SALES
Chapter 1 – Nature and Form of the Contract
CHAPTER 1
c. Onerous – to acquire the rights, valuable consideration
must be given.
NATURE AND FORM OF THE CONTRACT
Article 1458 . By contract of sale one of the contracting parties
obligate himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefore a price
certain in money or its equivalent.
Sales – a contract where one party (seller or vendor) obligates
himself to transfer the ownership of and to deliver a
determinate thing, while the other party (buyer or vendee)
obligates himself to pay for said thing a price certain in money
or its equivalent.
Under Roman Law, sale was termed avenditio.
French refer to the contract as a venta


Today the
The vendor need not be the owner at the time the sale
is perfected. It is sufficient that he is the owner at the
time the thing sold is deliver.
Suppose Art. 1458 did not specify that the seller must
transfer the ownership of the object, he still have this
obligation for after all the transfer of ownership is the
fundamental aim of the contract. A buyer is not
interested in a mere physical transfer, he is after the
ownership.
Essential Characteristics of the Contract of Sale
a. Consensual – perfected by mere consent.
b. Bilateral reciprocal – both parties are bound by
obligations dependent upon each other.
d. Commutative – the values exchanged are almost
equivalent to each other.
Note: By way of exception, some contracts are aleatory.
Ex: Sale of a genuine sweepstakes ticket.
e. Principal (as distinguished from accessory contract) –
there is no necessity for it to depend upon the
existence of another valid contract. (Ex: Contracts of
pledge and mortgage)
f.
Nominate (as distinguished from an innominate
contract) – a special designation or name. (Ex: the
contract of sale)
Elements of the Contract of Sale
a. Essential elements (those without which there can
be no valid sale)
1. Consent or meeting of the minds – (Ex: consent
to transfer ownership I exchange for the price.
2. Determinate subject matter (generally there is
no sale of generic thing; moreover, if the parties
differ as to the object, there can be no meeting
of the minds.
3. Price certain in money or its equivalent – (This is
the cause or consideration) (The price need not
be in money.)
SALES
Chapter 1 – Nature and Form of the Contract
b. Natural elements (those which are inherent in the
contract, and which in the absence of any contrary
provision, are deemed to exist in the contract.)
c. As to whether the object is tangible or intangible
1. warranty against
property bought)
2. sale of a right (assignment of a right or a credit, or some
other intangibles such as a copyright, a trademark, or
goodwill.)
eviction
(deprivation
of the
1. sale of property (tangible or corporeal)
2. warranty against hidden defects
c. Accidental elements (those which may be present or absent
in the stipulation, such as the place or time of payment, or the
presence of conditions.)
Stages in the Contract of Sale
a. Generation or negotiation
b. Perfection – meeting of the minds
c. Consummation – when the object is delivered and the
price is paid.
Kinds of Sales
tangible – chose of possession.
intangible – chose of action.

The term “goods” as used in the Uniform Sales Act does
not ordinarily include choses in action (things in action).
Neither does the term include money.
d. As to the validity or defect of the transaction
1. valid sale
2. rescissible sale
3. voidable sale
a. As to the nature of the subject matter
4. unenforceable sale
1. sale of real property
5. void sale
2. sale of personal property
e. As to the legality of the object
b. As to the value of the things exchanged
1. sale of a licit object
1. commutative sale
2. sale of an illicit object
2. aleatory sale
SALES
Chapter 1 – Nature and Form of the Contract
f.
As to the presence or absence of conditions
1. absolute sale (no condition)
2. conditional sale (as to whether there is a sale with a
pacto de retro, a right to repurchase or redeem; or
when there are suspensive conditions, or when the
things sold merely possess a potential existence, such
as the sale of the future harvest of a designated parcel
of land; or when, for example, all the personal
properties in an army depot would be sold “except all
combat materials” that may be found therein.
Therefore such combat materials should be excluded
from sale.)
g. As to whether wholesale or resale
1. wholesale –if to be resold for a profit the goods being
unaltered when resold, the quantity being large.
2. retail – if otherwise (also sold to tailors)
h. A to the proximate inducement for the sale
1. sale by description
2. sale by sample
3. sale by description and sample
i.
As to whether the price is tendered
1. cash sale
2. sale on the installment plan
Sale distinguished from “Dation in Payment” (Adjudicacion en
Pago, or Dacion en Pago or Dacion en Solutum)
SALE
DATION IN PAYMENT
1. There is no pre-existing
credit.
1. There is a pre-existing credit.
2. Gives rise to obligations.
3. The cause or consideration
here is the price, from the
viewpoint of the seller, or the
obtaining of the object, for
the viewpoint of the buyer.
4. There is greater freedom in
the determination of the
price.
5. The giving of the price may
generally end the obligation
of the buyer.
2. extinguishes obligations.
3. The cause or consideration
here, from the viewpoint of
the person offering the dation
in payment, is the extinguishin
of his debt; from the viewpoint
of the4 creditor, it is the
acquisition of the object
offered in lieu of the original
credit.
4. There is less freedom in the
determination of the price.
5. The giving of the object in
lieu of the credit may
extinguish
completely
or
partially
the
credit
(depending
on
the
agreement)
SALES
Chapter 1 – Nature and Form of the Contract
Contract of Sale distinguished from Contract to Sell
CONTRACT OF SALE
CONTRACT TO SELL
1. The non-payment of price is
a resolutory condition. (ex: the
contract of sale may by such
occurrence put an end to a
transaction that once upon a
time existed.)
1. The payment in full of the
price is a positive suspensive
condition. Hence, if the price
is not paid, it is as if the
obligation of the seller to
deliver
and
to
transfer
ownership never became
effective and binding.
2. Title to the property
generally passes to the buyer
upon delivery.
3. After delivery has been
made, the seller has lost
ownership
and
cannot
recover it unless the contract
is resolved or rescinded.
2. Ownership is retained by
the
seller,
regardless
of
delivery and is not to pass until
full payment of the price.
3. Since the seller retains
ownership, despite delivery,
he is enforcing and not
rescinding the contract if he
seeks to oust the buyer for
failure to pay.
Sale distinguished from Assignment of Property in Favor of
Creditors (Cession or Cession de Bienes)
SALE
CESSION
1. As defined, there is transfer
of ownership and delivery of a
determinate thing.
1. The assignee or creditor
does not acquire ownership
over the things assigned, but
only the right to sell said
things.
Cession – consists in the abandonment of all the property
of the debtor for the benefit of his creditors in order that
the latter may apply the proceeds thereof to the
satisfaction of their credits.
Dacion in payment distinguished from Cession
DATION IN PAYMENT
CESSION
1. One creditor is sufficient.
1. There must be two or more
creditors.
2. Not all properties of the
debtor are conveyed.
3. Debtor may be solvent or
insolvent.
4. The creditor becomes the
owner of the thing conveyed.
2. All the debtor’s properties
are conveyed.
3. Cession takes place only if
the debtor is insolvent.
4. The creditors do not
become owners of the thing
SALES
Chapter 1 – Nature and Form of the Contract
conveyed.
Licit – lawful, within the commerce of man.
Sale distinguished from lease
Things may be illicit:
In a sale, the seller transfers ownership; in a lease, the lessor
or landlord transfers merely the temporary possession and
use of the property.
1. per se (of its nature) Ex: Sale of human flesh for human
pleasure.
Kinds of Extrajudicial Foreclosure Sale
1. Ordinary execution – governed by the pertinent
provisions of Rule 39 of the Rules of Court.
2. Judicial foreclosure – governed by Rule 68 of
the Rules of Court.
3. Extrajudicia foreclosure – governed by Act
3135, as amended by Act 4118, otherwise
known as “An Act to Regulate the Sale of
Property Under Special Powers Inserted In or
Annexed to Real Estate Mortgages.”
Article 1459. The thing must be licit and the vendor must have a
right to transfer the ownership thereof at the time it is delivered.
Lawfulness of the Object and Right to Transfer Ownership
Two rules:
a. The object must be LICIT.
b. The object must have the RIGHT to transfer OWNERSHIP
at the time the object is delivered.
2. per accidens (made illegal by provision of the law) Ex: sale
of land to an alien after the effective date of the Constitution;
Sale of illegal lottery tickets.
* If the object of sale is illicit, the contract is null and void. (Art
1409), and cannot, be ratified.
* The right of redemption may be sold. So also may literary,
artistic, and scientific works. A usufruct may also be sold.
Transfer of Ownership
a. It is essential for a seller to transfer ownership (Art. 1458) and,
therefore, the seller must be the owner of the subject sold.
Nemo dat quad non habet – nobody can dispose of that
which does not belong to him.
b. But although the seller must be the owner, he need not be
the owner at the time of the perfection of the contract. It is
sufficient that he is the owner at the time the object is
delivered; otherwise he may be held liable for breach of
warranty against eviction.
* The contract of sale by itself, is not a mode of acquiring
ownership.
* The contract transfers no real rights; it merely causes certain
obligations to arise.
SALES
Chapter 1 – Nature and Form of the Contract
c. The seller need not be the owner at the time of perfection
because, after all, “future things or goods” inter alia, ,may be
sold.
* While there can be sale of future property, there can
generally be no donation of future property.
d. A person has a right over a thing (although he is not the
owner of the thing itself) may sell such right. Hence, a
usufructuary may generally sell his usufructuary right/
e. If the buyer was already the owner of the thing sold at the
time of sale, there can be no valid contract.
Article 1460. A thing is determinate when it is particularly
designated or physically segregated from all others of the
same class.
The requisite that a thing be determinate is satisfied if at the
time the contract is entered into, the thing is capable of being
made determinate without the necessity of a new or further
agreement between the parties.
Determinate – specific, but it is not essential really that at the
time of perfection, the object be already specific. It is sufficient
that it be capable of being determinate without need of any
new agreement. Thus, there can be a sale of 20 kilos of sugar
of a named quality.

However, from the viewpoint of risk or loss, not until the
object has really been made determinate can we say
that the object has been lost, for as is well known,
“generic thins cannot be lost.”
Article 1461. Things having a potential existence may be the
object of the contract of sale.
The efficacy of the sale of a mere hope or expectancy is
deemed subject to the condition that the thing will come into
existence.
The sale of a vain hope or expectancy is void.
Selling a thing having a potential existence – this is a future
thing that may be sold.
Examples:
a. young animals not yet in existence or still ungrown fruits.
b. the wine that a particular vineyard is expected to produce.
c. the wool that shall, thereafter, grow upon a sheep
d. the expected goodwill of a business enterprise
the sale of “a mere hope or expectancy” – should refer to a
sale of “an expected thing” not to the hope or expectancy for
the hope or expectancy already exists.
SALES
Chapter 1 – Nature and Form of the Contract
Emptio Rei Sperati (Sale of an expected thing) distinguished
form Emptio Spei (Sale of the hope itself)
Emptio Rei Sperati (Sale of an
expected thing)
Emptio Spei (Sale of the hope
itself)
1. If the expected thing does
not materialize, the sale is not
effective.
1. It does not matter whether
the
expected
thing
materialized or not, what is
important is that the hope
itself validly existed.
2. Deals with a future thing –
that which is expected.
Ex:
Sale
of
a
valid
sweepstakes ticket whether it
wins or not, the sale itself is
valid.
2. Deals with a present thing –
for certainly the hope or
expectancy already exists.
* If the hope or expectancy itself is vain, the sale is itself void.
BE it noted that this is not an aleatory contract for while in an
aleatory contract there is an element of chance, here, there is
completely no chance. (Ex: Sale of a losing ticket for a
sweepstakes already run. Except if the ticket be a collector’s
item)
Article 1462. The goods which form the subject of a contract of
sale may be either existing goods, owned or possessed by the
seller, or goods to be manufactured, raised, or acquired by the
seller after the perfection of the contract of sale, in this Title
called “future goods.”
There may be a contract of sale of goods, whose acquisition
by the seller depends upon a contingency which may or may
not happen.

Goods may be future or existing goods.
Future goods
a. Those still to be manufactured (like a future airplane) or
printed (like a subscription to a newpaper)
b. Those still to be raised (like young animals, whether already
conceived or not at the same time of perfection of the
contract), or future agricultural products (like copra still to be
manufactured.)
c. Those still to be acquired by seller after the perfection of the
contract (like land which the seller expects to buy.) This is also
referred to as the sale of “hereafter-acquired” property.)
d. Things whose acquisition depends upon a contingency
which may or may not happen. Ex: I can sell you now a
specific car which my father promised to give me, should I
pass the bar next year. The moment I get the car however, in
accordance with my father’s promise you do not necessarily
become its owner, for before title can pass to you, I must first
deliver the car to you, actually or constructively.
Article 1463. The sole owner of a thing may sell an undivided
interest therein.
SALES
Chapter 1 – Nature and Form of the Contract
Example of Sale of undivided interest
Sale of things subject to a Resolutory Condition
a. If I own a house, I may sell an aliquot part thereof (say ½ or
1/3) to somebody, in which case he and I will become coowners.
a. A property subject to reserve troncal may be sold.
b. A full owner may sell the usufruct of his land leaving the
naked ownership to himself.
Article 1464. In the case of fungible goods, there may be a sale
of an undivided share of a specific mass, though the seller
purports to sell and the buyer to buy a definite number, weight
or measure of the goods in the mass, and though the number,
weight or measure of the goods in the mass undetermined. By
such a sale the buyer becomes owner in common of such a
share of the mass as the number, weight or measure bought
bears to the number, weight or measure of the mass. If the
mass contains less than the number, weight or measure
bought, the buyer becomes the owner of the whole mass and
the seller is bound to make good the deficiency from goods of
the same kind and quality, unless a contrary intent appears.
Example of Share in a Specific Mass
In a stock of rice, the exact number of cavans which is still
unknown, Jose buys 100 cavans. If there are really 150, Jose
becomes co-owner of the whole lot, his own share being 2/3
thereof. The sale is of a specific object since the mass is
specific.
Article 1465. Things subject to a resolutory condition may be
the object of the contract sale.
b. A usufruct that may end when the naked owner becomes a
lawyer may be sold.
Article 1466. In construing a contract containing provisions
characteristic of both the contract of sale and of the contract
of agency to sell, the essential clauses of the whole instrument
shall be considered.
Contract of Sale distinguished from Agency to Sell (like a
Consignment for Sale)
CONTRACT OF SALE
AGENCY TO SELL
1. The buyer pays the price.
1. The agent delivers the price
which in turn he got from his
buyer.
2. The buyer after delivery
becomes the owner.
3. The seller warrants.
2. The agent who is supposed
to sell does not become the
owner, even if the property
has already been delivered to
him.
3. The agent who sells
assumes no personal liability
as long as he acts within his
authority and in the name of
the principal.
SALES
Chapter 1 – Nature and Form of the Contract
Article 1467. A contract for the delivery at a certain price of an
article which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the
same is on hand at the time or not, is a contract of sale, but if
the goods are to be manufactured specially for the customer
and upon his special order, and not for the general market, it is
a contract for a piece of work.
Rules to Determine if the Contract is One of Sale or a Piece of
Work
a. If ordered in the ordinary course of business - SALE
b. If manufactured specially and not for the market piece of
work contract
Schools of Thought
a. Massachusetts Rule – If specially done at the order of
another, this is a contract for a piece of work.
b. New York Rule – If the thing already exists, it is a SALE; if not,
WORK.
c. English Rule – If material is more valuable, sale; if skill is more
valuable, work.
Article 1468 – If the consideration of the contract consists partly
in money, and partly in another thing, the transaction shall be
characterized by the manifest intention of the parties. If such
intention does not clearly appear, it shall be considered a
barter if the value of the thing given as a part of the
consideration exceeds the amount of the money or its
equivalent; otherwise, it is a sale.
Rules to determine whether contract is one of Sale or Barter
a. First rule – Intent.
b. If intent does not clearly appear –
1. If thing is more valuable than money – BARTER
2. If 50-50 – SALE
3. If thing is less valuable than the money – SALE
Article 1469. In order that the price may be considered certain,
it shall be sufficient that it be so with reference to another thing
certain, or that the determination thereof be left to the
judgment of a specified person or persons.
Should such person or persons be unable or unwilling to fix it,
the contract shall be inefficacious, unless the parties
subsequently agree upon the price.
If the third person or persons acted in bad faith, or by mistake,
the courts may fix the price.
Where such third person or persons are prevented from fixing
the price or terms by fault of the seller or the buyer, the party in
fault as are allowed the seller or the buyer, as the case may
be.
Certainty of the Price

The price must be certain; otherwise, there is no true
consent between the parties.

There can be no sale without a price.
SALES
Chapter 1 – Nature and Form of the Contract

If the price is fixed but is later on remitted or condoned,
this is perfectly all right, for then the price would not be
fictitious.

The failure to pay the agreed price does not cancel a
sale for lack of consideration, for the consideration is still
there, namely, the price.

If the money paid is counterfeit, the sale would still be
valid for we cannot say that the consideration or cause
of the contract is the illegal currency. The real
consideration or caused is still the VALUE or price
agreed upon.
When no specific amount is stipulated
If no specific amount has been agreed upon, the price is
still considered certain:
a. If it be certain with reference to another thing certain.
b. If the determination of the price is left to the judgment of
a specified person or persons.
c. In the cases provided for under Art. 1472, Civil Code.
Article 1470. Gross inadequacy of price does not affect a
contract of sale except as it may indicate a defect in the
consent, or that the parties really intended a donation or some
other act or contract.
Effect of Gross Inadequacy of Price
a. In ordinary sale, the sale remains valid even if the price is
very low. If there was vitiated consent (such as fraud, or undue
influence is present) the contract may be annulled but only
due to such vitiated consent.
b. In execution of judicial sales – While mere inadequacy of
price will not set aside a judicial sale of real property, still if the
price is so inadequate as to shock the conscience of the
Court, it will not be set aside.
In case Contract was really a Donation
It is possible that a donation, not a sale, was really intended. In
such a case, the parties may prove that the low price is
sufficiently explained by the consideration of liberality.
Article 1471. If the price is simulated, the sale is void, but the
act may be shown to have been in reality a donation, or some
other act or contract.
Simulated price
a. The price must not be fictitious. Therefore if the price is
merely simulated, the contract as a sale is void. It may
however be valid as a donation or some other agreement,
provided the requirements of donations or other agreements
have been complied with. If these requirements do not exist,
then, as a sale, the contract is absolutely void, not merely
voidable. An action for annulment is therefore not essential.
b. A simulated price is fictitious. There being no price, there is
no cause or consideration; hence, the contract is void as a
sale. However, it is enough that the price be agreed on at the
time of perfection. A rescission of the price will not invalidate
the sale.
SALES
Chapter 1 – Nature and Form of the Contract
Fictitious sale
If the sale of conjugal property is fictitious and therefore nonexistent, the widow who has an interest in the property subject
of the sale may be allowed to contest the sale, even BEFORE
the liquidation of the conjugal partnership, making the
executor a party-defendant if he refuses to do so.
Article 1472. The price of securities, grain, liquids, and other
things shall also be considered certain, when the price fixed is
that which the thing sold would have on a definite day, or in a
particular exchange or market, or when an amount is fixed
above or below the price on such day, or in such exhange or
market, provided said amount be certain.
Certainty of Price of Securities
Ex: I can sell to you today my Mont Blanc fountain pen at the
price equivalent to the stock quotation two days from today of
100 shares of PLDT.
If stock market price cannot be ascertained
If the stock quotation price two days later cannot really be
ascertained at that time (2 days later), the sale is inefficacious.
Article 1473. The fixing of the price can never be left to the
discretion of one of the contracting parties. However, if the
price fixed by one of the parties is accepted by the other, the
sale is perfected.
Article 1474. Where the price cannot be determined in
accordance with the preceding articles, or in any other
manner, the contract is inefficacious. However, if the thing or
any part thereof has been delivered to and appropriated by
the buyer, he must pay a reasonable price therefore. What is a
reasonable price is a question of fact dependent on the
circumstances of each particular case.
Effect if the price cannot be determined
a. If the price cannot really be determined, the sale is void for
the buyer cannot fulfill his duty to pay.
b. If the buyer has made use of it, he should not be allowed to
enrich himself unjustly at another’s expense. So he must pay a
“reasonable price.” The seller’s price, however, must be the
one paid if the buyer knew how much the seller was charging
and there was an acceptance of the goods delivered. Here,
there is an implied assent to the price fixed.
Article 1475. The contract of sale is perfected at the moment
there is a meeting of minds upon the thing which is the object
of the contract and upon the price.
From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the
form of contracts.
Nature of Contract
Price cannot be left to one’s party’s discretion
Sale is a consensual contract (perfected by mere consent).
Therefore, delivery or payment is not essential for perfection.
Reason: The other could not have consented to the price, for
he did not know what is was.
Note: The contract of sale is consummated upon delivery and
payment.
SALES
Chapter 1 – Nature and Form of the Contract
Requirements for Perfection
a.When parties are face to face, when an offer is accepted
without conditions and without qualifications. (A conditional
acceptance is a counter-offer.)
Note: if negotiated thru a phone, it is as if the parties are face
to face.
b.When contract is thru correspondence or thru telegram,
there is perfection when the offeror receives or has knowledge
of the acceptance by the offeree.
Note: If the buyer has already accepted, but the seller does
not know yet of the acceptance, the seller may still withdraw.
c.When a sale is made subject to a suspensive condition,
perfection is had from the moment the condition is fulfilled.
Before perfection

Before perfection of the contract of sale, no mutual
rights and obligations exist between the would-be
buyer and the would-be seller. The same thing is true
when perfection is conditioned upon something, and
that thing is not performed.
Accepted Bilateral Promise to Buy and Sell

In a sense similar to, but not exactly the same as, a
perfected contract of sale.
Note: From the moment the parties have agreed upon the
kind of rice and the price thereof, they are deemed to
have entered into a perfected contract of purchase and
sale, the terms and conditions of which may not be held to
depend on subsequent events or acts of the parties unless
the contrary is stipulated. The mere fact that the seller
thereafter sells an object of the same kind to another at a
lesser price is no ground for the previous buyer to be
entitled to claim the excess, his contract being
independent of the other.
Formalities for Perfection
Under the statute of Frauds, the sale of:
a. Real Property (regardless of the amount)
b. Personal Property (if 500 or more must be in writing to be
enforceable.
* If orally made, it cannot be enforced by a judicial action,
except if it has been completely or partially executed, or
except if the defense of the Statute of Frauds is waived.
Note: Also in writing should be sales which are to be performed
only after more than one year (from the time the agreement
was entered into) – regardless as to whether the property is
real or personal, and regardless of the price involved.
Perfection in the Case of Advertisements

Advertisements are mere invitations to make an offer
(Art. 1325, Civil Code) and, therefore, one cannot
compel the advertiser to sell.
SALES
Chapter 1 – Nature and Form of the Contract
Transfer of Ownership
a.Mere perfection of the contract does not transfer ownership.
Ownership of the object sold is transferred only after delivery
(tradition), actual, legal or constructive.
The rule is, therefore, this: After delivery of the object,
ownership is transferred.
b.It is valid If it is stipulated that even with delivery there will be
no change or transfer of ownership till the purchase price has
been fully paid. (But the stipulation is not binding on innocent
third persons such as customers at a store. The customers must
not be prejudiced.
The Sales Tax
Even if the object sold has not yet been delivered, once there
has been a meeting of the minds, the sale is perfected and,
therefore, the sales tax (15% on the gross) is already due. It
accrues on perfection, not on the consummation of the sale.

Retail sales of flour to bakeries to be manufactured into
bread are subject to tax; if wholesale, they are not
subject to tax.

To determine if a sale is wholesale or retail, we must not
consider the quantity sold, but the character of the
purchase. If the buyer buys the commodity for his own
consumption, the sale is RETAIL, if for resale, the sale is
deemed wholesale, regardless of quantity, and is not
subject to the particular tax referred to.

In sales of textiles, if it be bought for resale at a profit,
the goods being unaltered when resold, the original
sale is wholesale. If he resells the goods only after
altering them by using his skill (as when he transforms
them to shirts), the original sale is retail. Same rule
applies in the case of the retail of the following:
1. Copra for the
oleomargarine.
manufacture
of
soap
or
2. Hemp used to make twine or rope
3. In general, raw materials that are used in or that
entered into the manufacture of finished
products.
Effect of Perfection
After perfection the parties must now comply with their mutual
obligations. Thus, for example, the buyer can now compel the
seller to deliver to him the object purchased. In the meantime,
the buyer has only the personal, not a real right. Hence, if the
seller sells again a parcel of land to a stranger who is in good
faith, the proper remedy of the buyer would be to sue for
damages.
SALES
Chapter 1 – Nature and Form of the Contract
Article 1476. In the case of a sale by auction:
-
(1) Where goods are put up for sale by auction in lots, each lot
is the 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.
(3) A right to bid may be reserved expressly by 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 behalf of the seller or any person
employed by him. Any sale contravening this rule may be
treated as fraudulent by the buyer.
When Sale by Auction is Perfected

The sale is perfected when the auctioneer announces
its perfection by the fall of the hammer or in other
customary manner.
Before the Fall of the Hammer
-
The bidder may retract hi bid because every bidding is
merely an offer and, therefore, before it is accepted, it
may be withdrawn. The assent is signified on the part of
the seller by knocking down the hammer.
The Auctioneer may withdraw the goods from the sale,
unless the auction has been announced to be without
reserve. Reason: The bid is merely an offer, not an
acceptance of an offer to sell. Therefore, it can be
rejected. What the auctioneer does in withdrawing is
merely reject the offer.
Conditions when a seller may bid
a. Provided such a 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.

A seller may employ others to bid for him provided he
has notified the public that the auction is subject to the
right to bid on behalf of the seller. People who bid for
the seller, but are not themselves bound, are called
“by-bidders” or “puffers.” In view of the notice, there
would not be any fraud, and the transaction with the
rest should be considered as valid. Without the notice,
any sale contravening the rule may be treated by the
buyer as fraudulent. In other words, the purchaser
could be relieved from his bid.
Note: It may happen that the owner is not himself the
auctioneer. Now then if the auctioneer employs puffers
and gives no notice to the public, the sale would still be
fraudulent, whether or not the owner of the goods
knew what the auctioneer had don
SALES
Chapter 1 – Nature and Form of the Contract
Rule in case of a Private Sale

A private sale authorized by a probate court (and
without objection on the part of the heirs or creditors)
cannot be assailed by a person who is not an
“interested party” (such as an heir or creditor). One
who merely offered a higher price (without actually
buying the property) is not “interested party.” It would
have been different had there been a public auction.
Article 1477. The ownership of the thing sold shall be transferred
to the vendee upon the actual or constructive delivery thereof.
When Ownership is Transferred
Ownership is not transferred by perfection but by delivery.
(This is true even f the sale has been made on credit; payment
of the purchase price is NOT essential to the transfer of
ownership, as long as the property sold has been delivered.
(Gabriel et. al. v. Encarnacion et. al.) A contrary stipulation is,
however, VALID.
KINDS OF DELIVERY
a. Actual (Art. 1497, Civil Code)
b. Constructive (Arts. 1498 – 1601, Civil Code), including “any
other manner signifying an agreement that the possession is
transferred.” (Art. 1496, Civil Code)
Article 1478. The parties may stipulate that ownership in the
thing shall not pass to the purchaser until he has fully paid the
price.
When ownership is not transferred despite delivery
Generally, ownership is transferred upon delivery, but even if
delivered, the ownership may still be with the seller till full
payment of the price is made, if there is a stipulation to this
effect. This stipulation is usually known as pactum reservati
dominii and is common in sales on the installment plan. But of
course, innocent third parties cannot be prejudiced.
Article 1479. A promise to buy and sell a determinate thing for
a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissory if the
promise is supported by a consideration distinct from the price.
First paragraph
(MUTUAL PROMISE)
A promise to buy something
and B promises to sell it at an
agreed price. (This is a
promise to buy and sell,
clearly a bilateral reciprocal
contract.)
Second paragraph
(ACCEPTED
UNILATERAL
PROMISE)
Only one makes the promise.
This promise is accepted by
the other. Hence, A promise
to sell to B accepts the
promise, but does not in turn
promise to buy.
Policitacion – a unilateral promise to buy or to sell which is not
accepted. This produces no juridical effect, and creates no
legal bond. This is a mere offer, and has not yet been
conversed into a contract.
SALES
Chapter 1 – Nature and Form of the Contract
Bilateral Promise – to buy and sell a certain thing for a price
certain gives to the contracting parties personal rights in that
each has the right to demand from the other the fulfillment of
the obligation.
Article 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 1166, and 1262.
Unilateral Promise – The acceptance of a unilateral promise to
sell must be plain, clear, and unconditional. Therefore, if there
is a qualified acceptance with terms different from the offer,
there is no acceptance, that is, there is no promise to buy and
there is no perfected sale.
(Art. 1163. Every person obliged to give something is also
obliged to take care of it with the proper diligence of a good
father of a family, unless the law or the stipulation of the parties
requires another standard of care. (1094a))
Option – a contract granting a person the privilege to buy or
not to buy certain objects at
any time within the agreed
period at a fixed price.
The contract of option is a separate and distinct contract from
the contract which the parties may enter into upon the
consummation of the contract; therefore, an option must have
its own cause or consideration.
Contract to SELL is NOT an Absolute Sale
A contract or promise to sell, a parcel of land for example, is
not a contract of sale. Such a contract to sell would exist when
for instance, land is promised to be sold, and title given only
after the down payment and the monthly installment therefor
shall have all been paid. Failure to make the needed payment
is failure to comply with the needed suspensive condition.
Hence, promissor was never really obliged to convey title.
Nothing wrong if he sells the property to another, after an
unsuccessful demand for said price.
(Art. 1164. The creditor has a right to the fruits of the thing from
the time the obligation to deliver it arises. However, he shall
acquire no real right over it until the same has been delivered
to him. (1095))
(Art. 1165. When what is to be delivered is a determinate thing,
the creditor, in addition to the right granted him by Article
1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the
obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing
to two or more persons who do not have the same interest, he
shall be responsible for any fortuitous event until he has
effected the delivery. (1096))
(Art. 1166. The obligation to give a determinate thing includes
that of delivering all its accessions and accessories, even
though they may not have been mentioned. (1097a))
(Art. 1262. An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be lost or
destroyed without the fault of the debtor, and before he has
incurred in delay.
SALES
Chapter 1 – Nature and Form of the Contract
When by law or stipulation, the obligor is liable even for
fortuitous events, the loss of the thing does not extinguish the
obligation, and he shall be responsible for damages. The same
rule applies when the nature of the obligation requires the
assumption of risk. (1182a))
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.
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 weighed, counted, or
measured, and delivered, unless the latter has incurred delay.
Who Bears the Risk of Loss
a. If the object has been lost before perfection, the seller bears
the loss. Reason: There was no contract, for there was no
cause or consideration. Being the owner, the seller bears the
loss. This means that he cannot demand payment of the price.
b. If the object was lost after delivery to the buyer, clearly the
buyer bears the loss. (Res perit domino – the owner bears the
loss.)
c. If the object is lost after perfection but before delivery, the
buyer bears the loss, as exception to the rule of res perit
domino.
Exceptions to the rule that between perfection and delivery,
the buyer bears the loss:
a. If the object sold consists of fungibles sold for a price fixed
according to weight, number, or measure. (Here, if there has
been no delivery yet, the seller bears the loss, unless the buyer
is in mora accipiendi.) Last par. 1480
b. If the seller is guilty of fraud, negligence, default, or violation
of contractual term. Arts. 1165, 1262, 1170)
c. When the object sold is generic because “genus does not
perish” (genus nunquam perit) Note: the unfortunate effect of
Art. 1504 on the question of the risk of loss is discussed under
said article.)
Fungibles – personal property which may be replaced with
equivalent things.
Consumables and non-consumables
fungibles and non-fungibles
distinguished
from
The former is based on the nature of the thing, while the latter
is based on the intention.
Article 1481. In the contract 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 also correspond with the
description.
The buyer shall have a reasonable opportunity of comparing
the bulk with the description or the sample.
SALES
Chapter 1 – Nature and Form of the Contract
Sale by description – Where seller sells things as being of a
certain kind, the buyer merely relying on the seller’s
representations or descriptions. Generally, the buyer has not
previously seen the good, or even if he has seen them, he
believes (sometimes erroneously) that the description tallies
with the goods he has seen.
Sale by sample – that where the seller warrants that the bulk
(not the major part or the majority of the goods but the goods
themselves) of the goods shall correspond with the sample in
kind, quality, and character. On the sample is exhibited. The
bulk is not present, and so there is no opportunity to examine or
inspect it.
Sale by description and sample – must satisfy the requirements
in both, and not in only one.
Article 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 – (“arras”) something of value to show that the
buyer was really in earnest, and given to the seller to bind the
bargain.
Significance of earnest money
a. Part of the purchase price. (Hence, from the total price must
be deducted the arras; the balance is all that has to be paid.)
b. Proof of the perfection of the contract.
Option money – applies to a sale not yet perfected; the
money is not part of the purchase price; the would be buyer is
not required to buy.
When arras must be returned
If merchandise cannot be delivered, the arras must be
returned. Of course, this right may be renounced since neither
the law nor public policy is violated.
Article 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 mouth, or may be inferred from the conduct
of the parties.
If sale is made thru an Agent
The sale of a piece of land or interest therein when made thru
an agent is void. (not merely unenforceable) unless the
agent’s authority is in writing. (Art. 1874). This is true even if the
sale itself s in a public instrument, or even registered.
Interest therein – refers to easement or usufruct for example.

If notary public is not authorized, the sale would still be
valid since for validity of the sale, a public instrument is
not even essential.
SALES
Chapter 1 – Nature and Form of the Contract
Article 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:
Purpose of the Rules For Sale of Personal Property on the
Installment Plan
-
(1)Exact fulfillment of the obligation, should the vendee fail to
pay;
(2)Cancel the sale, should the vendee’s failure to pay cover
two or more installments;
(3)Foreclose the chattel mortgage on 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 before Art. 1484 may be applied
To prevent abuse in the foreclosure of chattel
mortagages by selling at a low price and then suing for
the deficiency, is the precise purpose of this article.
Otherwise, the buyer would find himself without the
property, and still indebted.
Cancellation requires mutual restitution
-
It is clear that when the remedy of cancellation is
availed of, there must be a mutual restitution of
whatever had been received by either party.
Ex: When the seller of a car on installment asks for
cancellation of the sale, the car must be returned to
him, and he in turn must give back all installments he
has received, including the downpayment.
a. There must be a contract
b. The contract must be one of sale (absolute sale, not a
pacto de retro transaction, where redemption is effected in
installments)
c. What is sold is personal property (sale of real property in
installments is governed by RA 6552 – the Maceda Law – which
took effect on the date of its approval Sept. 14, 1972.
d. The sale must be on the installment plan (an installment – is
any part or portion of the buying price, including the down
payment)
Instances when Art. 1484 cannot be applied
a.Real estate mortgage because it can only be foreclosed
only in conformity with special provisions.
b. Sale of personal property on straight terms, in which the
balance, after the payment of the initial sum should be paid in
its totality at the time specified. Therefore, in a sale on straight
terms, the mortgagee-seller will still be entitled to recover the
unpaid balance.
SALES
Chapter 1 – Nature and Form of the Contract
Article 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.
b. However, by way of exception, it is valid to stipulate that
there should be NO returning of the price that has been
partially paid or of the “Rents” given, provided the stipulation is
not unconscionable.
Leases of Personal Property with Option to Buy
SALE OF REAL PROPERTY IN INSTALLMENTS
-
This may really be considered a sale of personal
property in installments. Therefore, the purpose of Art.
1485 is to prevent an indirect violation of Art. 1484.
“when the lessor has deprived lessee of the possession or
enjoyment of the thing”
For failure to pay, the lessor is apparently exercising the right of
an unpaid seller, and has taken possession of the property. This
is so even if the property had been given up in obedience to
the lessor’s extrajudicial demand, such surrender not really
being voluntary.
When lease construed as sale
Even if the word lease is employed, when a sale on installment
is evidently intended, it must be construed as a sale.
Article 1486. 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 be unconscionable under the circumstances.
Non-return of Installments Paid
a. As a general rule, it is required that a case of rescission or
cancellation of the sale requires mutual restitution, that is, all
partial payments of price or “rents” must be returned.
REPUBLIC ACT No. 6552
AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE
ON INSTALLMENT PAYMENTS. (Rep. Act No. 6552)
Section 1. This Act shall be known as the "Realty Installment
Buyer Act."
Section 2. It is hereby declared a public policy to protect
buyers of real estate on installment payments against onerous
and oppressive conditions.
Section 3. In all transactions or contracts involving the sale or
financing of real estate on installment payments, including
residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under Republic
Act Numbered Thirty-eight hundred forty-four, as amended by
Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the
buyer is entitled to the following rights in case he defaults in the
payment of succeeding installments:
(a) To pay, without additional interest, the unpaid
installments due within the total grace period earned
by him which is hereby fixed at the rate of one month
grace period for every one year of installment
payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of
the life of the contract and its extensions, if any.
SALES
Chapter 1 – Nature and Form of the Contract
(b) If the contract is canceled, the seller shall refund to
the buyer the cash surrender value of the payments on
the property equivalent to fifty per cent of the total
payments made, and, after five years of installments,
an additional five per cent every year but not to
exceed ninety per cent of the total payments made:
Provided, That the actual cancellation of the contract
shall take place after thirty days from receipt by the
buyer of the notice of cancellation or the demand for
rescission of the contract by a notarial act and upon
full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be
included in the computation of the total number of installment
payments made.lawphi1™
Section 4. In case where less than two years of installments
were paid, the seller shall give the buyer a grace period of not
less than sixty days from the date the installment became due.
purchase price annotated in the certificate of title covering
the property.
Section 7. Any stipulation in any contract hereafter entered
into contrary to the provisions of Sections 3, 4, 5 and 6, shall be
null and void.
Section 8. If any provision of this Act is held invalid or
unconstitutional, no other provision shall be affected
thereby.lawphi1™
Section 9. This Act shall take effect upon its approval.
Approved: August 26, 1972.
Raison d’ Etre” of the Maceda Law
-
To help especially the low income lot buyers,
delineating the rights and remedies of lot buyers and
protect them from one-sided and pernicious contract
stipulations. The Act’s declared public policy is to
protect buyers or real estate or installment basis against
onerous and oppressive conditions. More specifically,
the Act provided for the rights of the buyer in case of
default in the payment of succeeding installments,
where he has already paid at least two years of
installments.
-
The act seeks to address the acute housing shortage
problem in our country that has prompted thousands of
middle or lower class buyers of houses, lots, and
condominium units to enter into all sorts of contracts
with private housing developers involving installment
schemes.
If the buyer fails to pay the installments due at the expiration of
the grace period, the seller may cancel the contract after
thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a
notarial act.
Section 5. Under Section 3 and 4, the buyer shall have the right
to sell his rights or assign the same to another person or to
reinstate the contract by updating the account during the
grace period and before actual cancellation of the contract.
The deed of sale or assignment shall be done by notarial act.
Section 6. The buyer shall have the right to pay in advance any
installment or the full unpaid balance of the purchase price
any time without interest and to have such full payment of the
SALES
Chapter 1 – Nature and Form of the Contract
Art. 1487. The expenses for the execution and registration of
the sale shall be borne by the vendor, unless there is a
stipulation to the contrary.
If the property owner voluntarily sells the property to the
government, this would be a sale, and not an example of
expropriation.
Who Pays for Expenses in Execution and Registration
Eminent Domain distinguished from Expropriation
Observe that as a rule the seller pays for the expenses of:
Eminent Domain refers to the right given to the state,
whereas, expropriation usually refers to the process.
a.The execution (of the deed) of sale;
b. its registration.
NOTE: There can, however, be a contrary stipulation.
Art. 1488. The expropriation of property for public use is
governed by special laws.
Expropriation – involuntary in nature, that is, the owner may
be compelled to surrender the property after all the
essential requisites have been complied with. Therefore,
generally expropriation does not result in a sale.
One exception to the rule
Gutierrez v. CTA – SC held that the acquisition by the
government of private properties thru the exercise of
eminent
domain,
said
properties
being
justly
compensated, is a sale or exchange within the meaning of
the income tax laws and profits derived therefrom are
taxable as capital gain; and this is so although the
acquisition was against the will of the owner of the
property and there was no meeting of the minds between
the parties.
When Transaction is one of Sale
Essential requisites for Expropriation
1. Taking by competent authority
2. Observance of due process of law.
3. Taking for public use.
4. Payment of just compensation.
Just Compensation – market value (the price which the
property will bring when it is offered for sale by one who
desires but is not obliged to sell it, and is bought by one
who is under no necessity of having it) PLUS the
consequential damages, if any, MINUS the consequential
benefits, if any. BUT the benefits may be set off only against
the consequential damages, and not against the basic
value of the property taken.

The fixing of just compensation in expropriation
proceedings shall be made in accordance with Rule 67
of the Rules of Court and not on the basis of the
valuation declared in the tax declaration of the subject
property by the owner or assessor which ahs been
declared unconstitutional.
SALES
Chapter 1 – Nature and Form of the Contract
CHAPTER 2
CAPACITY TO BUY OR SELL
Necessaries – include everything that is indispensable for
sustenance, dwelling, clothing, and medical attendance,
according to the social position of the family.
Art. 1489. All persons who are authorized in this Code to
obligate themselves, may enter into a contract of sale, saving
the modifications contained in the following articles.
Support – also includes education of the person entitled to be
supported until he completes his education or training for some
profession, trade, or vocation, even beyond the age of
majority.” (Art. 290, Civil Code)
Where necessaries are those sold and delivered to a minor or
other person without capacity to act, he must pay a
reasonable price therefor. Necessaries are those referred to in
Article 290. (1457a)
Incapacity to Buy may be Absolute or Relative
a.Absolute incapacity – when party cannot bind himself in any
case.
b.Relative incapacity – when certain person, under certain
circumstances, cannot buy certain property. (Wolfson v. Estate
of Martinez)
Note: Among people relatively incapacitated are those
mentioned in Arts. 1490 and 491, Civil Code.)
Purchase by Minors

When minors buy, the contract is generally voidable,
but in the case of necessaries, “where necessaries are
sold and delivered to a minor or other person without
capacity to act, he must pay a reasonable price
therefor.
Husbands
Under this Code, the husband may sell, alienate, or encumber,
even without the consent of his wife, his exclusive property
acquired before the effectivity of the Civil Code. The wife
cannot even ask for the annulment of the sale on the ground
that it is in fraud of her rights when the purpose of the
transaction is to benefit the family, that is, to raise money for a
business venture. (See Arts. 166 and 173 of the Code)

If the deed of sale of the land lists as purchasers both
the husband and the wife, the presumption is that it is
paraphernal property. (Castillo v. Castillo)

If a Filipino sells a parcel of land to a Chinese who later
sells the same to another Filipino, the second sale is
VALID because the purpose of the Constitution of
preserving the land in favor of Filipinos has not been
frustrated.
SALES
Chapter 1 – Nature and Form of the Contract
Art. 1490. The husband and the wife cannot sell property to
each other, except:
(1) When a separation of property was agreed upon in the
marriage settlements; or
(Thus creditors who became such after the transaction
cannot assail its validity for the reason that they cannot
be said to have been prejudiced. But prior creditors
(creditors at the time of transfer) as well as the heirs of
either spouse may invoke the nullity of the sale.
(2) When there has been a judicial separation or property
under Article 191. (1458a)
Art. 1491. The following persons cannot acquire by purchase,
even at a public or judicial auction, either in person or through
the mediation of another:
NOTE: Under these two exceptions, the sale is generally valid,
but of course, should there be vitiated consent (as in the case
of undue influence) the sale is voidable.
(1) The guardian, the property of the person or persons who
may be under his guardianship;

Just as a married couple cannot generally sell to each
other, they also generally cannot donate to each
other. This prohibition also applies to common-law
husband and wife on the theory that here there can be
an even greater degree of undue influence.
Reason why Generally a Husband and Wife cannot Sell to Each
Other
1. To avoid prejudice to third persons;
2. To prevent one spouse from unduly influencing the
other;
3. To avoid by indirection the violation of the prohibition
against donations.
Effect of Sale

Generally, a sale by one spouse to another is void.
However, not everybody can assail the validity of the
transaction.
(2) Agents, the property whose administration or sale may
have been entrusted to them, unless the consent of the
principal has been given;
(3) Executors and administrators, the property of the
estate under administration;
(4) Public officers and employees, the property of the
State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of
superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose
jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect
SALES
Chapter 1 – Nature and Form of the Contract
to the property and rights which may be the object of
any litigation in which they may take part by virtue of
their profession.

(6) Any others specially disqualified by law. (1459a)
in his hands for sale or management. However, under
Art. 1491 of the new Civil Code, this prohibition was
modified in that the agent may now buy the property
placed in his hand for sale or administration, provided
the principal gives his consent thereto.
This article refers to relative incapacity.
Purchase by Attorney
Reason for the Law
A lawyer is not allowed to purchase the property of his
client which is in litigation. To do otherwise would be a
breach of professional conduct, and would constitute
malpractice.
Public policy prohibits the transactions in view of the
fiduciary relationship involved.
But assigning the amount of judgment by the client to
his attorney, who did NOT take any part in the case
where said judgment was rendered, is valid.
Purchase Thru Another
“Thru the mediation of another” - this must be proved,
that is, that there was really an agreement between
the intermediary and the person disqualified; otherwise,
the sale cannot be set aside. (Rodriguez v. Mactual)
When a thing is said to be in litigation
A thing is said to be in litigation not only if there is some
contest or litigation over it in court, but also from the
moment that it became subject to the judicial action
of the judge.
Purchase by Agent for Himself
An agent is not allowed, without his principal’s
permission, to sell to himself what he has been ordered
to buy; or to buy for himself what he has been ordered
to sell. (Moreno v. Villones)
-The fiduciary relations between them estop the agent
from asserting a title adverse to that of the principal.
And therefore such a sale to himself would be
ineffectual and void, because it is expressly prohibited
by law. The agent may, of course, buy after the
termination of the agency.
NOTE: Under Art. 1459 of the old Civil code, an agent or
administrator was disqualified from purchasing property

Art. 1491 does not prohibit a lawyer from acquiring a
certain percentage of the value of the properties in
litigation that may be awarded to his client. A
contingent fee based on such value is allowed.
If however the attorney participates in the sale, not as
buyer but as agent for the buyer, there is no violation of
the law.
SALES
Chapter 1 – Nature and Form of the Contract
Meaning of “Any others specially disqualified by law”
Cross Reference
This refers to prohibited by reason of the fiduciary relationship
involved.
Legal Redemption – the right to be subrogated upon the same
terms and conditions stipulated in the contract. (Art. 1619, Civil
Code)

Aliens though not allowed to buy land under the
Constitution, they do not fall under the above phrase.
Thus, while those disqualified under Art. 1490 and 491
may not become lessees (Art. 1646), still aliens may
become lessees even if they cannot buy lands.
Status of the Sale
Generally, sales entered into in disregard of the prohibition
under this article are not void. They are merely voidable.
(Wolfson v. Estate of Martinez)
Art. 1492. The prohibitions in the two preceding articles are
applicable to sales in legal redemption, compromises and
renunciations.
Applicability of Relative Incapacity to Legal Redemption,
Compromises, and Renunciation
Example:
If a ward’s property is sold, the guardian, even if he be an
adjacent owner, and even if all the other requisites for legal
redemption are present, cannot exercise the right of legal
redemption.
Compromises – Contract whereby the parties, by making
reciprocal concessions, avoid a litigation or to put an end to
one already commenced. (Art. 2028, Civil Code)
Renunciation – rights may be waived, unless the waiver is
contrary to law, public order, public policy, morals or good
customs or prejudicial to a third person with right recognized
by law. (Art. 6, Civil Code)
Renunciation - condonation or remission is essentially gratuitous
and requires the acceptance by the obligor. May be made
expressly or impliedly. (Art. 1270, Civil Code)
SALES
Chapter 1 – Nature and Form of the Contract
CHAPTER 3
EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN
LOST
Art. 1493. If at the time the contract of sale is perfected, the
thing which is the object of the contract has been entirely lost,
the contract shall be without any effect.
But if the thing should have been lost in part only, the vendee
may choose between withdrawing from the contract and
demanding the remaining part, paying its price in proportion to
the total sum agreed upon. (1460a)
Lost of the object before sale
This refers to a case of loss of the object even before the
perfection of the contract. It is evident that there would be no
cause or consideration; hence, the contract is void. Observe
that it is the seller here who naturally will have to bear the loss.
Complete Loss Distinguished from Partial Loss
When the object has been Partly or Partially Lost
REMEDIES:
1. Withdrawal or rescission.
2. Specific performance as to remainder by payment of
proportional price.
Art. 1494. Where the parties purport a sale of specific goods,
and the goods without the knowledge of the seller have
perished in part or have wholly or in a material part so
deteriorated in quality as to be substantially changed in
character, the buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much thereof as
have not deteriorated, and as binding the buyer to pay the
agreed price for the goods in which the ownership will pass, if
the sale was divisible.
Loss of Specific Goods
This article practically reiterates the principle involved in the
preceding article.s
REMEDIES:
1. Cancellation (avoidance);
2. Specific performance as to the remaining existing
goods. (if the sale was divisible).