o
ARTICLE 1476 TO 1488
SALE BY AUCTION:
Art 1476
(1) Where goods are put up for sale by auction
in lots, each lot is the subject of a separate
contract

Discussion
Lot refers to properties, eg car, books, jewelries

In cases where different lot is sold by
the same seller and bought by the same
buyer, there is still a separate contract
per each lot bought.
Example
A has 2 cars. He can auction the 2 cars as one
lot or 2 lots.

If 2 lots, each should be subject of a
separate contract of sale
(2) A sale by auction is perfected when the
auctioneer announces its perfection by the fall
of the hammer, or in other customary manner.
Until such announcement is made, any bidder
may retract his bid; and the auctioneer may
withdraw the goods from the sale unless the
auction has been announced to be without
reserve.

Discussion
PERFECTION: When auctioneer announces its
perfection by the fall of the hammer or in other
customary manner.
1. Before the hammer falls, the bidder can
retract his or her bud
2. Before the hammer falls, the seller may
withdraw the goods from the sale
Seller cant withdraw/EXCEPT:
the auction has been
announced without reserve
 In this case, the seller
can only withdraw if
there is no bid.
Why can one withdraw or retracts before
perfection?
 Since, EVERY BIDDING IS A MERE OFFER
(3) A right to bid may be reserved expressly by
or on behalf of the seller, unless otherwise
provided by law or by stipulation
(4) Where notice has not been given that a sale
by auction is subject to a right to bid on behalf
of the seller, it shall not be lawful for the seller
to bid himself or to employ or induce any
person to bid at such sale on his behalf or for
the auctioneer, to employ or induce any
person to bid at such sale on behalf of the
seller knowingly to take any bid from the seller
or any person employed by him. Any sale
contravening this rule may be treated as
fraudulent by the buyer.
Discussion
1. The seller can bid, provided,
a. such right to bid was reserved
b. and notice was given that the
sale by auction is subject to a
right to bid on behalf of the
seller.
2. Seller may employ others to bid for him
or her
o Notice to the publics that the
auction is subject to the right to
bid on behalf of the seller
3. By-bidders of Puffers
o Persons who bid for the seller,
but are not themselves bound
ACTUAL AND CONSTRUCTIVE DELIVERY
MUTUAL AND UNILATERAL PROMISE
Art. 1477
Art 1479:
The ownership of the thing sold shall be
transferred to the vendee upon the actual or
constructive delivery thereof. (GENERAL RULE)
A promise to buy and sell a determinate thing
for a price certain is reciprocally demandable.
(refers to mutual promise)

Art 1478. The parties may stipulate that
ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
(EXCEPTION TO 1477)

Ownership
o Transfer at deliver not in
perfection

GR: Payment is not necessary for the
transfer of ownership
Exception: 1478, parties can stipulate
that ownership will only transfer after
full payment


Kinds of delivery
a. Actual delivery (Art 1497)
b. Constructive (Art 1498 - 1601)
i.
Any other manner
signifying that the
possession is
transferred (1496)
Example
(1) A sold his car to B for 1000 pesos. A
delivered the car the day of the perfection but
they contemplated that the delivery should be
done next week.
Q: Who is the owner of the car if it is still
unpaid?
A: B is the owner bcs there is already a delivery
Q: Same situation with (1), but instead B paid
first, when the delivery will still occur next week
A: A is still the owner, bcs there is no delivery

Only have the right to demand the
fulfillment of the promise (technically
not perfected yet)
BUT ACCORDING TO ATTY FROM THE
VID, it is good as a perfected contracted
(2nd para): An accepted unilateral promise to
buy or to sell a determinate thing for a price
certain is binding upon the promisor if the
promise is supported by a consideration
distinct from the price. (only one promised and
the other accepted)
Example
(1) B promised A to sell his dog, and A
accepted such promise
Q: IS the promise binding to B, in other words
can A compel B to fulfill his promise?
A: YES, if supported by a consideration distinct
from the price
(2) Y is an Agent of a Mitsubishi branch, X
an customer planned to buy a car. So X
ask for the price of an Estrada, which is
1.5 million. Y saw how X still reluctant
to buy the car, so he offer him a
discount of 200,000 pesos. Still not sure
(X), Y said that I'll give it to you for 1.3
million and 1 week to think. SO X gave Y
1k as a consideration.
Q: SO can Y withdraw the offer?
A: NO, bcs it is an option contract
What is an Option contract?

A contract granting a privilege in one
person, for which he has paid a
consideration, which gives him the right
to buy certain merchandise or specified
property, from another person, at any
time within the agreed period, at a fixed
price.
o Object: the option to decide
within a week (base on the
example)
o Consideration: the price or
consideration given in case of
the example it's the 1k
o X can enforce only the option
contract NOT THE CONTRACT
OF SALE
Should fungible things be sold for a price fixed
according to weight, number, or measure, the
risk shall not be imputed to the vendee until
they have been weighted, counted, or
measured, and delivered, unless the latter has
incurred in delay.
Discussion

a. If SELLER BEARS THE LOSS
o Buyer need not to pay
b. If BUYER BEARS THE LOSS
o Buyer still need to pay
Seller

Policitiacion
 A unilateral promise to buy or to sell
which is not accepted
 Produces no juridical effect and creates
no legal bond.
Bilateral promise to buy or sell
 Gives to the contracting parties
personal rights
 No need for a consideration which is
separate and distinct from the selling
price
OWNER BEARS THE LOST
Art. 1480
Any injury to or benefit from the thing sold,
after the contract has been perfected, from the
moment of the perfection of the contract to
the time of delivery, shall be governed by
Articles 1163 to 1165, and 1262
This rule shall apply to the sale of fungible
things, made independently and for a single
price, or without consideration of their weight,
number, or measure.
Who bears the loss
Who bears the loss (in each stages of a
contract): OWNER BEARS THE LOSS
a. BEFORE PERFECTION
o Seller, since he is still the
owner (no contract of sale
yet)
b. AT PERFECTION
o Contract of Sale has NO EFFECT
o Seller
b.1. AT PERFECTION; PARTIALLY
LOSS (THE THING)
 Buyer
 Can withdraw the
contract
 Can continue by
demanding the
remaining part and
pay the proportion
to the total sum
agreed upon
c. DELIVERY
o Buyer
d. AFTER PERFECTION, AFTER DELIVERY
o Buyer

Who Bears the lost; AFTER
PERFECTION; BEFORE DELIVERY

GR: Buyer bears the lost, if the thing is
i.
Non- fungible things
(irreplaceable; eg house and lot)
ii.
Fungible things w/o
consideration weight, number
and measure
Articles shown in para 1; from
perfection to delivery; injury or benefit
a. 1163

b. 1164

Exception: Seller bears the loss, if the
thing is
i.
Fungible goods with consideration
to weight, number and measure
(suspensive condition)
1.
Exception to the 1st
exception
a.
: if BUYER delays in
terms of Weighing,
counting and
measure: Buyer
bear the lost
ii.
iii.


Buyer has the right to the
fruits at perfection
But no real rights until
delivery
c. 1165


Exception: Seller guilty of F, N, D, or
Violation of COS
Object is generic, generic thing never
perishes
Why Buyer bears the lost AFTER
PERFECTION BUT BEFORE DELIVERY
a. Historically, Roman Law
 Risk if the thing sold passes
to the buyer even though he
has not receive the thing
b. Art 1537
 Fruits pertained to the
Buyer from perfection of the
contract as such he must
shoulder the disadvantages
c. Object is specific
 Loss of the thing w/o the
fault of the seller
extinguishes the obligation
d. Price is generic
 Loss of generic thing does
not extinguish the
obligation
Seller obligated to take care
of the thing with the due
diligence of the father of
the family

The thing is determinate,
buyer can compel seller to
deliver
If generic, buyer can comply
the obligation by other at
the expense of the seller
 But SELLER BEARS
THE LOSS
 If he incurs
DELAY
 Or promises
to deliver
the thing to
2 or more
persons
with
different
interest
(fortuitous
or not)
Loss by fortuitous event; AFTER
PERFECTION, BEFORE DELIVERY
a. Exception to GR: SELLER BEARS THE
LOSS
 If he incurs DELAY
 Or promises to deliver the
thing to 2 or more persons
with different interest
a. 1262

Obligation delivery of a
determinate thing Shall be
extinguished if
 it should be lost or
destroy w/o fault of
the seller and
BEFORE DELAY
Q: Who bears the loss?
A: SELLER, bcs the suspensive condition was
not fulfilled yet that it need to be W,C and M
to determine the price
SALE BY DESCRIPTION, SAMPLE, DESCRIPTION
AND SAMPLE
Example
Art: 1481
(1) A and B entered into a COS on Jan 1 and will
be deliver on June 1. A seller, B the buyer. But
on march 1,the house was set into fire by a
third person.
Fact Check: The house is a NON-FUNGIBLE
GOOD
Q: Is A required to deliver the house?
A: NO OBLIGATION TO DELIVER
Q: Is B required to pay the house?
A: He still need to pay AS HE BEARS THE LOST
AS THE BUYER
In the contract of sale of goods by description
or by sample, the contract may be rescinded if
the bulk of the goods delivered do not
correspond with the description or the sample,
and if the contract be by sample as well as by
description, it is not sufficient that the bulk of
goods correspond with the sample if they do
not correspond with the description.
The buyer shall have a reasonable opportunity
of comparing the bulk with the description or
the sample.

(2) A and B entered into a COS on Jan 1 and will
be deliver on June 1. A seller, B the buyer. But
on march 1,the warehouse was set into fire by a
third person.
Fact Check: The RICE IS A FUNGIBLE GOOD
Q: Who bears the lost
A: BUYER
Q: Is A required to deliver the sack of rice?
A: NO OBLIGATION TO DELIVER
Q: Is B required to pay the sack of rice?
A: He still need to pay AS HE BEARS THE LOST
AS THE BUYER
(3) Same example with (2)
Additional Info: The rice needed to be weighted
How do we determine of the sale is of
description, of sample, or of
description and sample?
First: Seller will introduce his product to
buyer by either the 3
a. Perfection happened BEFORE buyer
get to see the BULK OF GOODS
i.
It is SALE OF DESCRIPTION,
SAMPLE, DESCRIPTION AND
SAMPLE
b. Perfection happened AFTER buyer
inspect the BULK OF GOODS
i.
Not a SALE OF
DESCRIPTION, SAMPLE,
DESCRIPTION AND SAMPLE
ii.
Contract of Sale
iii.
Buyer did not rely on D, S,
D&A to enter into a
contract

o
Sale by Description
o Seller describe the goods
o Buyer has not yet seen the good




Sale by Sample
o Buyer has seen a sample of the
good from the bulk
o The bulk should agree with the
sample
o Should be the same in character
and quality
Proof of perfection of the
contract
Earnest price must
o Return to the buyer when seller
cannot deliver
o But buyer can exercise the right
to renounce
Earnest
money
Option
money
Contract is
perfected
Contract is
not perfected
Sale by description and sample
o Describe and presented the
sample to the buyer
o The bulk should agree to both D
and S
o If the bulk did not agree with D
or S, then one can rescind the
contract
When paid?
Part of the
purchase
price?
/
X
Remedies when the good do not align
with D, S or D&S
o Rescind/cancel the COS
i.
Return the goods
ii.
Return the money
o Keep the goods but conduct
legal action in the basis of
breach of warranty
Refund
/
X
Promise to
sell and buy
Example
A sell his house to B for 1000. B gave 100 as an
earnest money.
Q: How much does B need to pay A
A: Only 900 pesos
EARNEST MONEY
Art. 1482
Whenever earnest money is given in a contract
of sale, it shall be considered as part of the
price and as proof of the perfection of the
contract.


Earnest Money or Arras or Deposit, def
o To show that the Buyer is
earnest
o And given to the seller to bind
the bargain
Earnest Money, significance
o Part of the purchase price
ORAL & WRITTEN CONTRACT
Art 1483
Subject to the provisions of the Statute of
Frauds and of any other applicable statute, a
contract of sale may be made in writing, or by
word of mouth, or partly in writing and partly
by word of mount, or may be inferred from the
conduct of the parties.

Validity of COS
1. Made in oral
2. Made in writing
3. Partly oral, and partly writing
Example
NOTE!! A valid contract does not mean that it is
also enforceable

A sell his house to B for 5 million.
For enforceability; the court can
compel the parties to do what is
stipulated
1. Real property and interest therein
i.
Interest; e.g Easement,
usufruct
ii.
Must be in writing to be
enforceable
iii.
Selling through agent, the
authorization
1. Must be in writing,
otherwise, if oral,
the COS is void even
if the contract itself
is written and
notarized
2. Movable property
i.
500 above, must be in writing to
be enforceable
ii.
500 below, can be done orally
3. Sale of Immovable property
i.
Must be in writing to be
enforceable and valid
ii.
To be enforceable against
THIRD PARTY, COS
1. must be a public
instrument (notarized)
2. Registered in the
Registry of Property
Oral
Written
Oral w/
delivery
and
paymen
t
Oral agent;
cos public
docu
Written
agent; cos
oral
Written
agent; cos
public docu
Valid
/
/
/
X
/
/
Enforce
able
X
/
/
X
X
/
(bcs
COS is
already
consum
ated)
Recto Law, sale on installment, remedies of
seller
Art 1484
In a contract of sale of personal property the
price of which is payable in installments, the
vendor may exercise any of the following
remedies:
a. Exact fulfillment of the obligation,
should the vendee fail to pay;
b. Cancel the sale, should the vendee's
failure to pay cover two or more
installments;
c. Foreclose the chattel mortgage or the
thing sold, if one has been constituted,
should the vendee's failure to pay
cover two or more installments. In this
case, he shall have no further action
against the purchaser to recover any
unpaid balance of the price. Any
agreement to the contrary shall be
void.

Requisites
1. Object must be MOVABLE
PROPERTY
2. Must be INSTALLMENTS (should
not be straight payment or DP +
SP)

What does remedy by the seller
means?
Situation: A sold his car to B for 500k.
They agreed that B will pay the remaining
price by installment of 50k. B will pay 5k
each installment (50 installments)
Problem: What if B will stop paying from
the 3rd installment and so on. What
should the remedy of the seller?
Remedies:
1. Exact fulfillment
 Applied if 1 UNPAID
INSTALLMENT
2. Cancel the sale
 APPLIED IF 2 OR MORE UNPAID
INSTALLMENT
3. Foreclose the mortgage
 APPLIED IF 2 OR MORE UNPAID
INSTALLMENT
Note!! Remedies are alternative not
cumulative


What contracts does this article
applies?
1. Sale
2. Lease with option to buy (1485)
What does EXACT FULFILLMENT
CONSTITUTE?
o Seller has the RIGHT TO
DEMAND PAYMENT
o Seller can sue Buyer to recover
the payment
 THE COURT then will
compel the buyer to pay

What does CANCEL THE SALE
CONSTITUTE?
o Seller must return the payment
o Buyer must return the object
o However, the parties can
stipulate that the payment will
not be returned as long as the
thing is not unconsumable or
against conscience
 Example: they can
agree that the DP will
not be returned

What does FORECLOSE THE CHATTEL
MORTGAGE CONSTITUTE?
o Applicable if the thing is entered
into a chattel mortgage
o CHATTEL MORTGAGE, DEF
 LOAN that naka sangla
a personal property
o Seller will retrieve the property,
but NOT NECESSARILY RETURN
THE PAYMENT ALREADY PAID
BY THE BUYER.
o Seller cannot recover any
unpaid payment from the buyer
Example
(1) A sold his car to B for 500k, will be paid 50k
per installment.
Q: B did not paid in 3rd installment
R: A can choose option A or Exact fulfillment or
sue A
Q: B did not paid 4th installment also
R: A can either cancel the sale or foreclose the
chattel mortgage if the car is mortgage
(2) A bought a car from Toyota. Bought under
Toyota finance and chattel mortgage. A will pay
it in installment for 60 mos ,30k
Q: A did not paid on the 31st and 32nd
installment. So Toyota foreclose the mortgage,
and resell it through an auction. A have still
unpaid 600k. And the Toyota resell the car for
500k. Do you need to pay 100k
A: NO
Q: Same question to 2 but instead Toyota
cancel the sale and file a case against A as an
ordinary creditor. The court auction the car and
retrieve 500k which has a deficiency of 100k. Do
A need to pay the 100k?
A: Required to pay the 100k
(3) A sold his car to B, with an agreed term of
DP and the balance of 1 million will be paid for 1
month. After 1 month, the 1 million is entered
into a chattel mortgage that is payable for 1
month. B failed to paid 1M in one month. So the
car was regmata and A recovered 800k.
Q: Does B need to pay the 200k unpaid?
A: Yes, because Art 1484 (option 3) does not
applied in this case. Chattel mortgage law is
applied instead.
car after 1 year for 380k. The 120k installment
will be applied.
A: It is a lease contract but the intention of the
party shows that it is a sale in installment,
since the 120k is applied to the purchase price
(2) A sold his printer to B for 60k with a term 5k
per month. The printer is in a chattel mortgage.
B failed to pay the 4th to 6th installment. A
retrieve to the printer and file a case for the 3
uncollected installments.
Q: Will the case pass to court?
A: NO, because by retrieving the printer he is
foreclosing the contract which is option 2.
Note that the remedies is alternative, once the
Lessee chooses a remedy he cannot use the
other remaining options
STIPULATION INSTALLMENTS NOT RETURN
Art. 1486
LEASE WITH OPTION TO BUY
Art. 1485
The preceding article shall be applied to
contracts purporting to be leases of personal
property with option to buy, when the lessor
has deprived the lessee of the possession or
enjoyment of the thing.
In the cases referred to in the two preceding
articles, a stipulation that the installments or
rents paid shall not be returned to the vendee
or lessee shall be valid insofar as the same may
not be unconscionable under the
circumstances.

What option does this Art applies?
o Only to option B, cancel the sale
GR: Buyer will return the personal
property, Seller will return the payment

Purporting, defined
o A contract that is pretending, in
this case as a lease of personal
property with option to buy
despite its over interpretation
showcase a COS
Exception: 1486, Seller can keep the
installments or rents as long as it is not
UNCONSCIONABLE (di labag sa
konsensya)
Example
Example: Lease contract = COS (installment)
(1) A lease his car to B for 500k. A will collect
10k per month. A also told B that he can buy the
A sold his phone to B for 5k on monthly
installment 1k per month. B did not paid
the 3rd installment and onwards. And A
retrieve his phone. And B returned it
Q: Does A required to return the 2k to B?
A: YES, based on the general rule
Q: there is a stipulation that A will not
returned the 2k to B, is it valid?
A: Yes as long it is unconscionable: e.g
keeping the down payment, returning
the installment with the reasonable
amount
PAYMENTS OF SALE & EXPROPRIATION
Art. 1487
The expenses for the execution and
registration of the sale shall be borne by the
vendor, unless there is stipulation to the
contrary.


Execution/ deed of sale
Registration
- GR: paid by the SELLER
- Exception: BUYER if the
stipulation said so
Art 1488
The expropriation of property for public use is
governed by special laws

Expropriation, defined
o Involuntary in nature, the owner
may be compelled to surrender
the possession when all
essential requisites has been
complied with
Example
The government can compel the owner of the
house or the land to sell its property or remove
for road widening

Requisites of expropriation
1. Taken by competent authority
2. Observance of the process of
law
3. Taking for public use
4. Payment of just compensation
Note!! This is not a contract of sale since
expropriation is INVOLUNTARY. A COS must be
voluntary