LAW ON SALES – Chapter 9
General provisions (1) Goods do not include things or choses in action or
negotiable instruments.
Article 1636. In the preceding articles in this Title
governing the sale of goods, unless the context or (a) A chose in action is any claim or right which may be
subject matter otherwise requires: pleaded in a suit at law, such as a claim of reparation for
a tort or quasi-delict, or a right acquired under a
(1) "Document of title to goods" includes any bill of
contract.
lading, dock warrant, "quedan," or warehouse receipt
or order for the delivery of goods, or any other (b) Stock certificates have been held to be goods within
document used in the ordinary course of business in the the meaning of the U.S. Uniform Sales Act. (Babb &
sale or transfer of goods, as proof of the possession or Martin, op. cit., p. 86.)
control of the goods, or authorizing or purporting to
(c) Real property is not the proper subject of a
authorize the possessor of the document to transfer or
transaction involving a sale of goods within the
receive, either by indorsement or by delivery, goods
definition of the term. However, growing crops or fruits
represented by such document.
which are agreed to be severed under the contract of
"Goods" includes all chattels personal but not things in sale are treated as goods and not as interest in realty.
action or money of legal tender in the Philippines. The
(d) The U.S. Uniform Commercial Code excludes money
term includes growing fruits or crops.
from the term “goods” but only where money is the
"Order" relating to documents of title means an order medium of payment.
by indorsement on the documents.
(e) Any transaction between the parties, even if in the
"Quality of goods" includes their state or condition. form of an unconditional contract to sell or even if in
the form of present sale, is excluded from a sale of
"Specific goods" means goods identified and agreed
goods if the parties to the transaction intended that the
upon at the time a contract of sale is made.
transaction operate only as a security transaction; but
An antecedent or pre-existing claim, whether for money the provision on sales will govern the general sales
or not, constitutes "value" where goods or documents aspects of such transaction. (Ibid., p. 176.)
of title are taken either in satisfaction thereof or as
(2) Ascertained goods means goods that are identified
security therefor.
and agreed upon as forming the subject matter of the
(2) A person is insolvent within the meaning of this Title bargain.
who either has ceased to pay his debts in the ordinary
(a) They are specific if they are identified and agreed
course of business or cannot pay his debts as they
upon at the time the contract of sale is made.
become due, whether insolvency proceedings have been
commenced or not. (b) If identification takes place afterwards, the goods
are specified but not specific.
(3) Goods are in a "deliverable state" within the
meaning of this Title when they are in such a state that (c) Existing goods (owned or possessed by the seller)
the buyer would, under the contract, be bound to take may or may not be specific.
delivery of them. (n)
(d) Future goods (to be manufactured or acquired by
the seller after the making of the contract to sell)
cannot be specific.
Definition of terms.
This article defines or explains the various terms used in
the preceding articles governing the sale of goods. They Article 1637. The provisions of this Title are subject to
hardly require comment. The definitions in this article the rules laid down by the Mortgage Law and the Land
do not apply if the context or subject matter of any Registration Law with regard to immovable property.
particular portion of the law otherwise requires.
