LAW ON SALES NOTES

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Article 1458 Contract of Sale

➔ One of the contracting parties obligates himself to:
◆ Transfer the ownership of a determinate thing
◆ Deliver a determinate thing
➔ The other party to:
◆ Pay therefore a price certain in money or its equivalent
➔ May be absolute or conditional
ESSENTIAL CHARACTERISTICS OF THE CONTRACT OF SALE:
★ Consensual
★ Bilateral Reciprocal
★ Onerous
★ Commutative
★ Principal
★ Nominate
ESSENTIAL ELEMENTS OF THE CONTRACT OF SALE
❖ Consent (meeting of the minds) as to the subject matter and price and
the transfer of the former in exchange for the latter
❖ Determinate subject matter
❖ Price certain in money or its equivalent
STAGES IN THE CONTRACT OF SALE
1. Generation or Negotiation
2. Perfection
3. Consummation
➔ Remember the differences between:
◆ Sale and Dation in Payment
◆ Contract of Sale and Contract to Sell
◆ Sale and Assignment of Property in Favor of Creditors
(Cession)
◆ Sale and Loan
◆ Sale and Lease

Article 1459 Thing being transferred must be:

● Licit - lawful (if illicit, contract is null and void)
● Under the right of the vendor to transfer its ownership at the time it is
delivered

Article 1460 The thing is only considered DETERMINATE when:

● It is particularly designated or
● Physically segregated from all others of the same class
➔ 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.

Article 1461 Things having POTENTIAL EXISTENCE:

● May be the object of a contract of sale
 ● Efficacy of the sale of mere hope or expectancy is dependent upon the
condition that the thing will come into existence (lotto vibes)
● Sale of vain hope or expectancy is void

Article 1462 Goods which form the subject of a contract of sale:

● Existing goods, owned or possessed by the seller
● Goods to be manufactured by the seller
● Goods to be raised by the seller
● Goods to be acquired by the seller
★ FUTURE GOODS ang tawag sa kanila
● Things whose acquisition depends upon a contingency which may or
may not happen

Article 1463 The sole owner of a thing may sell an undivided interest therein.
● Undivided Interest - sharing of two persons of a property wherein they
possess equal rights on that

Article 1464 Sale of Undivided Share in Fungible Goods (mga pwedeng mapalitan)
● Undivided Share in a SPECIFIC MASS of FG, the buyer becomes a
co-owner, owning his proportion agreed upon
● If the mass contains less than what they agreed upon, the seller is
bound to make good the deficiency from goods OF THE SAME KIND
AND QUALITY, unless a contrary intent appears

Article 1465 Things Subject to a Resolutory Condition

● MAY BE THE OBJECT OF THE CONTRACT OF SALE

Article 1466 Contract of Sale and Contract of Agency to Sell

SALE:
➢ Buyer pays the price
➢ Buyer after delivery becomes the owner
➢ The seller warrants
AGENCY TO SELL (CONSIGNMENT):
➢ Agent delivers the price which in turn he got from his buyer
➢ Agent does not become the owner even after delivery of the object to
him, for he is supposed to sell that
➢ Agent who sells assumes to personal liability as long as he acts within
his authority and in the name of the principal

Article 1467 Contract of Sale vs Piece of Work

● Sale: ordinary course of business
● Piece of Work: manufactured specially and not for the market, para
lang sayo sana all

Article 1468 Consideration of the contract - partly money, partly another thing
● Transaction shall be characterized by the intention
● If there is no clear intention:
○ Barter - thing is more valuable than money
○ Sale - if thing is equal to the value of money
○ Sale - if thing is less than the value of money
Article 1469 The price can only be considered CERTAIN if:
● It shall be sufficient that it is with reference to another thing certain
● That the determination thereof was left to the judgment of another
● If there is no price fixed by external parties, the parties in the sale must
agree upon the price
● If the third persons or persons acted in bad faith, the courts may fix the
price
● If the third persons or persons are influenced to fi the price by any of the
parties– buyer or seller, the party not in fault may have remedies against
that party
➔ The judgment on whether the sale would be valid is upon how
the price was fixed and the value of the price.
➔ If the price would involve conversion of a currency rate and there
has been no stipulation in the contract, the free market rate at the
time the goods are delivered must apply

Article 1470 GROSS INADEQUACY OF PRICE - does not affect the contract of sale
● unless there was vitiated consent (can annul the contract due to this)
● unless a donation was intended
➔ Judicial Sales - if the price is so inadequate as to shock the
conscience of the court, it will be set aside

Article 1471 SIMULATED PRICE - SALE IS VOID

● A sale with simulated price can pass as donation or something like that,
as long as it possesses the same elements, if not, the SALE IS VOID

Article 1472 PRICE OF SECURITIES, GRAINS, LIQUIDS, & OTHER THINGS

● It would have certain price when the price fixed is the market or fair
value of that thing on a definite day

Article 1473 FIXING OF THE PRICE NEVER BY THE DISCRETION OF ONE OF THE
CONTRACTING PARTIES
● There shouldn’t be only one party deciding, they must come to an
agreement because a contract of sale is consensual.

Article 1474 PRICE CANNOT BE DETERMINED - SALE IS VOID

● If the thing has been delivered, the buyer must pay a reasonable price
for it.
● Reasonable Price - subjective, dependent upon the circumstances

Article 1475 PERFECTION OF A CONTRACT OF SALE

● Contract of sale is perfected at the moment there is a meeting of minds
upon:
○ The object of the contract (CAUSE)
○ The price of the object (CONSIDERATION)
● From the point of perfection, parties can demand fulfillment of
obligations
➔ Requirements for perfection:
◆ Face to face - offer is accepted w/ no questions
◆ Correspondence - when the offeror receives acceptance
 ◆ Suspensive Condition - moment condition is fulfilled
➔ Formalities for Perfection:
◆ Statute of Frauds
● The object of the sale is a Real or Personal
Property, if orally made, cannot be enforced by
judicial action
● XPN: if it has been completely or partially
executed
● XPN: defense of the Statute of Frauds is waived

Article 1476 SALE BY AUCTION

➔ Sale by auction in lots, each lot - subject of a separate COS
➔ Perfected when the auctioneer announces its perfection by the fall of the
hammer, or other customary manner.
◆ Until then, the bidder may retract his bid, auctioneer may
withdraw the goods unless the auction has been announced to
be without reserved
➔ Right to Bid - may be reserved expressly or on behalf of the seller,
unless stipulated otherwise
➔ No notice that the 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
◆ For the auctioneer,
● to employ or induce any person to bid at such sale on
behalf of the seller or
● knowingly take any bid from the seller or any person
employed by him
➔ Kapag may notice naman, GORA!

Article 1477 Transfer of ownership shall only be at the actual or constructive delivery of the
object thereof.

Article 1478 The parties may stipulate that the ownership will not be transferred UNLESS the
buyer has paid the full price.

Article 1479 MUTUAL PROMISE (bilateral)

● To buy and sell a determinate thing for a price certain is reciprocally
demandable.
ACCEPTED UNILATERAL PROMISE (unilateral)
● To buy and sell a determinate thing is binding upon the promissor if the
promise is supported by a consideration distinct from its price.
➔ Contract to Sell vs Contract of Sale
◆ C2S - no ownership is transferred upon the execution of
the contract
◆ COS - the ownership over the object is transferred upon
execution of the contract.

Article 1480 INJURY TO OR BENEFIT FROM THE THING SOLD AFT PERFECTION OF
 CONTRACT
Articles 1163, ● From the moment of perfection to the time of delivery shall be governed
1166, 1262 by the articles 1163, 1166, and 1262
● This too shall apply to the sale of fungible things, made independently
and for a single price, or without consideration of their specifications
(WNM)
○ If the sale of fungible things had put the specifications into
consideration, the risk shall not be imputed to the vendee until
they have been WNM unless delay has been incurred
➔ Object lost before perfection of contract - seller bears the loss
➔ Object lost after delivery to buyer - buyer bears the loss
➔ Object lost after perfection, before delivery - buyer bears the loss
◆ XPNs
● Object sold consists of fungibles
● Seller is guilty of fraud, negligence, default, or violation of
contractual term
● Object is generic (genus nunquam perit)
● Fungibles - personal property which may be replaced with equivalent
things

Article 1481 CONTRACT OF SALE BY DESCRIPTION OR SAMPLE

● CONTRACT may be RESCINDED is the bulk of the goods delivered do
not correspond with the description or the sample
CONTRACT OF SALE BY DESCRIPTION AND SAMPLE
● The goods must both embody the description and the sample tested out
➔ The buyer shall have reasonable opportunity of comparing the bulk with
the description or the sample.

Article 1482 Whenever earnest money (arras, something of value to show that the buyer was
really in earnest, and given to the seller to bind the bargain) 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
➔ Merchandise cannot be delivered, the arras must be returned DUH

Article 1483 Subject to the provisions of the Statute of Frauds

● A contract of sale may be made:
○ In writing
○ By word of mouth
○ Partly in writing & partly by word of mouth
○ As inferred from the conduct of the parties

Article 1484 CONTRACT OF SALE OF PERSONAL PROPERTY OF WHICH THE PRICE

IS PAYABLE IN INSTALLMENTS
● Vendor may exercise the following remedies:
○ Exact fulfillment of the obligation, should the vendee fail to pay
 (kahit kung once lang di nakabayad)
○ Cancel the sale, should the vendee’s failure to pay cover two or
more installments (mutual restitution)
■ Mag babalikan sila ng mga binigay nila, and then liable
for the damages katulad ng deterioration of the thing and
such
○ Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee fail to cover two or more
installments
■ The vendor shall have no further action against the
purchaser to recover any unpaid balance of the price
➔ The remedies are not cumulative but alternative. If one is exercised, the
others cannot be made use of. (The election of one is a waiver of the
right to resort to others.)

Article 1485 Article 1484 shall be applied to contracts professing to be leases of personal
property with the option to buy, when the lessor has deprived the lessee of the
possession of enjoyment of the thing.

Article 1486 Articles 1484 & 1485 - a stipulation that the installments or rents paid shall not
be returned to the vendee or lessee shall be valid to the extent that the same
may not be unreasonable under the circumstances

Article 1487 EXPENSES FOR THE EXECUTION AND REGISTRATION OF SALE

● Shall be borne by the vendor, unless there is stipulation to the contrary

Article 1488 EXPROPRIATION OF PROPERTY FOR PUBLIC USE

● Governed by special laws
● This is involuntary in nature, thus, the owner may be compelled to
surrender the property after all the essential requisites have been
complied with.
● Generally, not a sale, because the property owner did not voluntarily sell
the property to the government

CHAPTER 2 CAPACITY TO BUY OR SELL

Article 1489 All persons authorized in the Civil Code to obligate themselves, may enter into a
contract of sale, saving the modifications contained in the succeeding articles.
➔ Where necessaries are sold & delivered to a minor, he must pay a
reasonable price therefore.
● Incapacity to Buy:
○ Absolute Incapacity - cannot be binded in any case
○ Relative Incapacity - certain persons, under certain
circumstances, cannot buy certain property

Article 1490 The husband and wife cannot sell property to each other. (SALE IS VOID)
● XPNs:
○ When a separation of property was agreed upon in the marriage
settlements
○ When there has been judicial separation of property under Article
 191
➔ WHY?
◆ To prevent prejudice to third persons
◆ To prevent one spouse from unduly influencing the other
◆ To avoid by indirection the violation of the prohibition against
donations
➔ VOID however, not everybody can assail the validity of the transaction
◆ Only prior creditors (creditors at the time of transfer)
◆ The heirs of either spouse
● These two bullets can invoke the nullity of the sale.

Article 1491 The following persons cannot acquire by purchase, even at a public auction,
either in person or through the mediation of another:
● The guardian - the property of the person or persons who may be under
his guardianship
● Agents - the property whose administration or sale has been entrusted
to them, unless consent from the principal has been given
● Executors and administrators - the property of the estate under
administration
● 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 entrusted
to them
○ This provision shall apply to judges and government experts
who, in any manner whatsoever, take part in the sale
● Justices, judges, prosecuting attorneys, clerks of superior and inferior
clients, 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 and territory
they exercise their respective functions
● Any others specially disqualified by law.
○ Those prohibited by reason of the fiduciary relationship involved.
➔ The status of the sale is void.
➔ According to other books, bullets 1-3 are voidable, 4-6 void.

Purchase of attorney of private property = VOID as per the provision

Bullets 4 & 5 = VOID by reason of Public Policy, it violated public policy
(Batalyer v. Truvias)

Article 1492 Articles 1490 & 1491 shall be applicable to sales in:
● Legal Redemption (Art. 1619) - right to be subrogated, upon the same
terms and conditions stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in payment, or by any other
transaction whereby ownership is transmitted by onerous title.
● Compromise (Art. 2028) - a contract whereby the parties, by making
reciprocal concessions, avoid litigation or put an end to one already
commenced.
● Renunciations (Arts. 6 & 1270) - essentially gratuitous, and requires the
acceptance by the obligor; can be made expressly or impliedly