REGULATORY FRAMEWORK
ISSUES IN BUSINESS
AND
LEGAL
SALES (Article 1458, NCC)
 By
the
contract
of
sale,
one
of
the contracting parties obligates himself to:
a) Transfer the ownership and to deliver a
determinate thing; and
b) To pay therefore a price certain in money
or its equivalent.
 A contract of sale is perfected by mere consent.
MANNER OF PERFECTION OF CONTRACTS
a) Consensual Contracts – those which maybe
perfected by mere consent of the parties.
b) Real Contracts – those that require delivery of
the object before perfection.
c) Solemn or Formal Contracts – those where the
legal formalities set by law need to be complied
first before it can be considered a perfected one.
STAGES OF A CONTRACT OF SALE
a) NEGOTIATION – the time the prospective
contracting parties indicate interest in the
contract to the time the contract is perfected.
b) PERFECTION – upon the concurrence of the
essential elements of the sale, which is the
meeting of the minds of the parties as to the object
of the contract and upon the price.
c) CONSUMMATION – when the parties perform
their respective undertakings under the contract
of sale until its extinguishment.
CHARACTERISTICS
a) CONSENSUAL – perfected by mere consent of the
parties.
b) BILATERAL – seller and buyer are bound by
obligations dependent upon each other.
c) ONEROUS – imposes a valuable consideration.
d) COMMUTATIVE–thing of value is exchanged for
equal value.
e) NOMINATE – Civil Code refers to it by a special
name “contract of sale”.
f) PRINCIPAL - can stand on its own and does not
depend on another contract for its validity.
REQUISITES/ELEMENTS
 ESSENTIAL ELEMENTS:
a) CONSENT or meeting of the minds
b) OBJECT or determinate thing
c) CONSIDERATION/PRICE CERTAIN in
money or its equivalent
 NATURAL ELEMENTS
a) Those which are considered inherent in
certain contracts even if not stipulated or even
if the parties are unaware. Deemed part of the
Contract by law. E.g. implied warranties
b) May be enforced even in the absence of an
expressed statement in the contract to that
effect.
 ACCIDENTAL ELEMENTS
a) Those which should be expressly stipulated in
the contract to be enforceable.
b) May include time and place of payment,
conditions, interests, registration, etc.
ESSENTIAL REQUISITES/ELEMENTS
1. CONSENT
 manifested by the meeting of the offer
and the acceptance upon the thing and
the cause/consideration which are to
constitute the agreement.
 consent to transfer ownership in
exchange for the price
 the merger of a definitive offer and an
unqualified acceptance as to:
• object;
• Price certain and manner of payment.
ACCEPTANCE
 Must be absolute.
 must not be coupled with conditions,
otherwise, it is a mere counter-offer.the
other
2. OBJECT/SUBJECT MATTER
 Must be DETERMINATE as to its kind
(particularly
designated/physically
segregated from all others of the same class)
Requisites:
1. At the time the contract is entered into, the
thing is capable of being made determinate
2. There is no necessity of a new or further
agreement between the parties.
 Must be LICIT
(lawful and within the
commerce of men)
 Lawful - the thing object of the sale should
not be contrary to law, morals, good
customs, public order or public policy.
 Within the commerce of men - if a thing
can be possessed, acquired, or transferred
 Vendor must have a right to transfer the
ownership at the time of delivery
General Rule: A person cannot sell what he does not
have or own.
Exceptions:
1. Sale of a thing having potential existence
2. Sale of future goods; and
3. Contract for delivery at a certain price of an
article which the vendor in the ordinary
course of business manufactures or procures
for the general market, whether the same is on
hand at the time or not.
3. CONSIDERATION (PRICE CERTAIN) – there
must be a definite agreement as to the price. Can
never be left to the decision of one of the
contracting parties, unless accepted by the other.
CAUSE
 The WHY of the contract or the
essential reason which moves the
contracting parties to enter into the
contract.
 the prestation of promise.of the other
CASES:
1. X told Y, I will sell to you a parcel of land worth
P1,000,000. Y agreed and paid the same amount.
The contract stated: “I, X, hereby unconditionally
sell to Y a parcel of land worthP1,000,000.” Is
there a valid contract of sale?
2. J sold to D 10 kilos of methamphetamine
hydrochloride for a discounted price of P5,000,000.
In a written contract, the parties stated that D will
pay in 2 separate installments at P2,500,000 each on
March 10 and April 10, 2022. Is the sale valid?
3. AM is the only daughter of billionaire EM. EM is
already dying and has no other relatives. AM
accidentally read her father’s will and found out
that EM will be leaving to her all his wealth. AM sold
one her father’s mansions in Makati to Z knowing
that this will be her future inheritance. Is the sale
valid?
4. Pfizer entered into agreement with the City of
Tacloban for the sale of its upcoming vaccine against
COVID-19 on March 1, 2022. Said vaccine will be
ready for production upon conclusion of its Phase 3
Trials on March 31, 2022. The agreement was for
Pfizer to deliver the vaccine on June 1, 2022 so that
majority of Taclobanons will be inoculated and many
would attend the street party of Sangyaw Festival.
Pfizer failed to produce the vaccine. Was there a valid
contract of sale?
SALE
There is no pre-existing
credit.
Gives
rise
to
obligations.
The
cause
or
consideration here is
the price (seller), or the
obtaining of the object
(buyer).
There is greater freedom
in the determination of
the price.
The giving of the price
may
generally
end the obligation of the
buyer.
ARTICLE 1466
CONTRACT OF SALE
Ownership is
transferred after
consummation of the
sale.
The buyer receives the
goods as
owner.
Buyer pays the price.
The seller warrants.
Non-payment (Remedy:
Rescission)
5. On January 1, 2022, P bought 100 lottery tickets from
a lotto outlet in Brgy. Sagkahan. He hoped to win the
P100,000 prize for the day. Unfortunately, none of
his tickets got the winning numbers. P went back to
the lotto outlet to claim refund saying that this
system was a scam.
DATION EN PAGO
There is a pre-existing
credit.
Extinguishes
obligations.
The
cause
or
consideration from the
viewpoint of the person
offering the dation in
payment
is
the
extinguishing of his debt;
from the viewpoint of
the creditor, it is the
acquisition of the object
in lieu of the original
credit.
There is less freedom in
the determination of the
price.
The giving of the object
in lieu of the credit may
extinguish completely or
partially the credit.
CONTRACT OF AGENCY
TO SELL
Seller explicitly reserves
the transfer
of title to the
prospective buyer.
Seller does not consent
to the transfer
of ownership of the
property until
fulfillment of an
event/condition (e.g.
full payment of the
purchase price)
Agent delivers the price
which in turn
he got from his buyer.
Agent assumes no
personal liability as
long as he acts within
his authority
and in the name of the
principal.
Non-payment (Seller can
eject the
buyer)
Illustration:
1. X delivered to Y, maong pants, for the purpose of
selling them with condition that payment will be
after one week. While in Y’s possession, the store
of Y was burned down and the maong pants were
destroyed.
Q: Is Y liable to pay X?
A: This is a contract of sale, hence there was
transfer of ownership there being delivery
already, Y is already the owner of the maong
pants and bears the risk of loss. Y is liable to pay
the price.
2. X delivered to Y, maong pants, for the purpose of
selling them on behalf of X. While in Y’s
possession, the store of Y was burned down and
the maong pants were destroyed.
Q: Is Y liable to pay X?
A: This is a contract of agency to sell, there was no
transfer of ownership even if the maong pants
were already delivered since X retains ownership
over the same. As such, Y is not liable to X since X
remains the owner of the maong pants and should
bear the risk of loss.
ARTICLE 1467
Contract of Sale VS Contract for a Piece of Work
CONTRACT OF SALE
CONTRACT FOR A
PIECE OF WORK
Ordered in the ordinary Manufactured especially
course of business.
and not for the market.
ARTICLE 1468
4. MANNER OF PAYMENT MUST BE AGREED
UPON – disagreement on the manner of
payment is tantamount to a failure
to agree on the price.
PRICE CERTAIN:
 Price must be certain, otherwise no true
consent between the parties.
 If no specific amount has been agreed, price is
still certain if:
a) With reference to another thing
certain (Art. 1469)
b) Determination of the price is left to the
judgment
of
a
specified person/s. (Art. 1469)
c) In the cases provided for under Art.
1472:
1. Certainty of price of securities
(price on a definite day)
2. If stock market price cannot be
ascertained
–
sale
is
inefficacious.
PRICE:
General Rule: Fixing of the price cannot be left to the
discretion of one of the contracting parties
Exception: If the price is accepted by the other.
If PRICE cannot be determined:
General Rule: If price cannot be determined in
accordance with the manner specified by law or in
any other manner, the contract is INEFFICACIOUS,
hence the sale is void.
Contract of Sale VS Barter
CONTRACT OF SALE
BARTER
A thing I given in A thing is given in
exchange
of
a exchange of another
price certain in money thing.
or its equivalent.
If consideration is party in money and partly in
another thing:
 First Rule – Intention of the Parties
 If Intention 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
CONSIDERATION/PRICE CERTAIN:
Requisites for a Valid Price:
1. REAL – not simulated or not fictitious
2. CERTAIN OR ASCERTAINABLE
• Certain - specific amount of money or its
equivalent.
• Ascertainable – with reference to
another thing certain; or determination
is left to the judgment of a special person
or persons.
3. IN MONEY OR ITS EQUIVALENT
Exceptions: If the thing or any part thereof has been
delivered to and appropriated by the buyer; he must
pay a reasonable price therefor.
Gross Inadequacy of Price
General Rule: Gross inadequacy if price does not
affect a contract of sale.
Exceptions:
1. There is a defect in the consent; or
2. The parties really intended a donation or some
other act or contract.
Q1: Does gross inadequacy of the price affect a
contract of sale?
A: Mere inadequacy of the price does not affect its
validity when both parties are in a position to form an
independent judgment concerning the transaction,
unless fraud, mistake or undue influence indicative
of a defect in consent is present.
In such case, remedy is Annulment of contract on
ground of vitiated consent and not due to inadequacy
of the price.
*If the price is so inadequate as to shock the
conscience of the Court, the sale will be set aside.
SIMULATED PRICE
 Is fictitious;
 There is lack of consideration.
 The contract is void.
*However, it may be valid as a donation or some
other agreement.
FAILURE TO PAY
LACK OF
CONSIDERATION
CONSIDERATION
Results in a right to There is no valid contract
demand the fulfillment or for lack of an essential
cancellation
of
the element (consideration).
obligation.
Contract is VALID.
Contract is VOID.
*Where the deed of sale states that the purchase price
has been paid but in fact has never been paid, the deed
of sale is null and void ab initio for lack of
consideration.
Case:
R is the owner of a lot with an area of 448 square
meters. R, being an illiterate, affixed his thumb mark
on a Deed of Sale in favor of M who promised to pay
the agreed P50,000 purchase price within one-month
from the signing of the Deed of Sale. Unknown to R, the
Deed of Sale states that he received the P50,000
purchase price on the date of its execution. M failed to
pay after the lapse of the one-month period.
Q: Was there a valid sale?
A: On its face, the Deed of Sale appears supported by a
valuable consideration. However, since M never paid
R, there is a total absence of consideration contrary to
what is stated in the Deed of Sale. Hence, it is null and
void ab initio for lack of consideration.
KINDS OF SALE
a) ABSOLUTE SALE
 No conditions attached to the contract;
b) CONDITIONAL SALE
 There are certain conditions attached
to the contract;
ABSOLUTE SALE
Ownership
transfers
upon delivery, actual or
constructive; even if no
total payment of the
price has been made yet.
CONDITIONAL SALE
Ownership automatically
transfers to the buyer
upon fulfillment of the
condition,
which
is
usually the full payment
of the price, without need
of a new agreement or
contract.
CONTRACT TO SELL VS. CONDITIONAL CONTRACT
OF SALE
CONTRACT TO SELL
A bilateral contract
whereby
the
prospective seller, while
expressly reserving the
ownership of the subject
property
despite
delivery thereof to the
CONDITIONAL
CONTRACT OF SALE
The element of consent
is present, although it is
conditioned upon the
happening
of
a
contingent event which
may or may not occur.
prospective buyer, binds  If the suspensive
himself to sell the said
condition is not
property
to
the
fulfilled,
the
prospective buyer upon
perfection of the
fulfillment
of
the
contract of sale is
condition agreed upon.
completely abated.
(Full payment purchase  If the suspensive
price).
condition is fulfilled,
the contract of sale is
thereby perfected,
such that if there had
been
already
previous delivery of
the property subject
of the sale to the
buyer,
ownership
thereto
automatically
transfers to the
buyer by operation
of law without any
further act having to
be performed by the
seller.
Seller can still sell the Seller can no longer sell
property to another.
the property to another.
Case:
X sold to Y his land for P1 million, the price payable in
10 monthly installments. X executed a deed stating
that X retains ownership over the land despite
delivery thereof subject to the full payment of the
price.
Q: Upon full payment, will Y become the owner of the
land?
A: Yes. Ownership automatically transfers upon the
fulfillment of the condition, i.e. payment of the full
price.
ART. 1475. PERFECTION OF THE CONTRACT OF
SALE
CONSENSUAL CONTRACT
 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, parties may reciprocally
demand performance.
REQUISITES FOR PERFECTION
a) When parties are face-to-face:
 Perfected when offer is accepted
without conditions and without
qualifications.
b) If thru correspondence:
 There is Perfection when offeror
receives/has
knowledge
of
the
acceptance by the offeree.
 Pending knowledge of acceptance, the
seller may still withdraw.
c) Sale with Suspensive Condition:
 Perfection is had from the moment the
condition is fulfilled.
EFFECT OF PERFECTION
 After perfection, parties must now comply with
their mutual obligations.
ART. 1476. SALE BY AUCTION
 If goods are sold by auction in lots, each lot is the
subject of a separate contract of sale.
 Perfection:
 Perfected when the auctioneer announces its
perfection by the fall of the hammer or in other
customary manner.
 Before the fall of the hammer:
 Bidder may retract his bid
 Auctioneer may withdraw the goods from the
sale
 Bid by the seller or his/her representative:
 Provided right to bid was reserved.
 Notice was given that sale by auction is subject
to such right.
TRANSFER OF OWNERSHIP
General Rule: (Art. 1477) Ownership of the thing sold
shall be transferred to the vendee upon:
 ACTUAL DELIVERY (Art. 1497)
 CONTRUCTIVE DELIVERY (Art. 1498-1601)
Exception: (Art. 1478) Parties may stipulate that
ownership shall not pass until price is fully paid. (e.g.
Sale on installment plan.)
*However innocent third parties cannot be prejudiced.
ART. 1479. CONTRACT OF SALE VS. OPTION
CONTRACT
 BILATERAL RECIPROCAL PROMISE – a promise to
buy and sell a determinate thing for a price certain
is reciprocally demandable.
 ACCEPTED UNILATERAL PROMISE – an accepted
unilateral promise to buy or 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.
 POLICITACION – a unilateral promise to buy or to
sell which is not accepted; Mere offer.
OPTION OR UNACCEPTED OFFER
 It is a continuing offer
 It stipulates that the prospective buyer shall
have the right to buy the property at a fixed
price within a certain time or under certain
terms/conditions.
 Merely secures a privilege to buy.
OPTION CONTRACT
 It is a contract by which the owner of the
property agrees with another person that the
latter shall have the right to buy the former’s
property at a fixed price within a certain time.
CONTRACT OF SALE VS. OPTION CONTRACT
CONTRACT OF SALE
Fixes
definitely
the
relative
rights
and
obligations
of
both
parties at the time of its
execution.
OPTION CONTRACT
An unaccepted offer or a
continuing offer by which
the owner stipulates with
another that the latter
shall have the right to
buy the object at a fixed
The offer and the
acceptance
are
concurrent, since the
minds of the contracting
parties meet in the terms
of the agreement.
price within a certain
time, or in compliance
with certain terms and
conditions.
It states the terms and
conditions on which the
owner is willing to sell
within the time limited.
ARTICLE 1482. EARNEST MONEY
EARNEST MONEY
OPTION MONEY
Part of the purchase Distinct consideration
price
Given only where there  Gives rise to an
is already a sale.
option
contract.
 Applies to a sale not
yet
perfected.
When earnest money is When the buyer gives
given, the buyer is option money, he is not
bound to pay the required to buy.
balance.
Case:
C1: Zander saw at a mall the newest model of Lexus
luxury car which he had always wanted. However, he
only had P100,000 cash with him that day, not enough
to cover the P500,000 down payment for the car. The
agent informed him that they sell at a ‘first come first
served basis’. But he also shared that Zander may pay
P100,000 for an option to buy the car within 30 days.
Zander paid the amount but was not able to buy the
Lexus within the 30 day period.
Q: Can he still withdraw his P 100,000?
A: No.
C2: Lala offered to sell to Anne her condominium unit
in Avida Towers, Sucat, Paranaque for P1,500,000.
Anne said she would think about it and will give her
answer within a week to which Lala agreed. Three (3)
days after the offer, Lala sold her condo unit to Carlo
for the same price. Anne found out about this and told
Lala that she is bound by her offer to sell the property
to her.
Q: Is Anne correct?
A: No.
C3: Maya offered to sell her Mercedes Benz car to Hans
for P 1,500,000. Hans asked Maya to give him 30 days
to decide on this and in exchange, he will pay P10,000.
Maya found a sure buyer the next day and immediately
sold the car.
Q: Can Maya do this?
A: No.
WHO BEARS THE RISK OF LOSS OR GAIN?
a) Object is lost before perfection of contract of
sale:
 The seller bears the loss
b) Object is lost after delivery to the buyer:
 The buyer bears the loss.
c) Object is lost after perfection but before
delivery:
 The buyer bears the loss as an exception to the
principle of res perit domino.
General Rule: Based on agreement of the parties.
Exception: In the absence of agreement, buyer bears
the loss/gain after perfection of the contract as an
exception to the rule of res perit domino (owner bears
loss).
Exceptions to Exception:
1) Object sold is fungible and price is fixed
according to weight, number or measure –
seller bears the loss before delivery unless
buyer incurs delay.
2) Seller is guilty of fraud, negligence, default or
violation of contractual term.
3) When the object is generic because genus nun
quam perit” (generic thing does not perish).
ART. 1481. CONTRACT OF GOODS BY
DESCRIPTION OR BY SAMPLE
 Where seller sells things as being of a certain
kind, the buyer merely relying on the seller’s
representations or descriptions.
Sale by sample
 Where the seller warrants that the bulk of the
goods shall correspond with the sample in
kind, quality, and character.
Sale by description and sample
 Must satisfy the requirement in both.
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
mouth, or may be inferred from the conduct of the
parties.
ART. 1483. FORM OF CONTRACT OF SALE
May be in writing
By word of mouth
Partly in writing and partly by word of mouth
Inferred from the conduct of the parties
* Subject to the provisions of the Statute of Frauds
FORMALITIES FOR
Statute of Frauds)
PERFECTION
 The expenses for the execution and
registration of the sale shall be borne by the
vendor, unless there is a stipulation to the
contrary.
Vendor may exercise any of the following remedies:
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. No further action the purchaser
to recover any unpaid balance of the price.
Agreement to the contrary is void.
BARRING RULE:
1) Alternative remedy
2) Foreclose no more recovery of balance
Art. 1485.
Sale by description
1.
2.
3.
4.
Art. 1484. RECTO LAW (Sale of Personal Property
in Installment)
(under the
Must be in writing to be enforceable:
 Sale of REAL PROPERTY, regardless of the
amount
 Sales of PERSONAL PROPERTY, if P500 or
more
 Sale of PROPERTY not to be performed
within a year
Exception: If there is partial or complete fulfillment or
execution. (Statute of Frauds refers only to executory
contracts.)
 Recto Law applicable 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.
 The expropriation of property for public use is
governed by special laws.
Art. 1486.
 Stipulation that the installments or rents paid
shall not be returned to the vendee or lessee
shall be valid, if not unconscionable.
1.2 CAPACITY OF PARTIES TO BUY OR SELL
a) Who can enter into a contract of sale:
 All persons, whether natural or juridical,
who can bind themselves, have legal
capacity to enter into a contract of sale.
b) Who cannot:
 Persons who are incapacitated
* Absolute Incapacity - persons who cannot enter
into a contract of sale in all circumstances
* Relative Incapacity - certain persons, under certain
circumstances, cannot buy certain property
ABSOLUTE INCAPACITY (Art. 1327):
a) Minors
b) insane or demented persons, and
c) Deaf-mutes who do not know how to write
Exception:
✓ Sale of necessaries
 Everything indispensable for sustenance,
dwelling, clothing, medical attendance,
education, and transportation.
REASON FOR INCAPACITY: They are not capable of
understanding or knowing the nature or import of
their actions. They can enter into a contract only
through a parent or guardian.
RELATIVE INCAPACITY (Art. 1490):
1) Husband and wife (incl. common law relationship)
 cannot sell property to each other


Effect: Contract of sale is null and void because it is
contrary to law;
4) Executors/Administrators 
REASONS:
1) To avoid prejudice to third persons (e.g.
creditors; heirs of either spouse)
2) To prevent one spouse from unduly
influencing the other;
3) To avoid indirect violation of the prohibition
against donations between spouses;

5)Public
Employees
Officers
& 
Exceptions:
1) When a separation of property was agreed upon in
the marriage settlements
2) When there has been a judicial separation of
property under the following circumstances:
a) When one of the spouses has been sentenced
to a penalty which carries with it civil
interdiction (imprisonment not lower than 12
years and 1 day to 20 years);
b) When a spouse has been declared absent
c) When legal separation has been granted by a
competent court.
Case:
C1:John and Anna were husband and wife who owned
a parcel of land. They had three children. When Anna
died, John lived with Martha as common law spouse.
When John died, his children discovered that their
father sold the land to Martha.

6) Justices, Judges,

prosecuting attorneys, clerks
of superior or inferior courts,
and other officers &
employees connected with
the administration of
justice;

Q: Was the sale valid?
A: No, the sale was void. The prohibition of sale against
spouses also applies to common law relations,
otherwise, the condition of those who incurred guilt
would turn out to be better than those in legal union.
Lawyers

C2: John and Anna were husband and wife who owned
a parcel of land. They had three children. When the
parents died, their children discovered that their
father sold the land to his mistress Martha.

Q: Was the sale valid?

A: No, the sale was void because it is contrary to law,
morals, good customs, public order, or public policy.
RELATIVE INCAPACITY (Art. 1491):
PROHIBITED FROM
ACQUIRING BY
PURCHASE
2) Guardian
3) Agents
NATURE OF
PROPERTY
 Property
of
ward or persons
under his/her
guardianship.
 Property
of
ward.
 Property of the
principal
entrusted
to
them
for
administration
or sale, unless
7) Any others specially
disqualified by
law

principal gives
consent.
Property of the
principal
Except:
principal gives
consent.
Property of the
estate
under
administration.
Estate
under
administration.
Property of the
State or of any
subdivision
thereof, or of
any GOCC, or
institution, the
administration
of which is
entrusted
to
them.
Government
property under
their
administration.
Property
&
rights
in
litigation
or
levied upon an
execution
before the court
within
their
jurisdiction or
territory they
exercise their
respective
functions.
Property falling
in
their
jurisdiction.
Property
and
rights object of
any litigation in
which they may
take part by
virtue of their
profession;
Client’s property
in litigation.
Except:
Contingency fee
arrangement
Their
representatives
(or
spouses);
Aliens as they
are prohibited
by
the
Constitution
from acquiring
lands except by
succession.
RELATIVE INCAPACITY:
Reason: There is fiduciary relationship involved.
Effect: Contract of sale is null and void because it is
contrary to law;
 They cannot acquire by purchase even at a
public of judicial auction, either in person or
through the mediation of another.
 They are only prohibited from acquiring those
properties enumerated but they are not
barred from selling properties to their
counterpart enumerated persons.
2. Partially Lost - Vendee may choose:
a) Withdrawing (rescission) from the
contract; or;
b) Demanding the remaining part
(specific performance), paying its price
in proportion to the total sum agreed
upon.
Art. 1492. The Prohibitions in the two preceding
articles are applicable to sales in legal
redemption, compromise, and renunciations.
Art. 1619. Legal Redemption – is the right to be
subrogated, upon the same terms and conditions
stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in payment, or
by any other transaction whereby ownership is
transmitted by onerous title.
Case:
X sold to Y his house in Manila which, unknown to
both of them, had been completely destroyed last
night.
Q: Who bears the loss?
Art. 2028. Compromise – is a contract whereby the
parties, by making reciprocal concessions, avoid a
litigation or put an end to one already commenced.
A: X bear the loss since he is still the owner as the
contract of sale is without any effect for lack of an
essential element (object).
Art. 6. Waiver– 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 a right recognized by law.
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 threat 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
is divisible.
Art. 1270. Condonation or Remission – is
essentially gratuitous, and requires the acceptance by
the obligor. Subject the rules governed by donations.
EFFECTS OF THE CONTRACT WHEN THE THING
SOLD HAS BEEN LOST
RULES WHEN SUBJECT MATTER IS LOST:
1. Before Perfection - Res Perit Domino
(Roman v. Grimalt, 6 Phil. 96 (1906)
2. At Time of Perfection – Seller (Art. 1493 and
1494) - “Sale is inefficacious.”
Case:
X sold to Y his house in Manila which, unknown to
both of them, had been completely destroyed last
night.
Q: Who bears the loss?
A: Seller as the owner.
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.
Loss of object Before Sale:
 The contract is void or ineffectual because
there absence of an essential element which
is the object.
 The seller, being the owner, shall bear the
loss.
COMPLETE LOSS VERSUS PARTIAL LOSS
1. Completely Lost - Contract is without effect
1.3 Effects of the contract when goods sold is lost:
LOSS OF THE GOODS AT THE TIME OF
PERFECTION OF THE CONTRACT
• Completely/Partially Lost - buyer may treat the
sale as:
1.Avoided; or
2.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).