BLAW 23A: REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS

LAW ON SALES

IDENTIFICATION DEFINITION OF TERMS (from book)

Contract of sale Contract whereby one of the parties (seller/vendor) obligates himself to deliver something to the
other (buyer/purchaser/vendee) who, on his part, binds himself to pay therefore a sum of money
or its equivalent (price).
Aleatory contract One of the parties or both reciprocally bind themselves to give or to do something in consideration
of what the other shall give or do upon the happening of an event which is uncertain, or which is
to occur at an indeterminate time.
Expropriation Forced sale
Price Cost at which something is obtained in exchange for something else. It does not generally include
goods or merchandise and other things although they have their own value in money.
Natural elements Those which are deemed to exist in certain contracts, in absence of any contrary stipulations like
warranty against eviction or hidden defects.
Accidental elements Those which may be present or absent depending on the stipulations of the parties, like conditions,
interest, penalty, time or place of payment, etc.
Absolute sale Where the sale is not subject to any condition whatsoever and where title or ownership passes to
the buyer upon delivery of the thing sold.
Conditional sale Where the sale contemplates a contingency, and in general, where the contract is subject to certain
conditions usually the full payment of the purchase price.
Licit or lawful It should not be contrary to law, morals, good customs, public order, or public policy.
Per se Of its nature
Per accidens Because of some provisions of law declaring it illegal.
Determinate thing It is particularly designated or physically segregated from all others of the same class. It is
identified by individuality.
Expected thing Not yet in existence, and not to the hope or expectancy which already exists.
Existing goods Goods owned or possessed by the seller.
Future goods Goods to be manufactured, raised, or acquired.
Fungible goods Goods of which any unit is, from its nature or by merchantile usage, treated as the equivalent of
any other unit such as grain, oil, wine, gasoline, etc.
Contract of agency A person binds himself to render some service or to do something in representation or on behalf
of another, with the consent or authority of the latter.
Contract for a piece of work The contractor binds himself to execute a piece of work for the employer, in consideration of a
certain price or compensation. The contractor may either employ his labor or skill, or also furnish
the material.
Contract of barter or One of the parties binds himself to give one thing in consideration of the other’s promise to give
exchange one thing in consideration of the other’s promise to give another thing.
Judicial or execution sale One made by court with respect to the property of a debtor for the satisfaction of his unpaid
indebtedness.
Negotiation Period from the time the prospective contracting parties indicate interest in the contract to the
time the contract is perfected.
Perfection Concurrence of the essential elements of the sale which are the meeting of the minds of the parties
as to the object of the contract and upon the price.
Consummation Parties perform their respective undertakings under the contract of sale, culminating in the
extinguishment thereof.
Policitation Unilateral promise or offer to sell or to buy a thing which is not accepted.
Option Privilege existing in one person for which he has paid a consideration which gives him the right
to buy/sell. It is a preparatory contract separate and distinct from the main contract itself.
Res perit domino The thing perishes with the owner.
“Bulk of the goods” Goods themselves as distinguished from the sample and/or description with which they must
correspond.
Sale by description Seller sells things as being of a particular kind, the buyer not knowing whether the seller’s
representations are true or false, but relying on them as true.
Sale by sample Parties contracted solely with reference to the sample, with understanding that the bulk was like
it.
Earnest money Money given by the buyer to the seller to bind the bargain. It is actually a partial payment.
Attachment Process whereby the property of a defendant is placed in custody of the law to await final
determination of a suit.
Execution Remedy for the enforcement of a final judgement of a court.
Absolute incapacity Persons who cannot bind themselves.
Relative incapacity Exists only with reference to certain persons or certain class of property.
Necessaries Those things which are needed for sustenance, dwelling, clothing and medical attendance, in
keeping with the financial capacity of the family of the incapacitated person.
Marriage settlement Also called ante-nuptial contract. An agreement entered into by persons who are about to be
united in marriage, and in consideration thereof for the purpose of fixing the property relations
that would be followed by them for the duration of the marriage.
A thing lost It perishes or goes out of commerce or disappears in such a way that its existence is unknown or
it cannot be recovered.
Tradition Derivative mode of acquiring ownership by virtue of which one who has the right and intention
to alienate a corporeal thing, transmits it by virtue of a just title to one who accepts the same.
Public instrument Acknowledged before a notary public or any official authorized to administer oath, by the person
who executed the same.
Constructive or symbolic To effect the delivery, the parties make use of a token symbol to represent the thing delivered.
delivery
Traditio longa manu Takes place by mere consent or agreement of the contracting parties as when the vendor merely
points to the thing sold which shall thereafter be at the control and disposal of the vendee.
Traditio brevi manu Vendee has already the possession of the thing sold by virtue of another title as when the lessor
sells the thing leased to the lessee.
Traditio constitutum Opposite of traditio brevi manu. It takes place when the vendor continues in possession of the
possessorium property sold not as owner but in some other capacity, as for example, when the vendor stays as
a tenant on the vendee.
Quasi-traditio Tradition can only be made with respect to corporeal things.
Sale or return Contract by which 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.
Sale on trial or approval Contract in the nature of an option to purchase if the goods prove satisfactory, the approval of the
buyer being a condition precedent.
Resolutory condition One the happening of which will extinguish an obligation or right already existing.
Suspensive condition One the happening of which will give rise to an obligation or right.
Document of title to goods Includes any bill of lading, dock warrant, quedan or warehouse receipt or order for the delivery
of goods, or any other document used in the ordinary course of business in the sale or transfer of
goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize
the possessor of the document to transfer or receive, either by indorsement or by delivery, goods
represented by such document.
Goods Includes all chattels personal but not things in action or money of legal tender in the Philippines.
The term includes growing fruits or crops.
Order Relating to documents of title, means an order by indorsement on the documents.
Bill of Lading Contract or receipt for the transport of goods and their delivery to the person named therein, to
order, or to bearer.
Dock warrant An instrument given by dock owners to an importer of goods warehoused on the dock recognizing
the importer’s title to the said goods.
Warehouse receipt A contract or receipt for goods deposited with a warehouseman containing the latter’s undertaking
to hold and deliver the said goods to a specified person, to order, or to bearer.
Quedan A warehouse receipt usually for sugar received by a warehouse man.
Negotiable documents of Those by terms of which the bailee undertakes to deliver the goods to the bearer and those by the
title terms of which the bailee undertakes to deliver the goods to the order of a specified person.
Non-negotiable documents Those by the terms of which the goods covered are deliverable to a specified person.
of title
Unpaid seller One who has not been paid or tendered the whole price or who has received a bill of exchange or
other negotiable instrument as conditional payment and the condition on which it was received
has been broken by reason of the dishonor of the instrument.
Lien Right to retain goods.
Stoppage in transitu He may resume possession of the goods while they are in transit, when the buyer is or becomes
insolvent.
Accessions Fruits of a thing, or additions to or improvements upon a thing such as the young of animals,
house or trees on a land, etc.
Accessories Anything attached to a principal thing for its completion, ornament, or better use such as picture
frame, key of a house, etc.
Condition An uncertain event or contingency on the happening of which the obligation of the contract
depends.
Warranty Any representation made by the seller of the thing with respect to its character, quality, or
ownership, by which he induces the buyer to purchase the same relying on said representation.
Express warranty Any affirmation of fact or any promise by the seller relating to the thing, the natural tendency of
which is to induce the buyer to purchase the thing, and the buyer thus induced, does purchase the
same.
Implied warranty Derives by implication or inference from the nature of the transaction or the relative situation or
circumstances of the parties, irrespective of any intention of the seller to create it.
Caveat emptor Buyer beware
Caveat venditor The vendor is liable to the vendee for any hidden faults or defects in the thing sold, even though
he was not aware thereof.
Eviction Judicial process whereby the vendee is deprived of the whole or part of the thing purchased by
virtue of a final judgement based on a right prior to the sale or an act imputable to the vendor.
Servitude or easement An encumbrance imposed upon an immovable for the benefit of another immovable belonging to
a different owner.
Hidden defect It was not known and could not have been known to the vendee.
Warranty of merchantability Warranty that goods are reasonably fit for the general purpose for which they are sold.
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 purposes.

IDENTIFICATION DEFINITION OF TERMS (from notes)

Commodities futures Agriculture related to lumber, (may iba pang examples di q maalala)
Recto law Counterpart of Maceda law
Maceda law • Paid at least 2 years of amortization, you are entitled to 50% redemption of purchase price.
• Paid more than 5 years, you are entitled to 50% redemption of all payments made with a
premium 5% recoverable for every year of payment after the 5th year provided that total
redemption value will not exceed 90%.
Letter of credit Confirmation na hind pa bayad or utang pa. It is attached to bill of lading.
Rescind Withdraw, cancel, terminate.
FRIA Financial Rehabilitation and Insolvency Act
Lien Right to claim
Custom’s duty Money levied on import
Waiver Surrender of rights
Logistics Movement of cargo/goods
Attornment Performed upon surrendering Bill of Lading. No delivery, no attornment.
Immovable properties Part daw dito yung mango fruit in a mango tree.
Possession Use and abuse of property.
Ancestral lands Land owned by ancestors. No Torrens title.
Torrens title
Evidence May either be document or testaments.
Title Right to assert claim
Res Thing
Perit Perish
Domino Dominium. Ownership
Corporeal things Has physical existence
Incorporeal things Intangible things
Ports in the Ph Manila – biggest. Cebu – 2nd biggest
Consignation Kapag hindi tinaggap ang payment, iaakyat na sa judge and concern(?)

ENUMERATION
Characteristics of contract of 1. Consensual
sale 2. Bilateral
3. Onerous
4. Commutative
5. Nominate
6. Principal
Essential requisites of a 1. Consent or meeting of the minds
contract of sale 2. Object or subject matter
3. Cause or consideration
Kinds of contract of sale 1. Absolute
2. Conditional
Requisites concerning object 1. Determinate
2. Licit or lawful
3. Not be impossible
Stages of a contract of sale 1. Negotiation
2. Perfection
3. Consummation
Kinds of promise in article 1. An accepted unilateral promise to sell in which the promisee (acceptor) elects to buy
1479 2. An accepted unilateral promise to buy in which the promisee (acceptor) elects to sell
3. A bilateral promise to buy and sell reciprocally accepted in which either of the parties chooses
to exact fulfillment
Remedies of vendor in sale 1. Elect fulfillment upon the vendee’s failure to pay
of personal property payable 2. Cancel the sale, if the vendee shall have failed to pay two or more installments
in installments 3. Foreclose the chattel mortgage, if one has been constituted, if the vendee shall have failed to
pay two or more installment
Persons prohibited from 1. Guardian
acquiring property in 2. Agents
relation with persons under 3. Executors and administrators
their charge 4. Public officers and employees
5. Judicial officers and employees and lawyers
6. Others especially disqualified by law
Principal obligations of the 1. To transfer the ownership of the determinate thing sold
vendor 2. To deliver the thing
3. To warrant against eviction and hidden defects
4. To take care of the thing, pending, delivery, with proper diligence
5. To pay for the expenses for the execution and registration of the deed of sale, unless there is
a stipulation to the contrary
In case of incorporeal things, 1. By the execution of a public instrument
delivery is effected: 2. When that mode of delivery is not applicable, by the placing of the titles of ownership in the
possession of the vendee
3. By allowing the vendee to use his rights as new owner with the consent of the vendor
Exception to the rule sale by 1. Where the owner of the goods is, by his conduct, precluded from denying the seller’s
a person not the owner authority to sell
2. Where the law enables the apparent owner to dispose of the goods as if he were the true
owner thereof
3. Where the sale is sanctioned by statutory or judicial authority
4. Where the sale is made at merchant’s stores, fairs, or markets
5. Where the seller has a voidable title which ahs not been avoided at the time of the sale
6. Where seller subsequently acquires title
Requisites for acquisition of a. Before the title of the seller has been avoided
good title by buyer b. In good faith for value]
c. Without notice of the seller’s defect of title
Most common forms of 1. Bill of lading
documents of title 2. Dock warrant
3. Warehouse receipt
Seller’s duty after delivery to 1. To enter on behalf of buyer into such contract reasonable under the circumstances
carrier 2. To give notice to buyer regarding necessity to insure goods
Remedies of an unpaid seller 1. A lien on the goods or right to retain them for the price while he is in possession of them
2. In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has
parted with the possession of them
3. A right of resale as limited by this title
4. A right to rescind the sale as likewise limited by this title
When unpaid seller losses 1. Delivery to agent or bailee of the buyer
his lien 2. Possession by buyer or his agent
3. Waiver of the lien
Requisites for the exercise of 1. The seller must be unpaid
right of stoppage in transitu 2. The buyer must be insolvent
3. The goods must be in transit
4. The seller must either actually take possession of the goods sold or give notice of his claim
to the carrier or other person in possession
5. The seller must surrender the negotiable document of title, if any, issued by the carrier or
bailee
6. The seller must bear the expenses of delivery of the goods after the exercise of the right
When goods in transit 1. After delivery to a carrier or other bailee and before the buyer or his agent takes delivery of
them
2. If the goods are rejected by the buyer, and the carrier or other bailee continues in possession
of them
When goods considered no 1. After delivery to the buyer or his agent in that behalf
longer in transit 2. If the buyer or his agent obtains possession of the goods at a point before the destination
originally fixed
3. If the carrier or bailee acknowledges to hold the goods on behalf of the buyer
4. If the carrier or bailee wrongfully refuses to deliver the goods to the buyer
Ways of exercising the right 1. By taking actual possession of the goods
to stop 2. By giving notice of his claim to the carrier or bailee
When resale is allowable 1. Where the goods are perishable in nature
2. Where the right to resell is expressly reserved, in case the buyer should make a default
3. Where the buyer delays in the payment of the price for an unreasonable time
 4. Where the seller has a right of lien
5. Where a seller has a right to stop the goods in transitu
When the seller may rescind 1. Where the right to rescind is expressly reserved in case the buyer should make a default
2. Where the buyer delays in the payments of the price for an unreasonable time
3. Where a seller has a right of lien
4. Where a seller has a right to stay the goods in transity
When article 1544 applies 1. The two or more sales transactions must constitute valid sales
2. The two or more sale transactions must pertain to exactly the same subject matter
3. The two or more buyers at odds over the rightful ownership of the subject matter must each
represent conflicting interests
4. The two or more buyers at odds over the rightful ownership of the subject matter must each
have bought from the very same seller
Implied warranties 1. Implied warranty as to seller’s title
2. Implied warranty against hidden defects or unknown encumbrances
3. Implied warranty as to fitness or merchantability
When implied warranty not 1. “as is and where is” sale
applicable 2. Sale of secondhand articles
3. Sale by virtue of authority in fact or law
Essential elements of the 1. The vendee is deprived in whole or in part of the thing purchased
warranty against eviction 2. He is so deprived by virtue of a final judgement
3. The judgement is based on a right prior to the sale or an act imputable to the vendor
4. The vendor was summoned in the suit for eviction at the instance of the vendee
5. There is no waiver on part of the vendee
Requisites for warranty 1. The defect must be important or serious
against hidden defects 2. It must be hidden
3. It must exist at the time of the sale
4. The vendee must give notice of the defect to the vendor within a reasonable time
5. The actions for rescission or reduction of the price must be brought within the proper period
– six months from the delivery of the thing sold or within 40 days from the date of the delivery
in case of animals
6. There must be no waiver of warranty on the part of the vendee
When defect important 1. It renders the thing sold unfit for the use for which it is intended
2. If it diminishes its fitness for such use to such an extent that the vendee would not have
acquired it had he been aware thereof or would have given a lower price for it.