1. Def|n|t|on
Lease " lessor blnds hlmself Lo glve Lo anoLher Lhe en[oymenL
or use of a Lhlng for a prlce cerLaln, for a perlod whlch may be
deflnlLe or lndeflnlLe.
Lease wlLh opLlon Lo buy" ls a condlLlonal sale.
o Such ls a lease only ln name
When renLals ln a lease" are clearly meanL Lo be lnsLallmenL
paymenLs Lo a sale conLracL, desplLe Lhe nomenclaLure glven by
Lhe parLles, lL ls a sale by lnsLallmenLs and governed by Lhe
8ecLo Law. !)F>F+'*@? "#*-F? ".#H( '( ".$#? .G 4HH*,>@/ 51I
2"34 5II 75JIJ;(