I.

SALES A contract by which 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 equivalents Distinguished from other contracts

The essential clauses of the whole instrument shall be considered 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. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterised 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

Elements of a Sale i. Consent to a Sale, Auction, Promise The contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price In the case of Auctions Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale. 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 big; and the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by stipulation

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 bud at such sale on his behalf or for the auctioneer, to employ or induce take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent from the buyer, A promise to buy and sell a determinate thing for a price certain is reciprocally redeemable ii. Object
"legal"

any person to bid at such sale on behalf of the seller or knowingly

The thing must be licit and the vendor must have the right to transfer the ownership thereof at the time it is delivered from all other of the same class. A thing is determinate when it is particularly designated or physical segregated The requisite that a thing is determinate is satisfied if at the time the contract is entered into, the things is capable of being made determinate without the necessity of a new or further agreement between the parties Things having a potential existence may be the object of the contact 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 The goods which form the subject of a contract of sale may be either existing 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 The sole owner of a thing may sell an undivided interest therein goods, owned or possessed by the seller, or goods to be manufactured, raised or

In 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,

can be readily estimatedand replaced according to weight, measure and amount

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 bought, the buyer becomes the owner of the whole mass and the seller is bound to make goos the deficiency from goods of the same kind and quality, unless a contrary intent appears iii. Form 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 The following contracts are UNENFORCEABLE, unless they are ratified: (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; (2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: (a) An agreement that by its terms is not to be performed within a year from the making thereof; (b) A special promise to answer for the debt, default, or miscarriage of another; (c) An agreement made in consideration of marriage, other than a mutual promise to marry; (d) An agreement for the sale of goods, chattels or things in action, at a

price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum; (e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein; (3) Those where both parties are incapable of giving consent to a contract. Effects i. Obligation of the Seller - The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale A. Delivery The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract. All the fruits shall pertain to the vendee from the say on which the contract was perfected 1. MODES The ownership of the thing sold shall be transferrable to the vendee upon the actual or constructive delivery thereof 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 possession is transferred from the vendor to the vendee placed in the control and possession of the vendee below or in any other manner signifying an agreement that the The thing sold shall be understood to be delivered when it is When the sale is made through a public instrument, the execution ( f ) A representation as to the credit of a third person. the auctioneer in his sales book, at the time of the sale, of the amount and

thereof shall be equivalent to the delivery of the thing which is not appear or cannot clearly be inferred. With regard to

the object of the contract, if from the deed the contrary does moveable property, its delivery may also be made by the delivery The delivery of movable property may likewise be made by the mere consent or agreement of the contracting parties, if the thing sold cannot be transferred to the possession of the possession from any reason

of the keys of the place or depository where it is stored or kept

vendee at the time of the sale, or if the latter already had it in his There may also be tradition constitutum possessorium

With respect to incorporeal (no physical existence) property, the provisions of the first paragraph of 1498 shall govern. In any other case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood as a delivery The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve the right of possession or ownership in the goods until certain conditions have been fulfilled. The right of possession or ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer.

Where the goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order of the seller or of his agent, the seller thereby reserves the ownership

in the goods. But, if except for the from of the bill of lading, the ownership would have passed to the buyer or shipment of goods,

the seller's property in the goods shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract.

Where goods are shipped, and by the bill of lading the goods are

deliverable to order of the buyer or of his agent, but possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the possession of the goods as against the buyer

Where the seller of goods draws on the buyer for the price and transmits the bill of exchange or bill of lading together to the the buyer is bound to return the bill of lading if he does not buyer to secure acceptance or payment of the bill of exchange, honour the bill of exchange, and if he wrongfully retains the bill of lading he acquires to added right thereby. If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value, the bill of lading, or goods from the buyer will obtain been honoured, provided that such purchaser has received

the ownership in the goods, although the bill of exchange has not delivery of the bill of lading indorsed by the consignee named transfer wrong.

therein, or of the goods, without notice of the facts making the 2. ON RETURN OR TRIAL ON SATISFACTION

When goods are delivered to the buyer "on sale or return" to give the buyer an option to return the goods instead of paying the price, the ownership passes to the buyer on delivery, but he may revest the ownership in the seller by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within a reasonable time.

When goods are delivered to the buyer on approval or on trial or

on satisfaction, or other similar terms, the ownership therein passes to the buyer 1. When he signifies his approval or acceptance to the seller or does any other act adopting the transaction 2. If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. 3. PLACE AND TIME OF DELIVERY

Whether it is for the buyer to take possession of the goods or of the seller to send them to the buyer is a question depending in each case on the contract, express or implied, between the usage of trade to the contrary, the place of delivery is the parties. Apart from any such contract, express or implied, or seller's place of business if he has one, and if not his residence; but in case of a contract of sale of specific goods, which to the knowledge of the parties when the contract or the sale was delivery. made were in some other place, then that place is the place of Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time. Where the goods at the time of sale are in the possession of a

third person, the seller has not fulfilled his obligation to deliver to the buyer unless and until such third person acknowledges to the buyer that he holds the goods on the buyer's behalf. Demand or tender of delivery may be treated as ineffectual question of fact.

unless made at a reasonable hour. What is a reasonable hour is a

Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be borne by the seller. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if no period for the payment has been fixed in the contract 4. INCORRECT QUALITY AND/OR QUANTITY

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 B. Risk of Loss bulk with the description or the sample.

The following contracts are inexistent and void from the beginning: morals, good customs, public order or public policy;

(1) Those whose cause, object or purpose is contrary to law, (2) Those which are absolutely simulated or fictitious; transaction;

(3) Those whose cause or object did not exist at the time of the (4) Those whose object is outside the commerce of men; (5) Those which contemplate an impossible service; (6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; (7) Those expressly prohibited or declared void by law. up the defense of illegality be waived.

These contracts cannot be ratified. Neither can the right to set 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 upon.

remaining part, paying its price in proportion to the total sum agreed 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 or measure. and for a single price, or without consideration of their weight, number, 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 latter has incurred in delay.

they have been weighed, counted, or measured and delivered, unless the Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the delivery; contract, the goods are at the buyer's risk from the time of such (2) Where actual delivery has been delayed through the fault of fault

either the buyer or seller the goods are at the risk of the party in 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 (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 the sale was divisible agreed price for the goods in which the ownership will pass, if C. Sale by Non-Owner

Subject to the provisions of this Title, where goods are sold by a

person who is not the owner thereof, and who does not sell them under title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Nothing in this Title, however, shall affect:

authority or with the consent of the owner, the buyer acquires no better

(1) The provisions of any factors' act, recording laws, or any dispose of them as if he were the true owner thereof;

other provision of law enabling the apparent owner of goods to (2) The validity of any contract of sale under statutory power (3) Purchases made in a merchant's store, or in fairs, or laws.

of sale or under the order of a court of competent jurisdiction; markets, in accordance with the Code of Commerce and special D. Double Sale

If the same thing should have been sold to different vendees, the

ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the Property.

person acquiring it who in good faith first recorded it in the Registry of Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is

E. Conditions and Warranties

good faith.

Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the

condition. If the other party has promised that the condition should nonperformance of the condition as a breach of warranty

happen or be performed, such first mentioned party may also treat the Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller of his obligation to deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the obligation of the buyer to perform his promise to accept and pay for the thing

Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller's opinion only, shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied upon by the buyer.

In a contract of sale, unless a contrary intention appears, there is:

(1) An implied warranty on the part of the seller that he has a

right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing; (2) An implied warranty that the thing shall be free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer.

This article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee, pledgee, or other person professing to

sell by virtue of authority in fact or law, for the sale of a thing in II. Obligations of the Buyer which a third person has a legal or equitable interest.

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. A. Acceptance of Delivery

Where the seller delivers to the buyer a quantity of goods less

than he contracted to sell, the buyer may reject them, but if the buyer accepts or retains the goods so delivered, knowing that the seller is not going to perform the contract in full, he must pay for them at the contract rate. If, however, the buyer has

used or disposed of the goods delivered before he knows that

the seller is not going to perform his contract in full, the buyer shall not be liable for more than the fair value to him of the goods so received. Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest. If the buyer accepts the whole of the goods so delivered he must pay for them at the contract rate. Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest. In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject the whole of the goods. The provisions of this article are subject to any usage of trade, special agreement, or course of dealing between the parties. 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 seller makes defective deliveries in respect of one or more to take delivery of or pay for one or more instalments, it

stated instalments, which are to be separately paid for, and the instalments, or the buyer neglects or refuses without just cause 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 or whether the breach is severable, giving rise to a claim for broken further and suing for damages for breach of the entire contract, compensation but not to a right to treat the whole contract as Where goods are delivered to the buyer, which he has not unless and until he has had a reasonable opportunity of

previously examined, he is not deemed to have accepted them 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 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 a reasonable opportunity of examining the goods for the purpose

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. 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. 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 breach, the seller shall not be liable therefor

reasonable time after the buyer knows, or ought to know of such 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 liable as such voluntarily constitutes himself a depositary thereof, he shall be 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. B. Payment of Price

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. 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 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 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. be observe

of mortgage, he may suspend the payment of the price until the

Should such ground not exist, the provisions of article 1191 shall