SALES PRELIMS REVIEWER
CHAPTER 1
Nature and Form of the Contract
Article 1458. By the contract of sale one of the contracting
parties obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent.
NOTES:
- Sale is a contract where one party (seller or vendor)
obligates himself to transfer the ownership of and to
deliver a determinate things, while the other party
(buyer or vendee) obligates himself to pay for said
thing a price certain in money or its equivalent.
- The Civil Code requires not only the delivery but also
the transfer of the ownership of the thing sold.
However, the vendor need not to be the owner of the
thing at the time the sale is perfected, it is sufficient
that he is the owner at the time the thing sold is
delivered.
-
Essential Characteristics of the Contract of Sale
1.) Consensual – contract is perfected by mere
consent
2.) Bilateral Reciprocal – both parties are bound
by obligations dependent upon each other
3.) Onerous – valuable consideration must be
given
4.) Commutative – values exchanged are almost
equivalent to each other
5.) Principal – no necessity for a contact of sale
to depend upon the existence of anther valid
contract
6.) Nominate – special; designation or name
-
Elements of a Contract of Sale
1.) Essential Elements (those without
which there can be no valid sale)
a. Consent or meeting of minds
b. Determinate subject matter
c. Price certain in money or its
equivalent
2.) Natural elements (those which are
inherent in the contract, and which in
the absent of any contrary provision, are
deemed to exist in the contract).
a. Warranty against eviction
(deprivation of the property
bought)
b. Warranty against hidden
defects (flaws actually present
but not manifest during the
time of the sale)
-
Stages in the Contract of Sale
1.) Generation or negotiation
2.) Perfection – meeting of minds ( all the
essential elements of sale must be present)
3.) Consummation – when the object is
delivered and the price is paid
-
Kinds of Sales
1.) As to nature of the subject matter
a. Sale of real property
b. Sale of personal property
2.) As to the value of the things exchanged
a. Commutative sale
b. Aleatory Sale
3.) As to whether the object is tangible or
intangible
a. Sale of property (tangible or
corporeal)
b. Sale of a right ( assignment of
a right or credit, or some other
intangibles)
4.) As to the validity or defect of the
transaction
a. Valid sale
b. Rescissible sale
c. Voidable sale
d. Unenforceable sale
e. Void sale
5.) As to the legality of the object
a. Sale of a licit object
b. Sale of an illicit object
6.) As to the presence or absence of
conditions
a. Absolute Sale
b. Conditional Sale
7.) As to wholesale or retail
a. Wholesale – if to be resold for
a profit the goods being
unaltered when resold, the
quantity being large
b. Retail – if otherwise
8.) As to the proximate inducement for the
sale
a. Sale by description
b. Sale by sample
c. Sale by description and sample
9.) As to when the price is tendered
a. Cash Sale
b. Sale on the installment plan
Contract of Sale
Non-payment of the price is
a resolutory condition
Title to the property
generally passes the to
buyer upon delivery
After delivery has been
made, the seller has lost
ownership and cannot
Contract to Sell
The payment in full of the
price is a positive
suspensive condition
Ownership is retained by the
seller , regardless of
delivery and is not to pass
until full payment of the
price.
Since the seller retains
ownership, despite delivery,
he is enforcing and not
recover it unless the contract
is resolved or rescinded
rescinding the contract if he
seeks to oust the buyer for
failure to pay.
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.
NOTES:
- The object must be licit
o Lawful; within the commerce of man
o If the object is illicit, the contract is null and
void
o The right of redemption may be sold
-
The vendor must have the right to transfer
ownwerhip at the time the object is delivered
o It is essential for a seller to transfer the
ownership, and therefore, the seller must
must be the owner of the subject sold,
butvhe need not to be the owner at the time
of the perfection of the contract
Article 1460. A thing is determinate when it is particularly
designated or physical 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.
NOTES:
- The object must be determinate
o specific, but it is not essential that at the
time of the perfection, the object is already
specific. It is suffiecient that it be capable of
being determinate without need of any new
agreement.
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.
NOTES:
- Sale of a thing having a potential existence:
o A future thing that may be sold
§ Young of animals not yet in
existence; ungrown fruits
§ Wine that a particular vineyard is
expected to produce
§ Wool that shall grown on a sheep
o !! Future inheretance cannot be sold !!
- Sale of an expected thing
o Valid but if the expected thing did not
materialize, the sale is not effective.
- Sale of the hope itself
o Valid if there is a chance of winning, but if
there is really none (sale of a losing/expired
ticket), the sale is invalid.
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.
NOTES:
- Goods may be future or existing goods
o Manufactured
o Raised
o Acquired by the seller after the perfection of
contract ( like land which the seller expects
to buy)
o Things whose acqusition depends upon a
contingency which may or may not happen.
Article 1463. The sole owner of a thing may sell an undivided
interest therein.
NOTES:
- Sale of the part of my house (co-ownership then
arises)
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, and though the
number, weight or measure of the goods in the mass is
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.
NOTES:
- Example:
o In a stock of rice, the exact number is still
unknown, Jose buys 100 cavans. If there are
really 150, Jose becomes the co-owner of
the whole product, his share being 2/3
thereof.
Article 1465. Things subject to a resolutory condition may be
the object of the contract of sale.
NOTES:
- Self explanatory (kaya mo na to maan)
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.
NOTES:
Contract of Sale
The buyer pays the price
The buyer after delivery
becomes the owner
The seller warrants
Agency to Sell
The agent delivers the price
which in turn he got from
his buyer
The agent who is supposed
to sell does not become the
owner, even if the property
has already been delivered
to him
The agent who sells
assumes no personal
liability as long as he acts
within his authority and in
the name of the principal
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.
NOTES:
- Rules to determine if the contract is one of sale or
a piece of work
o SALE - if ordered in the ordinary course of
business
o PIECE OF WORK – if manufactured
specially and not for the market
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.
NOTES:
- Rules to determine whether contract is one of sale
of barter
o First Rule – Intent
o If intent does not clearly appear
§ BARTER – the thing is more
valuable than money
§ SALE – if 50/50 and if the thing is
less valuable than the money
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 special 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 not in fault may
have such remedies against the party in fault as are allowed
the seller or the buyer, as the case may be.
NOTES:
- Certainty of the Price
o The price must be certain; otherwise, there is
no true consent between the parties. There
can be no sale without without a price. If the
rpice is fixed but is later on remitted or
condoned, this is perfectly alright, for then
then price would not be fictitious, the failure
to pay the agreed price does not cancel a
sale.
-
When no specific amount is stipulated
o If no specific amount has been agreed upon,
the price is still considered certain:
§ If it be ceratain with reference to
another thing
§ If the determination of the price is
left to the judment of a specified
person/s
§ In the cases provided in Article
1472.
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.
NOTES:
- Effect of gross inadequacy of price
o In ordinary sale, the sale remaines valid
even if the price is very low. However, if
there was vitiated consent, the contract may
be annulled but only due to tsuch vitiated
consent.
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.
NOTES:
- Simulated Price
o The price must not be fictitious. Therefore,
if the price is merely simulated, the contract
of sale is void. It may, however, be valid as
a donation or some other agreement,
provided that the requiremnts of such have
been complied with. If these requirements
do not exist, then, as a sale, the contract is
absolutely void, not merely voidable.
o 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 upon at the time of the perfection. A
recission of the prioce will not invalidate the
sale.
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 exchange or
market, provided said amount be certain.
-
NOTES:
- Self explanatory kaya na ‘to (check examples sa book
nalang)
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.
NOTES:
- Price cannot be left to one party’s discretion
o Reason: the other could not have consented
to the price, for he did not know what it was.
-
-
-
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 therefor. What is a reasonable
price is a question of fact dependent on the circumstances of
each particular case.
NOTES:
- Effect if the price cannot be determined
o If the price cannot really be determined, the
sale is void for the buyer cannot fulfill his
duty to pay.
o If the buyer made use of it, he must then 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.
NOTES:
- Nature of the Contract
o Sale is a consensual contract (perfected by
mere consent). Therefore, delivery or
payment is not essential for perfection.
o The contract of sale is consummated upon
delivery and payment.
- Requirements of Perfection
o When the parties are face to face, when an
offer is accepted without conditions and
without qualifications.
When contract is thru correspondence or
thru telegram, there is perfection when the
offeror receives or has knowledge of the
acceptance by the offeree.
o When the sale is made subject to a
suspensive condition, perfection is had from
the moment the condition is fulfilled.
Before Perfection
o No mutual rights and obligations exist
between the would-be buyer and the wouldbe seller. The same is true when perfection
is conditioned upon somethings, and that the
thing is not performed.
o
-
Accepted Bilateral Promise to Buy and Sell
o An accepted bilateral promise to buy and
sell is in a sense similar to but not exactly
the same, a perfected contract of sale.
Advertisements
o Mere invitations to make an offer and,
therefore, one cannot compel the advertiser
to sell.
Transfer of Ownership
o Mere perfection of the contract does not
transfer ownership. Ownership of the object
sold is transferred only after delivery
(tradition) – actual, legal, or constructive.
After delivery of the object, ownership is
transferred.
o A stipulation that even with delivery there
will be no change or transfer of ownership
until the purchase price has been fully paid
is valid but such stipulation is not binding on
innocent third persons.
Effect of Perfection
o The parties must now comply with theur
mutual obligations.
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 or on
behalf of the seller, unless otherwise provided by law
or by stipulation.
(4) Where notice has not been given that a sale by
auction is subject to a right to bid on behalf of the
seller, it shall not be lawful for the seller to bid
himself or to employ or induce any person to bid at
such sale on his behalf or for the auctioneer, to
employ or induce any person to bid at such sale on
behalf of the seller or knowingly to take any bid from
the seller or any person employed by him. Any sale
contravening this rule may be treated as fraudulent by
the buyer.
NOTES:
- When the sale by auction is perfected
o The sale is perfected when the auctioneer
announces its perfection by the fall of the
ahmmer or in other customary manner.
- Before the fall of the hammer
o The bidder may retract his bid because evry
bidding is merely an offer and, therefore,
before it is accepted, it may be withdrawn.
o The auctionners withdraw the goods from
the sale unless the auction has been
announced to be without reserve for the
reason that a 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.
- When seller can bid
o The seller may bid provided that:
§ Such right to bid was reserved
§ Notice was given that the sale by
auction is subject to a right to bid
on behalf of the seller
- When seller may employ others to bid for him
o The seller may employ others to bid on his
behalf, provided that he has notified the
public that the auction is subject to the right
to bid ion behalf of the seller. Otherwise,
any sale contravening the rule may be
treated by the buyer as fraudulent.
Article 1477. The ownership of the thing sold shall be
transferred to the vendee upon the actual or constructive
delivery thereof.
NOTES:
- When ownership is transferred
o Ownership is transferred not by perfection
but by delivery.
o Payment of the purchase price is not
essential to the transfer or ownership, as
long as the property sold has been delivered.
- Kinds of delivery
o Actual
o Constructive
Article 1478. The parties may stipulate that ownership in the
thing shall not pass to the purchaser until he has fully paid the
price.
NOTES:
- When ownership is not transferred despite
delivery
o The ownership may still be with the seller
until full payment of the price is made, if
there is a stipulation to this effect. But of
course, innocent third parties cannot be
prejudiced.
o A stipilation that ownership in the thing
shall not pass to the purchaser until he has
fully paid the price is different from a
stipulation regarding the payment of
balnace. If payment of balance – contract to
sell because the payment of the price is a
condition precedent.
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 promisor if the promise is
supported by a consideration distinct from the price.
NOTES:
- Mutual promise vs. Accepted Unilateral Promise
Mutual Promise (1st par)
Accepted Unilateral
Promise (2nd par)
A promises to buy
Only one makes the
something and B promises
promise. This promise is
to sell it at an agreed price – accepted by the other.
good as a perfected sale.
Hence, A promises to sell to
(Bilateral reciprocal
B accepts the promise, but
contract)
does not in turn promise to
buy. (Accepted unilateral
promise to sell. It is binding
on the promissor only if the
promise is supported by a
consideration distinct from
the price)
-
-
-
Meaning of Policitation
o This is a unilateral promise to buy or to sell
which is not acepted. This produces no
Juridical effect, and creates no legal bond.
This is a mere offer, and has not yet been
conversed into a contract.
Bilateral Promise
o A bilateral promise to buy and sell a ceratin
thing for a price ceratin gives to the
contracting parties personal rights in that
each has the right to demand from the other
the fulfillment of the obligation.
Unilateral Promise
o The acceptance of a unilatral promise to sell
must be plain, clear, and unconditional.
o 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 threis no perfected sale.
o Option
§ It is the contract granting a person
and a privilege to buy or not to buy
certain objects at any time within
the agreed period at a fixed price.
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 1165, and 1262. This rule shall
apply to the sale of fungible things, made independently and
for a single price, or without consideration of their weight,
number, or measure. 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 in delay.
exhibition must have been the sole basis for
the inducement of sale.
NOTES:
- Who bears the risk of loss?
o If the object has been lost before perfection,
the seller bears the loss. Reason: There was
no contract, for there was no cause of
consideration. Being the owner, the seller
bears the loss. The means that he cannot
demand payment of the price.
o If the object was lost after delivery to the
buyer, clearly the buyer bears the loss
o If the object is lost after perfection but
before delivery, the buyer bears the loss for
the reason that had the sale been perfected,
the buyer would have borne the loss, that is,
he would still have to pay for the object even
if no delivery had been made. This means
that the obligation of the seller to deliver is
extinguished but the obligation of the buyer
to pay is not extinguished.
o Art. 1583 – If the thing is lost without the
faullt of the vendor, the obligation shall be
extinguished.
- Meaning of Fungibles
o Fungibles are personal property which may
be replaced with equivalent things.
Article 1481. In the contract of sale of goods by description or
by sample, the contract may be rescinded if the bulk of the
goods delivered do not correspond with the description or the
sample, and if the contract be by sample as well as 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.
NOTES:
- Definitions of Sale by Description or By Sample
o 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 goods, or even if he has
seen them, he believes (sometimes
erroneously) that the description tallies with
the goods he has seen.
o Sale by sample - that where the seller
warrants that the bulk (not the major part of
the majority of the goods but the goods
themselves) of the goods should correspond
with the sample in kind, quality, and
character. Only the sample is exhibited. The
bulk is not present, and so there is no
opportunity to examine or inspect it.
o Sale by description and sample – must
satisfy the requirements in both, and not in
only one.
- Effect of Mere exhibition of sample
o The mere exhibition of the sample does not
necessarily make it a sale by sample. This
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.
NOTES:
- Earnest Money defined
o Also know as “ arras”
o Something of value to show that the buyer
was really in earnest, and given to th seller
to bind the bargain.
- Significance of Earnest Money
o Part of the purchase price
o Proof of perfection of the contract
- When arras must be returned
o If merchandise cannot be delivered, the arras
must be returned.
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.
NOTES:
- Statute of Frauds
o Self explanatory 🤪
- If sale is made thru an agent
o The sale of a piece of land or interest
therein when made thru an agent is void (not
mrely unenforceable) unless that agent’s
authority is in writing). This is true even if
the sale itself is in a public instrument.
- Effect if Notary Public is not Authorized
o If the deed of sale of a land is notarized by a
notary public whose authority had expired,
the sale woul stil be valid, since for the
validity of the sale, a public instrument is
not even essential.
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:
(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.
NOTES:
- Requisites before Art 1484 may be applied
o There must be a contract
o The contract must be one of sale ( absolute
sale, not a pacto de retro sale)
o What is sold is a personal property
o
-
-
The sale must be on the installment plan
Alternative Remedies
o The remedies enumerated are not
cumulative. They are alternative, and if one
is exercised, the others cannot be made use
of. But for this doctrine to apply, the remedy
must have been fully exercised.
Instances when Art. 1484 cannot be applied
o Does not apply to a real estate mortgage
o Does not apply to the sale or personal
property on straight terms.
§ Straight terms – one which the
balance, after payment of the initial
sum, should be paid in its totality at
the time specified.
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.
NOTES:
- Reason for Rule on Leases of Personal Property
With Option to Buy
o This may be really considered a seal of
personal property in installments. Therefore
the purpose of Art. 1485 is to prevent any
direct violation of Art. 1484.
- Meaning of the clause “ when the lessor has
deprived the lessee of the possession or enjoyment
of the thing”
o This means that 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 the property
had been given up and obedience the
“lessor’s” extrajudicial demand, such
surrender not really being voluntary.
- When lease is construed as sale
o 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 case referred to in the two preceding
articles, a stipulation that the installments or rents paid shall
not be returned to the vendee or lessee shall be valid insofar as
the same may not be unconscionable under the circumstances.
NOTES:
- Non return of Installments Paid
o As a general rule, it is required that a case of
recission or cancellation of the sale requires
mutual restitution, that is, all partial
payments of price or “rents” must be
returned. 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 that
the stipulation is not unconscionable.
Article 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.
NOTES:
- Who pays for expenses in the execution and
registration
o Seller (unless otherwise stated)
Article 1488. The expropriation of property for public use is
governed by special laws.
NOTES:
- Nature of expropriation
o Expropriation is involuntary in nature, that
is, the owner may be compelled to surrender
the property after all the essential requisites
have been complied with. Therefore,
expropriation does not result in a sale.
CHAPTER 2
Capacity to Buy or Sell
Article 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. 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.
NOTES:
- Incapacity to Buy May be Absolute or Relative
o Absolute Incapacity – when party cannot
bind himself in any case.
o Rrelative Incapacity – when ceratian
persons, under certain circumstances, cannot
buy certain property. (Art. 1490 & 1491)
- Purchase by Minors
o When minors buy, the contract is generally
voidable, but in case of necessaries, “ where
neccessaries are sold to and delibvered to a
minor or to other person without capacity to
act, he must pay reasonable price therefor.
§ Neccessaries – include everything
that is indispensable for sustenance,
dwelling, clothing, and medical
attendance, according to the social
position of the family. Support also
includes education of the person
entitled to be supported until he
completes hi education or training
for some profession, trade, or
vocation, even beyond the age of
majority. (Art. 290, Civil Code)
Article 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
(2) When there has been a judicial separation of
property under article 191.
NOTES:
- Reason why a husband and wife cannot sell to
each other
o To avoid prejudice to thrid persons; to
prevent one spouse from unduly influencing
the other; to avoid indirection the violation
of the prohibition against donations.
- Effect of Sale
o A sale by one spouse is void.
- Who can attack the validity of the Sale
o The heirs of either spouse, as well as the
prior creditors (persons who are already
creditors at the time of the transfer)
Article 1491. The following persons cannot acquire by
purchase, even at a public or judicial auction, either in person
or through the mediation of another:
(1) The guardian, the property of the person or
persons who may be under his guardianship;
(2) Agents, the property whose administration or sale
may have been intrusted 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 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.
NOTES:
- This article refers to persons relatively
incapacitated to buy
- Reason for the law
o Public policy prohibits the transactions in
view of the fiduciary relationship involved.
-
-
Purchase through another
o “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.
Purchase by Agent for Himself
o 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.
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, however, buy after the
termination of the agency.
Purchase by Attorney
o 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 with constituent
malpractice.
§ A thing is said to be in litigation
not only if there is some contest or
litigation of it in court but also from
the moment that it became subject
of the judicial action of the judge.
Meaning of “ any others specially disqualified by
law”
o This refers to those prohibited by reason of
the fiduciary relationship involved.
Status of the sale
o Sales entered into in disregard of the
prohibition under this article are not void.
They are merely voidable.
Article 1492. The prohibitions in the two preceding articles
are applicable to sales in legal redemption, compromises and
renunciations.
NOTES:
- Applicability of Relative Incapacity to Legal
Redemption, compromise, and renunciation
o 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.
- Cross reference
o Legal redemption ( Art. 1619)
o Compromises (Art. 2028)
o Renunciation (Arts. 6 & 1270)
CHAPTER 3
Effects of the Contract When the Thing Sold Has
Been Lost
Article 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.
NOTES:
- Loss of Object Before Sale
o 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 distinguised from Partial Loss
o When the object has been completely lost
o When the object has been partly or partially
lost
§ Remedies
• Withdrawal (or rescission)
• Specific performance as to
remainder by payment of
proportional price
Article 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.
NOTES:
- Loss of Specific Goods
o This article practically reiterates the
principles involved in the preceding article.
o Remedies:
§ Cancellation (or avoidance)
§ Specific performance as to the
remaining existing goods (if the
sale was divisible)
NOTES:
- Obligations of Vendor
o To transfer ownership (cannot be waived)
o To deliver (cannot be waived)
o To warrant the object sold (this can be
waived or modified since warranty is not an
essential element of contract of sale)
o To preserve the thing from perfection to
delivery, otherwise, he can be held liable for
damages.
- Failure to deliver on time
o If the seller promise to deliver at a stipulated
period, and such period is of the essence of
the contract, but did not comply with his
obligation on time, he has no right to
demand payment of the price.
o If failure by the seller to deliver on time is
not due to his fault, as when it was the buyer
who failed to supply the necessary credit for
the transportation of the goods, delay on the
part of the seller may be said to be
sufficiently excused.
- Effect of non-delivery
o If the seller fails to deliver, and by your
house no fault, the latter may ask for the
resolution or rescission of the contract.
- Duty to deliver at Execution Sales
o When the property is sold at an execution
sale, the judgment debtor is not required to
deliver the property sold right away. Reason:
He has a period of one year within which to
redeem the property. In the meantime, the
buyer should not take actual physical
possession of the property. If he does so, an
option of forcible entry may be brought
against him.
Article 1496. The ownership of the thing sold is acquired by
the vendee from the moment it is delivered to him in any of
the ways specified in articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is
transferred from the vendor to the vendee.
NOTES:
- Ownership is Transferred Generally Only by
Delivery
o As a rule, in the absence of agreement,
onwership is not transferred, even if sold,
unless there has been delivery.
-
CHAPTER 4
Obligations of the Vendor
SECTION 1
General Provisions
Article 1495. The vendor is bound to transfer the ownership
of and deliver, as well as warrant the thing which is the object
of the sale.
Effect of Delivery to Buyer (Who Used Another’s
Money)
o In general, the delivery of the property to a
person who has purchased the property in
his own name (although he use the money
up another) will give title to said purchaser
(for it is he who appears in the dead of sale
to have made the purchase in his own name),
and not the owner of the money used.
CHAPTER 5
Obligations of the Vendee
Article 1582. The vendee is bound to accept delivery and to
pay the price of the thing sold at the time and place stipulated
in the contract. If the time and place should not have been
stipulated, the payment must be made at the time and place of
the delivery of the thing sold.
NOTES:
- Principal Obligations of the Buyers
o Accept delivery
o Pay the price
- Effect of Delivery when no time has been fixed for
payment of price
o If the seller has delivred but no time has
been fixed for the payment of the price, the
seller may require payment to be made at
any time after delivery. The buyer here has
the duty to pay the price immediately upon
demand.
- Effect of deviations from the contract
o If the seller is forced tpo deviate from the
provision of the contract, but the purchaser
consents or agrees to such deviations, the
purchaser should still pay the price.
Article 1583. Unless otherwise agreed, the buyer of goods is
not bound to accept delivery thereof by installments.
Where there is a contract of sale of goods to be delivered by
stated instalments, which are to be separately paid for, and the
seller makes defective deliveries in respect of one or more
instalments, or the buyer neglects or refuses without just cause
to take delivery of or pay for one or more instalments, it
depends in each case on the terms of the contract and the
circumstances of the case, whether the breach of contract is so
material as to justify the injured party in refusing to proceed
further and suing for damages for breach of the entire contract,
or whether the breach is severable, giving rise to a claim for
compensation but not to a right to treat the whole contract as
broken.
NOTES:
- Generally, no delivery by installments
o Reason: Performance must generally be
complete
o Exception: Express provisons
- Rule in case of Installment deliveries
o Second paragraph provides for the rules and
distinguishes whether the breach is severable
or not.
Article 1584. Where goods are delivered to the buyer, which
he has not previously examined, he is not deemed to have
accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of ascertaining
whether they are in conformity with the contract if there is no
stipulation to the contrary. Unless otherwise agreed, when the
seller tenders delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable opportunity of
examining the goods for the purpose of ascertaining whether
they are in conformity with the contract. Where goods are
delivered to a carrier by the seller, in accordance with an order
from or agreement with the buyer, upon the terms that the
goods shall not be delivered by the carrier to the buyer until he
has paid the price, whether such terms are indicated by
marking the goods with the words "collect on delivery," or
otherwise, the buyer is not entitled to examine the goods
before the payment of the price, in the absence of agreement
or usage of trade permitting such examination.
NOTES:
- When Buyer has the right to examine
o Generally, the buyer is entitled to examine
the goods prior to delivery.
o Such right to examine, however, should be
availed of within a reasonable time in order
that the seller may not be subjected to undue
delay or prejudice in the payment of his raw
materials, workers, or other damages which
may be incurred due to the deterioration of
his products.
o The buyer is deemed to have accepted the
goods when, after the lapse of a reasonable
time, he retains them without intimating to
the seller that he has rejected them.
- When the buyer has no right to examine
o When there is a stipulation to this effect
o When the goods are delivered C.O.D –
unless there is an agreement or a usage of
trade permitting such examination.
Article 1585. The buyer is deemed to have accepted the goods
when he intimates to the seller that he has accepted them, or
when the goods have been delivered to him, and he does any
act in relation to them which is inconsistent with the
ownership of the seller, or when, after the lapse of a
reasonable time, he retains the goods without intimating to the
seller that he has rejected them.
NOTES:
- When there is acceptance of the Goods
o Express acceptance
o When buyer does an act which only an
owner can do
o Failure to return after a reasonable lapse of
time
Article 1586. In the absence of express or implied agreement
of the parties, acceptance of the goods by the buyer shall not
discharge the seller from liability in damages or other legal
remedy for breach of any promise or warranty in the contract
of sale. But, if, after acceptance of the goods, the buyer fails to
give notice to the seller of the breach in any promise of
warranty within a reasonable time after the buyer knows, or
ought to know of such breach, the seller shall not be liable
therefor.
NOTES:
- Even if buyer accepts, seller can still be liable
o Reason for the last sentence:
§ To prevent afterthoughts or belated
claims
o
The buyer is allowed to set up a breach of
the warranty or promise as a set-off or
counterclaim for the price.
Article 1587. Unless otherwise agreed, where goods are
delivered to the buyer, and he refuses to accept them, having
the right so to do, he is not bound to return them to the seller,
but it is sufficient if he notifies the seller that he refuses to
accept them. If he voluntarily constitutes himself a depositary
thereof, he shall be liable as such.
NOTES:
- Effect if the buyer justifiably refuses to accept the
delivery
o Buyer has no duty to return the goods to the
seller
o Mere notification to seller of refusal will
suffice
o But buyer may make himself a voluntary
depository – in which case he must safely
take care of them in the meantimes (liable na
sya here)
Article 1588. If there is no stipulation as specified in the first
paragraph of article 1523, when the buyer's refusal to accept
the goods is without just cause, the title thereto passes to him
from the moment they are placed at his disposal.
NOTES:
- Effect if buyer unjustifiably refuses to accept the
delivery
o Generally, the buyer becomes the owner.
§ Exception: when there is a contrary
stipulation or when the seller
reserves ownership as a sort of
security for the payment of the
price.
Article 1589. The vendee shall owe interest for the period
between the delivery of the thing and the payment of the price,
in the following three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits
or income;
(3) Should he be in default, from the time of judicial
or extrajudicial demand for the payment of the price.
NOTES:
- When buyer has to pay for interest on the Price
o No. 1 – no demand is needed
o No. 2 – the reason for the law is that the
fruits or income is sufficient to warrant the
payment of interest.
o No. 3 – default is “mora”, called “in delay”
Article 1590. Should the vendee be disturbed in the
possession or ownership of the thing acquired, or should he
have reasonable grounds to fear such disturbance, by a
vindicatory action or a foreclosure of mortgage, he may
suspend the payment of the price until the vendor has caused
the disturbance or danger to cease, unless the latter gives
security for the return of the price in a proper case, or it has
been stipulated that, notwithstanding any such contingency,
the vendee shall be bound to make the payment. A mere act of
trespass shall not authorize the suspension of the payment of
the price.
NOTES:
- When the buyer may suspend the payment of the
price
o There is a well-grounded fear (fundado
temor)
§ The fear is because of:
• A vindication or action to
recover
• A foreclosure of mortgage
• !! TAKE NOTE!!
o The fear must not
be the result of
any other ground,
like the vendor’s
insanity
o A mere act of
trespass is made
by one claiming
no legal right
whatsoever.
Here, the buyer is
not authorized to
suspend the
payment of the
price.
Article 1591. Should the vendor have reasonable grounds to
fear the loss of immovable property sold and its price, he may
immediately sue for the rescission of the sale. Should such
ground not exist, the provisions of article 1191 shall be
observed.
NOTES:
- When the seller may immediately sure for
rescission of the sale
o The seller must have reasonable grounds to
fear
§ Loss of the immovable property
sold
§ Loss of the price
• If the buyr is squandering
his money, but the
immovable property
remains untouched, this
article cannot apply.
- Rule if neither ground exists
o Article 1191 applies
Article 1592. In the sale of immovable property, even though
it may have been stipulated that upon failure to pay the price at
the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay, even after the expiration
of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by a
notarial act. After the demand, the court may not grant him a
new term.
NOTES:
- Rescission of Sale of Real Property
o This is only applicable to a sale of real
property,Not to a contract to sell real
property or to a promise to sell real property,
where title remains with the vendor until
fulfillment of a positive suspensive
condition, such as the full payment of the
price.
o This article applies whether or not there is a
stipulation for automatic rescission. The law
says “even though”
o The demand may be:
§ Judicial
§ Extrajudicial (this must however be
by notarial act)
o The demand is not for the payment of the
price, but for rescission of the contract. If
the demand for such a rescission comes only
after offered to pay the balance
(accompanied by a postal money order for
the amount due), the automatic rescission
cannot of course legally take place.
o The demand is not for the payment of the
price but for the rescission of the contract.
- The demand needed
o The demand is not for the payment of the
price inasmuch as the seller precisely desires
to rescind the contract.
Article 1593. With respect to movable property, the rescission
of the sale shall of right take place in the interest of the
vendor, if the vendee, upon the expiration of the period fixed
for the delivery of the thing, should not have appeared to
receive it, or, having appeared, he should not have tendered
the price at the same time, unless a longer period has been
stipulated for its payment.
NOTES:
- Rescission of personal property
o Applies only if the object sold has not been
delivered to the buyer.
o If there has already been delivery, other
articles, like Art. 1191, would be applicable.
In this case, automatic rescission is not
allowed. An affrimative action is necessary,
the action being one to rescind judicially, if
the buyer refuses to come to amicable
settlement.
- Right, not obligation, to rescind
o If in a contract, the seller is authorized to
rescind the sale in case of breach, this does
not necessarily mean that he is obliged to do
so.