LAW ON SALES - object of contract should be determinate

thing
CONTRACT OF SALE
- Obligation to give LAW ON SALES
- For perfection: there must be delivery.
CAUSE/CONSIDERATION
ELEMENT OF CONTRACT OF SALE
- price certain in money/equivalent
1. Accidental – basis (Art. 1306 – Obli-con) - Presumed that a contract has sufficient
- It could be not present, not necessary. consideration.
- Dependent on parties’ stipulations. - VOID: In truth and in fact, there is no
- They can stipulate whatever conditions, consideration given.
stipulations, clauses as long as not contrary to
law, policy, and etc. FORMALITIES REQUIRED
- Examples: Interest, conditions, time and place
of payment, penalty - General Rule: No form is required. It is a
consensual contract.
2. Natural
- Inherent even in absence of contrary - Exception: Under Statute of Frauds, the
following sale must be in writing, if not, they
provisions.
- Deemed to exist in certain contracts. shall be unenforceable.
Sale of;
- Example: Warranty
3. Essential – for validity: a. Personal Property at a price not less than
500.
a. Consent
b. Determinate subject matter – object b. Real property or an interest therein
c. Property not to be performed within a
- Should be licit or legal
c. Consideration year from the date thereof.
d. When an applicable statute requires that
- Lack of consideration would result to
simulated contracts or absolutely the contract of sale be in a certain form
(Art. 1403, par.2)
simulated contract – it would be void.
NOTE: All essential element should exist, REASONS WHY CONTRACTS SHOULD BE IN WRITING:
absence of one means there is no valid
contract. 1. For validity
2. For enforceability
CONSENT/MEETING OF THE MINDS 3. For convenience – if one party wants the
- Consent on part of seller/vendor to transfer contract to be in writing the other should
and deliver, and on the part of the buyer to follow.
pay. (Art. 1475 NCC) NOTE: Unenforceable Contracts – if you go to court,
it will be dismissed because of lack of formalities.
ELEMENTS OF CONSENT
3 STAGES INVOLVED IN THE FORMATION OF
a. Subject/contracting parties CONTRACT OF SALE
- 2 or more persons. 1. Preparation
b. Concurrence of offer and acceptance (Art. - Negotiation in process
1319 -1326 NCC) - Time the prospective contracting parties
- If the seller offers something, there must be indicate interest in the contract to the time
acceptance by the buyer. the contract is perfected.
- Not a modified acceptance (the buyer is 2. Perfection
negotiating with seller) x - Meeting of minds
- It should be full acceptance. - Birth of the contract
c. Legal capacity of contracting parties - Concurrence of essential elements
- Not minor 3. Consummation
- Not suffering with physical or mental - Object is delivered
challenge - Price is paid
d. Freely given, intelligently, and spontaneously - End of contract
- No undue influence
KINDS OF SALES
OBJECT/SUBJECT
General Classification
 1. Absolute Sale
- No condition attached
- Title or ownership passes to the buyer upon
delivery of the thing sold.
- Example: Deed of Absolute Sale
- NOTE: Title of the document is not controlling.
Body of the document is controlling.
2. Conditional Sale
- The sale is subject to a contingent
event/approval
- Subject to certain conditions, usually the full
payment of the purchase price.
- Delivery of the thing sold does not transfer
ownership until the condition is fulfilled.
- Example: Deed of Conditional Sale, Sale with
right of repurchase, sale of future harvest of a
designated parcel of land.
VALIDITY OR DEFECT OF THE TRANSACTION
a. Valid Sale
- All element are present, also the warranties,
and the delivery.
b. Rescissible Sale
- There is lesion on part of the minor or
incompetent person.
- LESION - does not receive a full equivalent for
what he gives in a commutative contract
c. Voidable Sale
- Presence of the vices of consent.
- There is fraud, intimidation, undue influence,
etc.
- Given by law certain time, in order to question
the contract.
d. Unenforceable or Validable Sale
- Cannot enforce in court because of non-
compliance with certain requirements.
- Example: In writing or public instrument.
e. Void Sale
- Absence of one of the 3 elements
- Object of sale is illicit or illegal
- One party of transaction is minor (xpn:
necessity)
ART. 1461
- Future fruits to be harvested, having a
potential existence may be object of the
contract of sale.
- Sale of vain hope/expectancy – VOID.
Example: Used ticket in lotto which did not
win any price.
Art. 1463
- Sole owner of a thing may sell an undivided
interest therein.
- Example: Sale of 200sq.m of 800sq.m
- General Rule: Co-owner can alienate his or her
share, or a portion of his ownership. He may
alienate, sell, and mortgage it.
- Exception: Personal rights are involved (Ex.
House of family)
Art. 1467
- Specifically manufactured (not a contract of
sale) – it is a contract for piece of work.
- Contract for piece of work is not within
Statute of Frauds.
Art. 1470
General Rule: Gross inadequacy of price does not
affect the contract of sale.
- Because party really intended a donation.
- The contract was perfected.
Exceptions:
1. If consent is vitiated by consent such as fraud,
mistake, violence, intimidation or undue
influence (Art. 1330 NCC)
2. If the parties intended a donation or some
other act or contract (Art. 1470 NCC)
3. If the price is so low to be “shocking to the
conscience,” the sale shall be set aside.
Art. 1471
Price is simulated – sale is VOID.
EFFECTS OF SIMULATED PRICE
1. Absolutely simulated contract is VOID. (Art.
1409 NCC). This simply means that the parties
did not intend to be bound at all
EXAMPLE: Sale devoid of consideration.
2. Relatively simulated sale is when the parties
conceal their true agreement. Concealed
transaction will be binding upon the parties if
it does not affect 3rd person and is not
intended for any purpose contrary to law,
morals, good customs, public order or public
policy.
Art. 1473
General Rule: Price of the thing subject of the sale
CANNOT be fixed unilaterally by one of the
contracting parties. The consent of the other
party is necessary, otherwise, there is no meeting
of minds on the price, in which case, the sale is
inefficacious.
GR: Fixing of price can never be left to the
discretion of one of the contracting parties.
XPN: If the price fixed by one of the parties is
accepted by the other, the sale is perfected.
Art. 1475
Contract of sale is perfected – moment there is a
meeting of minds upon the thing and price.
Contract is consummated after the delivery of the
things and payment of the price.
Art. 1477
Ownership of thing – transferred upon
actual/constructive delivery, NOT upon perfection.
Transfer of possession – not necessarily mean
transfer of ownership.
Art. 1478
In sale, General Rule is that the delivery of thing
transfers ownership to the buyer.
However, parties may agree that the ownership shall
remain with the seller until full payment of the
purchase price.
EXAMPLE: Layaway or installment plan.
Art. 1479
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 form the price.
NOTE: Unilateral promise or offer to sell or buy a thing
which is not accepted created no juridical effect or
legal bond. Unaccepted offer is called policitation.
Art. 1480
Art. 1163 to 1165, 1262 governs in the question who
will suffer the injury or who will benefit from the
improvements from the time of delivery.
Applicability: Speaks of injury to the property
subject of the sale.
Injury includes;
- Loss
- Destruction or deterioration of the thing
Also speaks of benefit arising from the things such
as fruits or income generated therefrom or
improvements gained due to time or by accession.
Art 1163
 Default diligence: Diligence of a good father of
a family (responsible one in every context)
 Unless, law or stipulation of the parties
requires another standard of care. (Ex.
Common Carriage – extraordinary diligence)
Art. 1164
 Creditor has the right to the fruits of the thing
from the time the obligation to deliver it
arises.
Art 1165
 When what is to be delivered is a determinate
thing, the creditor, in addition to the right
granted him by Art. 1170, may compel the
debtor to make the delivery.
Art. 1262
 Obligation which consists in the delivery of a
determinate thing shall be extinguished if it
should be lost or destroyed without the fault
of the debtor, and before he has incurred
delay.
CONSEQUENCES OF THE LOSS OR DETERIORATION
OF THE THING
1. If the loss or deterioration is incurred before
the perfection of the contract of the sale, the
loss or deterioration will be suffered by the
vendor or seller, since the latter remains the
owner of the thing.
2. If the thing is lost at the time of perfection of
the contract of sale, the contract is inexistent
because its object did not exist. It follows that
the contract will have no legal effect (Art.
1493 NCC). Hence, the seller bears the loss.
3. If the loss or deterioration is incurred after the
perfection of the contract but before delivery
of the thing to the vendee, the following rules
shall be observed.
a. If the loss or deterioration is due to the
fault of the vendor, the vendor shall bears
the injury
b. If the loss or deterioration is due to the
fault of the vendee, the latter shall bear
the injury
c. If the obligation consists in the delivery of
a determinate thing, the seller shall bear
the loss or deterioration if
i. He was in delay, or
ii. He assumed the loss or deterioration
by stipulation, or
iii. He promised to deliver the same thing
to two or more persons who do not
have the same interest over the thing.
Art. 1481
Contract of sale of goods by description or by sample,
the contract may be rescinded if
a. The bulk of the goods delivered do not
correspond with the description or the
sample.
b. 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.
NOTE: Buyer shall have a reasonable opportunity of
comparing the bulk with description or the sample.
Art. 1482
Earnest Money
- Money that shows that you really are
interested in buying the property.
- Money given by the buyer to the seller to bind
the bargain.
- Deducted from total price.
EARNEST MONEY ACCEPTED BY THE SELLER.
- Partial payment of the purchase price.
- Considered as proof of the perfection of the
contract.
- Seller cannot sell the property to other at the
moment, unless the remaining price cannot
be delivered by the buyer at the appropriate
time.
Art. 1483
Subject to provisions of the Statute of Frauds, and any
other applicable statute, contract may be made in:
- Writing
- By word of mouth
- Partly in writing and partly by word of mouth
- Or may or inferred from the conduct of the
parties.
Art. 1484
Contract of sale of personal property the price of
which is payable in installments, the vendor may
exercise ANY of the following;
a. Exact fulfillment of the obligation, should the
vendee fail to pay
b. Cancel the sale, should the vendee’s failure to
pay cover 2 or more installments.
c. Foreclose the chattel mortgage, if one has
been constituted, if the vendee shall have
failed to pay 2 or more installments.
Art. 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.
Art. 1486
In the case referred to in the 2 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.
NOTE: Not valid if unconscionable.
Art. 1488
The expropriation of property for public use is
governed by special laws.
EXPROPRIATION – forced sale.
- power of eminent domain
- Expropriation must be decreed by competent
authority and for public use and always upon
payment of just compensation.
When national government expropriate – 100%
payment.
When local government expropriate – 15-20%
payment
Art. 1489
Requirement to enter a contract
1. Must be of legal age, no other impediments.
Necessities
- Valid sale, even sold and delivered to minor or
other person without capacity to act.
Art. 1490
General Rule: Husband and wife cannot sell property
to each other.
Exceptions:
a. When a separation of property was agreed
upon in the marriage settlements (pre-nuptial
agreements)
b. When there has been a judicial separation of
property under article 290.
REASONS:
1. To prevent a spouse defrauding his creditors
by transferring his properties to the other
spouse
2. To avoid a situation where the dominant
spouse would unduly take advantage of the
 weaker spouse, thereby effectively defrauding
the latter
3. To avoid an indirect violation of the
prohibition against donations between
spouses under Article 133 of the Civil Code
Art. 1491
The following CANNOT acquire by purchase, even at a
public or judicial auction, wither in person or through
the mediation of another:
1. Agent, with respect to the property whose
administration or sale may have been
entrusted to him, unless the consent of the
principal has been given
2. Guardian, with respect to the property of the
person who is under his guardianship
3. Executor or administrator, with respect to the
property of the estate under his
administrations
4. Public officers and employees, with respect to
property of the State or any subdivision
thereof, or of any government-owned or
controlled corporation, or institution, the
administration of which has been entrusted to
them; it includes judges and government
experts who, in any manner whatsoever, take
part in the sale
5. Justices, judges, prosecuting attorneys, clerks
of courts, and other officers and employees
connected with the administration of justice,
with respect to the property and rights in
litigation or levied upon an execution before
the court within whose jurisdiction or
territory they exercise their respective
functions
6. 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.
7. Any others specially disqualified by law
Art. 1493
Time the contract is perfected;
a. Thing entirely lost – contract is void and
inexistent
b. Thing only partially lost – vendee may
choose between withdrawing from the
contract and demanding the remaining
part, paying its proportionate price.
Art. 1494
Specific goods perished in part or wholly or in a
material part so deteriorated in quality as to be
substantially changed in character, buyer may at his
option treat the sale:
a. As avoided – have it declared void.
b. 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.
Sale divisible – when its consideration is made up of
several parts.
Sale indivisible – consideration is entire and single.
NOTE: When sale is divisible he can the remaining.
OBLIGATION OF THE VENDOR
SECTION 1 GENERAL PROVISIONS
Art. 1495
Vendor is bound to transfer the ownership of and
deliver, as well as warrant the thing which is the
object of the sale.
PRINCIPAL OBLIGATIONS OF THE VENDOR
1. Transfer the ownership
2. Deliver the thing sold
3. Warranty against eviction and hidden defects
– can be waived or modified (not essential
elements of contracts)
4. Take care of the thing, pending deliver, with
proper diligence (Art. 1163)
5. Pay for the expenses for the execution and
registration of the deed of sale, unless there is
a stipulation to the contrary.
NOTE: 1 and 2 cannot be waived.
SECTION 2 DELIVERY OF THE THING SOLD
Art. 1496
Transfer of ownership effected by delivery.
1. Ways of effecting delivery
a. Actual or real delivery
b. constructive or legal delivery
c. Delivery in any other manner
Art. 1497
Thing sold shall be understood as delivered, when it is
placed in the control and possession of the vendee.
Art. 1498
When the sale is made through a public instrument,
the execution 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 inferred.
Movable Property – delivery may also be made by the
delivery of the keys of the place or depository where
it is stored or kept.
General Rule: Execution of public instruments as a
manner of delivery applied to movable and
immovable property.
NOTE: Public instruments – there is participation of
notary.
Art. 1499
Delivery of movable property
- May be made by mere consent or agreement
of the contracting parties, if 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.
NOTE: Transfer of ownership may be by mere consent
as well.
Example: The property is in possession of the 3 rd
party.
Art. 1505 SALE OF GOODS BY NON-OWNER
General Rule: Buyer acquires NO TITLE even if in good
faith and for value under the maxim “memo dat quad
non habet”
Exceptions:
1. Owner is estopped or precluded by his
conduct
2. When sale is made by registered owner or
apparent owner in accordance with recording
or registration laws
3. Sales sanctioned by judicial or statutory
authority
4. Purchases in a merchant’s store, fairs or
markets
5. When a person who is not the owner sells and
delivers a thing, subsequently acquires title
thereto.
6. When the seller has a voidable title which has
not been avoided at the time of the sale. (Art.
1506)
7. Sale by co-owner of whole property or a
definite portion thereof.
8. Special rights of unpaid seller (Art. 1526-1533)
“UNLAWFUL DEPRIVATION” is no longer limited to
a criminal act. There is unlawful deprivation
where there is no valid transmission of ownership.
Art. 1544 Double Sale
Same thing have been sold to different buyers.
- If movable property, ownership shall be
transferred to the one first taken possession
- If immovable property
a. Ownership shall belong to the person first
recorded in Registry of Property
b. If no registration, to the buyer who first
taken possession
c. Absence of both, to the buyer who
presents the oldest title (first bought the
property)
APPLICABILITY;
- Buyers in the transaction is in good faith.
Requisites;
1. 2 or more transactions must constitute valid
sales.
2. They must pertain exactly to the same object
or subject matter
3. They must be bought from the same or
immediate seller
4. 2 or more buyers who are at odds over the
rightful ownership of the subject matter must
represent conflicting interest
NOTE: If not all elements are present, Art. 1544
should not apply. Because, simply he is a purchaser
in good faith because at the time he bought the
real property, there was still no 2nd buyer.
PURCHASER IN GOOD FAITH
- Buys the property of another without notice that
some other person has a right to or interest in
such property and pays a full price and fair price
for the same at the time of such purchase or
before he has notice of the claim or interest of
some other person in the property. The 2 nd buyer
must register in the document in good faith,
otherwise, he does not have a better right.
MIRROR DOCTRINE
- One does not need to go beyond the title.
- Well settled rule that every person dealing
with registered land may safely rely on the
correctness of the certificate of titled issued
therefore and law will in no way oblige him to
go beyond the certificate to determine the
condition of the property.
- Banks are exception in mirror doctrine.
 SECTION 3 CONDITIONS AND WARRANTIES
Art. 1545
CONDITION – uncertain event/contingency on the
happening of which the obligation of the contract
depends.
EFFECT OF NON-FULFILLMENT OF CONDITION
1. The other party may;
a. Refuse to proceed with contract
b. Proceed with the contract, waving the
performance of the condition.
2. If the condition is in the nature of a promise
that it should happen, the nonperformance of
such condition may be treated by the other
party as breach of warranty.
Art. 1546
WARRANTY – representation made by the seller
contemporaneously and as a part of the contract of
sale, having reference to the character, quality, or title
of the goods, and by which he promises or undertakes
to insure that certain facts are or shall be as he then
represents.
- Waivable.
KINDS OF WARRANTY
1. Express
- Written.
- Affirmation of fact or any promise by the
seller relating to the thing, which induces
the buyer to purchase the same and if the
buyer purchases the thing relying thereon.
EFFECT OF EXPRESSION OF OPINION
- Mere expression of opinion, no matter how
positively asserted, does not import a
warranty, unless the seller is an EXPERT and
the opinion was relied upon by the buyer.
2. Implied
- Law derives by implication or inference from
the nature of the transaction or the relative
situation or circumstances of the parties,
irrespective of any intention of the seller to
create it.
- Natural – deemed incorporated in contract of
sale.
General Rule: 2nd hand personal property does not
have warranty
Exception: If vendor himself provides express
warranty.
IMPLIED WARRANTIES IN SALE
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty as to Fitness and Merchantability
Art. 1548 – WARRANTY AGAINST EVICTION
EVICTION – judicial process whereby the vendee is
deprived of the whole or part or the thing purchased
by virtue of final judgment based on a right prior to
the sale or an act imputable to the vendor.
Elements
1. Vendee is deprived, in whole or in part, of the
thing purchased.
2. The deprivation is by virtue of a final
judgment.
- Court made a final and executory
judgment.
3. The judgment is based on a prior right to the
sale or an act imputable to the vendor
4. Vendor was summoned in the suit for eviction
at the instance of the vendee
5. No waiver of warranty by the vendee
VENDOR’S LIABILITY
1. Total eviction (VICED)
2. Value of the thing at the time of eviction
3. Income or fruits if he has been ordered to
deliver them to the party who won the suit
4. Costs of the suit
5. Expenses of the contract
6. Damages and interests if the sale was in bad
faith.
NOTE: If not in bad faith, only 1-6 is the liability.
Art. 1561 – WARRANTY AGAINST HIDDEN DEFECTS
Warranty in which the seller guarantees that the thing
sold is free from any hidden defaults or defects or any
charge or encumbrances not declared or known to the
buyer.
ELEMENTS;
1. Defect is serious or important
- It is important when;
a. Renders the thing sold unfit for use for
which it is intended
b. Diminished its fitness for such use
2. Defect is hidden
- Hidden defect is when it was not known and
could not have been known to the vendee.
3. Exists at the time of the sale
- Factory defect.
 4. Vendee must give notice of the defect to the
vendor within a reasonable time
5. Remedies must be brought within the period
of 6 mos. from the delivery of the thing, or 40
days from the date of delivery in case of
animals
6. No waiver of the warranty
REMEDIES OF THE VENDEE/BUYER
a. Rescission of the contract
b. Reduction of the price
EFFECT OF LOSS OF THING ON ACCOUNT OF HIDDEN
DEFECTS (Art. 1568)
If vendor was aware of hidden defects, he shall bear
the loss and vendee shall have the right to recover:
a. Price paid
b. Expenses of the contract
c. Damages
If vendor was not aware of hidden defects, he shall be
obliged to return:
a. Price paid
b. Interest thereon
c. Expenses of the contract if paid by the vendee
IMPLIED WARRANTIES OF QUALITY WARRANTY OF
FITNESS
Seller guarantees that the things sold is reasonably fit
for the known particular purpose for which it was
acquired by the buyer.
WARRANTY EXISTS IN THE FOLLOWING INSTANCES;
1. Where the buyer, expressly or by implication
manifests to the seller the particular purpose
for which the goods are required
2. Where the buyer relies upon the seller’s skill
or judgment.
WARRANTY OF MERCHANTABILITY
Seller guarantees, where the goods were bought by
description, that they are reasonably fit for the
general purpose for which they are sold.
NOTE: Buyer are allowed to examine the thing
bought, in sense that it will meet the quality buyers
are expecting.
INSTANCES WHERE IMPLIED WARRANTIES ARE
INAPPLICABLE
1. As is and where is sale
- Vendor makes no warranty as to the quality or
workable condition of the goods, and that the
vendee takes them in the condition in which they
are found and from the place where they are
located.
- Example: Junk computers – as is and where is.
2. Sale of 2nd hand articles
- Except when seller gave express warranty.
3. Sale by virtue of authority in fact or law
Art. 1566
Caveat – means beware
CAVEAT VENDITOR (“Let the seller beware”)
- Vendor is liable to the vendee for any hidden
faults or defects in the thing sold, even
though he was not aware thereof.
CAVEAT EMPTOR (“Let the buyer beware”)
- Requires the purchaser to be aware of the
supposed title of the vendor and one who
buys without checking the vendor’s title takes
all the risk and losses consequent to such
failure.
Art. 1572 – RULE IN CASE OF SALE OF ANIMALS
1. When 2 or more animals are sold together,
whether for a lump sum or for a separate
price for each of them, the redhibitory defect
of one shall only give rise to its redhibition,
and not that of the others, unless it should
appear that the vendee would not have
purchased the sound animal or animals
without the defective one
2. No warranty against hidden defects of animals
sold at fairs or at public auction, or of
livestock sold as condemned.
NOTE:
a. The sale of animals suffering from contagious
diseases shall be void
b. A contract of sale of animals shall also be void
if the use or service for which they are
acquired has been stated in the contract and
they are found to be unfit therefor
PRESCRIPTIVE PERIOD
- The redhibitory action, based on the faults or
defects of animals, must be brought within
forty (40) days from the date of their delivery
to the buyer
- If the animal should die within three (3) days
after its purchase, the vendor shall be liable if
the disease which cause the death existed at
the time of the contract
- When the buyer returns the objects bought
and demands the payment of the purchase
price, he is in effect “withdrawing from the
contract” as provided in Article 1567, where
 the prescriptive period is six (6) months from
the delivery of the thing sold
REMEDIES OF BUYER
- In the sale of animals with redhibitory defects,
the buyer may choose between
a. Withdrawing from the contract and
b. Demanding a proportionate reduction of
the price, with damages; but he must
make use thereof within the same period
which has been fixed for the exercise of
the redhibitory action
NOTE: Redhibitory vice.\/defect – defect in the article
sold against which defect the seller is bound to
warrant.
Art. 1582 OBLIGATION OF THE VENDEE

PRINCIPAL OBLIGATIONS
1. To accept the delivery
2. To pay the price of the thing sold in legal
tender unless another mode has been agreed
upon.