Article 1466. In construing a contract containing provisions 1. Determine the intention of the parties.

characteristic of both the contract of sale and of the contract of 2. If intention could not be determined, consider the value of the
agency to sell, the essential clauses of the whole instrument shall be thing given:
considered. a. If value of the thing more than value of the money, it is BARTER
b. If value of the thing less than value of the money, it is SALE
Sale vs. Agency c. If both values are the same, SALE
SALE AGENCY
The buyer pays for the price of The agent does not pay for the Article 1470. Gross inadequacy of price does not affect a contract of
the goods/property purchased price. He merely accounts for the sale, except as it may indicate a defect in the consent, or that the
proceeds of the sale. parties really intended a donation or some other act or contract.
The buyer becomes the owner of The agent does not become the
the goods/property purchased owner of the goods/property Article 1471. If the price is simulated, the sale is void, but the act
delivered to him for sale. may be shown to have been in reality a donation, or some other
Buyer cannot return the The agent returns the act or contract.
goods/property when the sale is goods/property if he was not able
defective to sell the same EFFECT OF GROSS INADEQUACY OF PRICE
The seller warrants the The agent does not make any
goods/property sold warranty as long as he acts within NOTE: Mere inadequacy of the price does not affect the validity of the
his authority and in the name of sale, except
the principal (1) When there is fraud, mistake, or undue influence indicative of a
The seller has full freedom to The agent must follow the defect in consent is present,
enter into any terms or instructions of the principal (2)When it shows that the parties really intended a donation or some
conditions on the contract of other act or contract.
sale
EFFECT WHERE PRICE IS SIMULATED
Article 1467. A contract for the delivery at a certain price of an
article which the vendor in the ordinary course of his business 1. The act may be shown to have been in reality a donation, or some
manufactures or procures for the general market, whether the same other act or contract
is on hand at the time or not, is a contract of sale, but if the goods 2. If not and neither party had any intention whatsoever that the
are to be manufactured specially for the customer and upon his amount will be paid (absolutely simulated): the sale is void
special order, and not for the general market, it is a contract for a 3. If there is a real price but what is stated in the contract is not the
piece of work. one intended to be paid (only relatively simulated): the contract of
sale is valid but subject to reformation
Contract for a Piece of Work The article sold is specially
manufactured and upon the special order of the customer. Article is Effect of Gross Inadequacy of Price. No effect.
not sold in the ordinary course of business. Exceptions: (meaning, sale is set aside)
Contract for a piece of work Contract of Sale 1. If consent is vitiated, such as VIMFU (Violence, Intimidation,
Mistake, Fraud, Undue influence)
The thing transferred is one not The thing transferred is one which
2. If the parties intended a donation or some other act or contract
in existence and w/c never would have existed and would
3. If the price is so low as to be shocking to the conscience
would have existed but for the have been the subject of sale to
order of the party desiring to some other person, even if the
Effect of Simulated Price. Sale is void, unless it could be shown that
acquire it order had not been given
the parties intended a donation or some other act of liberality.
The services dominate the The primary objective of the
o Price Simulated- No price to support a contract of sale, such that
contract even though there is a contract is a sale of the
neither party had any intention that the amount will be paid
sale of goods involved manufactured item; it is a sale of
void
goods even though the item is
o Price is False- there is a real price not declaredcontract is valid,
manufactured by labor furnished
but the underlying deed is subject to reformation to indicate the
by the seller and upon previous
real price upon which the minds of the parties have met.
order of the customer
Not w/in the Statute of Frauds Governable by the Statute of
Article 1475. The contract of sale is perfected at the moment there
Frauds
is a meeting of minds upon the thing which is the object of the
contract and upon the price.
Article 1468. If the consideration of the contract consists partly in
From that moment, the parties may reciprocally demand
money, and partly in another thing, the transaction shall be
performance, subject to the provisions of the law governing the
characterized by the manifest intention of the parties. If such
form of contracts.
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
PERFECTION OF CONTRACT OF SALE. Meeting of the minds upon the
the amount of the money or its equivalent; otherwise, it is a sale.
thing and price.
Effect: Parties may reciprocally demand performance
Sale Barter
Consideration: giving of money Consideration: giving of a thing GENERAL RULE: A contract of sale is perfected at the moment there is
as payment a meeting of the minds upon the thing which is the object of the
Governed by law on sales: species of the genus sales contract and upon the price; consensual contract
If consideration consists party in money and partly by thing look at Exception: When the sale is subject to a suspensive condition
manifest intention;
If intention is not clear: value of If intention is not clear: value of REQUIREMENTS:
thing is equal thing is more 1. When parties are face to face when there is absolute acceptance
or less than amount of money than amount of money barter of an offer that is certain
sale 2. When thru correspondence or telegram when the offer or
receives or had knowledge of the acceptance
Rules if Consideration is partly Money and Partly Goods
3. When the sale is subject to a suspensive condition from the
moment the condition is fulfilled
NOTES: Qualified acceptance: mere counter-offer which needs to be
absolutely accepted to give rise to perfected contract of sale. Business
ads are mere invitations to make an offer except when it appears to
be otherwise.
Article 1477. The ownership of the thing sold shall be transferred to
the vendee upon the actual or constructive delivery thereof.
Article 1478. The parties may stipulate that ownership in the thing
shall not pass to the purchaser until he has fully paid the 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.
Legal consequences from point of perfection are the same in both
legal systems: upon perfection of an unconditional contract of sale
involving specific or determinate subject matter, the risk of loss
deterioration and the benefits of fruits and improvements, were fro
the account of the buyer.
WHO BEARS RISK OF LOSS/ DETERIORATION/
FRUITS:
1. BEFORE PERFECTION
a. Res perit domino
b. Owner is seller so seller bears risk ofloss
2. AT PERFECTION
o Res perit domino
o Contract is merely inefficacious because loss of the subject matter
does not affect the validity of the sale
o Seller cannot anymore comply with obligation so buyer cannot
anymore be compelled
3. AFTER PERFECTION BUT BEFORE DELIVERY
o Loss confused state
o Paras: BUYER
o Tolentino: SELLER
o Deterioration and fruits Buyer bears loss;
4. AFTER DELIVERY
o Res perit domino
o Delivery extinguishes ownership visa-vis the seller and creates a
new one in favor of the buyer
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.
Sale of Goods By Description- where a seller sells a thing as being of a
certain kind verbally describing them and the buyer simply relies on
the sellers descriptions of the things, not knowing whether the
sellers representations are true or not.
Sale by Sample- Where the seller warrants that the bulk of goods
being sold correspond with the sample or samples exhibited not only
in kind but also in quality and character.
Sale by Description and Sample- Where the seller has to satisfy the
requirements in sale by description and sample. There are two-fold
warranty here:
(a) the goods purchased matched with the description and
(b) the goods also matched in kind, quality and character with that of
the sample or samples exhibited to the buyer or his representative
Article 1482. Whenever earnest money is given in a contract of sale,
it shall be considered as part of the price and as proof of the
perfection of the contract.
EARNEST MONEY vs. OPTION MONEY
Earnest Money Option Money
It is part of the purchase price It is given as a distinct
consideration for an option
contract which gives the buyer a
specific period within which to
purchase the thing
It is given only when there is It is given at a time when the sale
already a perfected sale had not yet been perfected. What
had been perfected only is the
option contract
When it is given, the buyer is Even if option money is paid by
bound to pay the balance of the the would-be-buyer he is not
agreed purchase price bound to buy the thing
If the sale does not materialize, If the buyer decides not to buy the
the earnest money paid must thing, he cannot recover the
be returned, unless a contrary option money he paid as
agreement had been stipulated consideration for the contract of
option
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.
FORM OF SALES
I. Form not important in validity of sale
a. Sale being consensual, may be oral or written, perfected by mere
consent as to price and subject matter
b. If particular form is required under the statute of frauds:
i. valid and binding between parties but not binding to 3rd persons
c. Reason: purposes of convenience only and not for validity and
enforceability; cause of action is granted to sue and compel other
party to execute the document
II. When form is important for validity; exception by specific
provision of law;
a. Power to sell a piece of land granted to an agent otherwise VOID
b. Sale of large cattle; must also be registered with Municipal
treasurer otherwise VOID
c. Sale of land by non-Christian if not approved by Governor VOID
III. When form is important for enforceability (STATUTE OF FRAUDS
Article 1403 (2))
a. A sale agreement which by its terms is not to be performed within a
year from the making thereof;
b. An agreement for the sale of goods, chattels or things in action, at a
price not less than P500.00; and
c. A sale of real property or of an interest therein.
IV. EXCEPTIONS TO COVERAGE OF STATUTE IN SALES CONTRACTS:
1. When there is a note or memorandum in writing and subscribed to
by party or his agent (contains essential terms of the contract)
2. When there has been partial performance/execution (seller delivers
with intent to transfer title/receives price)
3. When there has been failure to object to presentation of evidence
(oral)
4. When sales are effected through electronic commerce
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.
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.
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.
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.
Article 1488. The expropriation of property for public use is
governed by special laws.
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.
Two Kinds of Incapacity:
1. Absolute Incapacity- Party cannot bind himself in any case.
2. Relative Incapacity- Certain Persons under certain circumstances
cannot buy certain property.
** Minors in contract for necessaries must pay reasonable price.
Necessariesthose things which are needed for sustenance, dwelling,
clothing and medical attendance, in keeping with the financial
capacity of the family of the incapacitated person.
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.
Prohibition against Husband and Wife. Exceptions.
Rationale: PID
a. To avoid Prejudice to 3rd Persons
b. To prevent one spouse from unduly influencing the other.
c. To avoid by indirection the violation of the prohibition against
donations.
Who may assail illegality?
a. Creditors prior to the sale
b. Heirs of either spouse.
** Either spouse may not assail illegality because they are parties
thereto.
** A spouse designated as agent of the other spouse may sell the
latters exclusive property.
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.
Persons Relatively Incapacitated to Buy. (PAGEJO)
1. Public Officers and employeesProperty Of State.
2. AgentsProperty of Principal unless with consent.
3. GuardianProperty of Ward.
4. Executors and administratorsEstate
5. Justices, Judges, Prosecuting Attorneys, Clerks and employees of
courtProperty/Rights under litigation.
6. Others disqualified by law. (Ex. *aliens who are disqualified to
purchase private agricultural lands; *an unpaid seller having a right of
lien or having stopped the goods in transitu, who is prohibited from
buying the goods either directly or indirectly in the resale of the same
at a public or private sale w/c he may make. Art. 1533, par.5)
Rationale: Fiduciary relationship
Status of Sale: Voidable (1-3); Void (4-6)
Article 1492. The prohibitions in the two preceding articles
are applicable to sales in legal redemption, compromises
and renunciations.
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.
Partial Loss Rules:
1. Vendee may withdraw from the contract
2. Demand the remaining part, paying its price in proportion to the
total sum agreed upon
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.

Loss/Substantial Deterioration of Specific Goods without sellers
knowledge.
1. Buyer may avoid the sale or
2. May treat sale as valid w/ respect to the existing goods
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.
Obligations of Vendor. (TDWP)
1. Transfer Ownership (not waivable)
2. Deliver (not waivable)
3. Warrant Object (waivable and may be modified)
4. Preserve Thing from perfection to delivery (Art. 1163)
5. Pay for the execution and registration of the sale unless there is a
contrary agreement
**Execution sales do not require the delivery of thing since a one year
period of redemption is available to seller.
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.
Article 1497. The thing sold shall be understood as delivered,
when it is placed in the control and possession of the vendee.
Control and Possession necessary in Delivery.
Exception: Art. 1478. Stipulation as to full payment of price.
Delivery- a mode of acquiring ownership as a consequence of a
contract of sale by virtue of which actually or constructively the object
is placed in the control and possession of the vendee.
KINDS OF DELIVERY
1. Actual or Real. (1497)
2. Legal or Constructive
a. Legal Formalities (1498); execution of public instrument.
b. Symbolical Tradition (1498 par 2)- keys delivered.
c. Traditio Longa Manu- by mere consent /agreement. If the
movable sold cannot yet be transferred to the possession of the
buyer at the time of the sale. (1499)
d. Traditio Brevi Manu- if the buyer had already the possession
the object even before the purchase. (lessee becomes owner)
e. Traditio constitutum possessorium- possession as owner
changed. (Owner becomes lessee)
3. Quasi-Tradition- Delivery of Rights, credits or incorporeal property
made by:
a. Execution of public instrument
b. Placing titles of ownership in the hands of a lawyer.
c. Allowing the buyer to make use of the rights (1501)
Article 1498. When the sale is made through a public instrument,
the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred.
With regard to movable property, its delivery may also be made
by the delivery of the keys of the place or depository where it is
stored or kept.
Requirements:
1. Sellers Control.
2. Sellers Control transferred to buyer.
3. Intention to deliver for ownership.
Article 1499. 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
vendee at the time of the sale, or if the latter already had it in his
possession for any other reason.
Article 1500. There may also be tradition constitutum possessorium.
Different forms of Constructive Delivery - Constructive delivery has
same legal effect as actual or physical delivery
1. Traditio Longa Manu Delivery of thing by mere agreement; when
SELLER points to the property without need of actually delivering
2. Traditio Brevi Manu Before contract of sale, the would be buyer
was already in possession of the would be subject matter of sale (ex:
as lessee)
3. Symbolic delivery As to movables ex: delivery of the keys to a
car
4. Constitutum possessarium When at the time of the perfection of
the contract of sale, seller had possession of the subject matter in the
concept of owner and pursuant to the contract, seller continues to
hold physical possession no longer in the concept of an owner but as a
lessee or any other form of possession other than in the concept of
owner.
Article 1501. With respect to incorporeal property, the provisions of
the first paragraph of article 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.
Article 1502. 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.
Transaction on Sale or Return. Subject to Resolutory Condition.
Difference with Delivery with option to purchase- Ownership is
transferred in Sale or Return
Transaction on Approval or Trial/Satisfaction. Subject to Suspensive
Condition.
Rules:
1. Risk of loss to seller until the sale becomes absolute. (Exceptions:
Buyer in default; Buyer agreed to bear the loss)
2. Buyer must give goods a trial except when it is evident that it
cannot perform the work intended.
3. Period of signifying acceptance commences to run only when all the
parts essential for operation has been delivered.
4. A provision that a 3rd person must satisfy approval is valid but he
must be in Good faith.
5. Generally the Sale and Delivery to an expert buyer is not a sale on
approval/trial.
Sale or Return vs. Sale on Approval
Basis Sale or Return Sale on Approval
Condition Subject to Subject to
Resolutory condition suspensive condition
Premise It depends upon the It depends upon the
 will of the buyer suitability, quality or
character of the
goods
Transfer of Ownership Ownership does not
ownership immediately passes immediately pass to
to the buyer on the buyer. It passes
delivery only upon approval
or satisfaction of the
buyer duly
manifested after trial
Revesting of Ownership is There is no revesting
ownership in the revested in the seller of ownership
owner if the buyer so because it is
decides retained by the
seller until the sale
becomes absolute
Risk of loss or The risk rests on the The risk remains in
deterioration buyer before the the seller while the
revestment of goods are on trial
ownership