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CHAPTER 1: NATURE AND FORM OF CONTRACT

Article 1460. A thing is determinate when it is


Article 1458. By the contract of sale one of the particularly designated or physically segregated
contracting parties obligates himself to transfer the from all others of the same class.
ownership of and to deliver a determinate thing, and The requisite that a thing be determinate is satisfied
the other to pay therefore a price certain in money or if at the time the contract is entered into, the thing is
its equivalent. capable of being made determinate without the
A contract of sale may be absolute or conditional. necessity of a new or further agreement between the
parties.
Contract of sale contract whereby one of the parties
(seller/vendor) obligates himself to deliver something to Subject matter must be determinate
the other (buyer/purchaser/vendee) who, on his part, (1) When thing determinate when it is particularly
binds himself to pay therefor a sum of money or its designated physically segregated from all others
equivalent. of the same class
(2) Sufficient if subject matter capable of being
Characteristics of a contract of sale: made determinate
1. Consensual perfected by mere consent at the
moment there is meeting of minds Article 1461. Things having a potential existence
2. Bilateral both contracting parties are bound to may be the object of the contract of sale.
fulfill obligations The efficacy of the sale of a mere hope or
3. Onerous the thing sold is conveyed in expectancy is deemed subject to the condition that
consideration of the price and vice versa; both the thing will come into existence.
give up something The sale of a vain hope or expectancy is void.
4. Commutative the thing sold is considered the
equivalent of the price paid vice versa Article 1462. The goods which form the subject of a
5. Nominate it is given a special name or contract of sale may be either existing goods owned
designation in the civil code, sale or possessed by the seller or goods to be
6. Principal does not depend for its existence manufactured, raised, or acquired by the seller after
and validity upon another contract the perfection of the contract of sale, in this title
called future goods.
Essential requisites of a contract of sale: There may be a contract of sale of goods, whose
1. Consent or meeting of the minds acquisition by the seller depends upon a
transaction, object, and price contingency which may or may not happen.
2. Object or subject matter the determinate
thing (real or immovable; personal or movable; Goods which may be the object of sale.
tangible or intangible) (1) Existing goods goods owned or possessed by
3. Cause or consideration price certain in the seller
money or its equivalent (2) Future goods goods to be manufactured,
Price cost at which something is obtained raised, or acquired
in exchange for something else.
4. Form of the contract Article 1463. The sole owner of a thing may sell an
undivided interest therein.
Natural elements those which are deemed to exist in
certain contracts, in the absence of any contrary Sale of undivided interest in a thing
stipulations like warranty against eviction or hidden (1) By sale owner the sole owner of a thing may
defects. sell the entire thing; or only specific portion
thereof; or an undivided interest therein and
Accidental elements those which may be present or such interest may be designated as an aliquot
absent depending on the stipulations of the parties, like part of the whole. The legal effect of the sale of
conditions, interest, penalty, time or place of payment an undivided interest in a thing is to make the
buyer a co-owner of the thing sold.
Two kinds of contract of sale: (2) By co-owner he can dispose of his share even
1. Absolute - sale is not subject to any condition without the consent of the other co-owners.
whatsoever and where title or ownership passes
to the buyer upon delivery of the thing sold Article 1464. In the case of fungible goods, there
2. Conditional the sale contemplates a may be a sale of an undivided share of a specific
contingency and in general, where the contract mass, though the seller purports to sell and the
is subject to certain conditions buyer to buy a definite number, weight or measure of
the goods in the mass, and though the number
Article 1459. The thing must be licit and the vendor weight or measure of the goods in the mass is
must have a right to transfer the ownership thereof undetermined. By such a sale the buyer becomes
at the time it is delivered. owner in common of such a share of the mass as the
number, weight or measure bought bears to the
Requisites concerning object. number, weight or measure of the mass. If the mass
1. Things contains less than the number, weight or measure
a. Determinate thing bought, the buyer becomes the owner of the whole
b. Must be licit or lawful mass and the seller is bound to make good the
c. Not be impossible deficiency from goods of the same kind and quality,
2. Rights all rights which are not intransmissible unless a contrary intent appears.
or personal may also be the object of sale
Sale of an undivided share of a specific mass.
Right of vendor to transfer ownership. (1) Fungible good goods of which unit is, from its
1. One can sell only what he owns nature or by mercantile usage, treated as the
2. Sufficient if right exists at the time of delivery equivalent of any other unit (grain, oil, wine,
gasoline)
(2) Effect of sale - the owner of a mass of goods never would have existed but for the order of the
may sell only an undivided share thereof, party desiring to acquire it
provided the mass is specific or capable of being Contract of sale the thing transferred is one
determinate which would have existed and been the subject
(3) Risk of loss if the buyer becomes a co-owner, of sale to some other person, even if the order
with the seller, or other owners of the remainder had not been given
of the mass, it follows that the whole mass is at
the risk of all the parties interested in it, in Contract for a piece of work the risk of loss
proportion to their various holdings. before delivery is borne by the worker or
(4) Subject matter it is an incorporeal or intangible contractor, not by the employer
right. Here, ownership passes to the buyer by Contract of sale the risk of loss is borne by the
the intention of the parties. buyer

Article 1465. Things subject to a resolutory condition Contracts for a piece of work, unlike contracts
may be the object of the contract of sale. of sale, are not within the Statute of Frauds

Resolutory condition an uncertain event upon the Article 1468. If the consideration of the contract
happening of which the obligation (or right) subject to it is consists partly in money, and partly in another thing,
extinguished. Hence, the right acquired in virtue of the the transaction shall be characterized by the
obligation is also extinguished. manifest intention of the parties. If such intention
does not clearly appear, it shall be considered a
Article 1466. In construing a contract containing barter if the value of the thing given as a part of the
provisions characteristic of both the contact of sale consideration exceed the amount of the money or its
and of the contract of agency to sell, the essential equivalent; otherwise, it is a sale.
clauses of the whole instrument shall be considered.
Barter or exchange one of the parties binds
Contract of agency a person binds himself to render himself to give one thing in consideration of the
some service or to do something in representation or on others promise to give another thing
behalf of another, with the consent or authority of the
latter. Contract of sale the vendor gives a thing in
consideration for a price in money
Sale the buyer receives the goods as owner
Agency to sell the agent receives the goods as The only point of difference between the two contracts is
the goods of the principal who retains his in the element which is present in sale but not in barter,
ownership over them namely: price certain in money or its equivalent.

Sale the buyer has to pay the price Article 1469. In order that the price may be
Agency to sell the agent has simply to account considered certain, it shall be sufficient that it be so
for the proceeds of the sale he may make on the with reference to another thing certain, or that the
principals behalf determination thereof be left to the judgment of a
specified person or persons.
Should such person or persons be unable or
Sale the buyer cannot return the object sold
unwilling to fix it, the contract shall be inefficacious,
Agency to sell the agent can return the object unless the parties subsequently agree upon the
in case he is unable to sell the same to a third price.
person If the third person or persons acted in bad faith or by
mistake, the courts may fix the price.
Sale the seller warrants the thing sold Where such third person or persons are prevented
Agency to sell the agent makes no warranty from fixing the price or terms by fault of the seller or
for which he assumes personal liability as long the buyer, the party not in fault of the seller or the
as he acts within his authority and in the name of buyer, the party not in fault may have such remedies
the seller against the party in fault as are allowed the seller or
the buyer, as the case may be.
Sale the buyer can deal with the thing sold as
he pleases, being the owner When price considered certain.
Agency to sell the agent in dealing with the (1) No sale if price not certain or ascertainable.
thing received, must act and is bound according (2) Cases when price considered certain
to the instructions of his principal a. The parties have fixed or agreed upon a
definite amount
Article 1467. A contract for the delivery at a certain b. It be certain with reference to another
price of an article which the vendor in the ordinary thing certain
course of his business manufactures or procures for c. The determination of the price is left to
the general market, whether the same is on hand at the judgment of a specified person or
the time or not, is a contract of sale, but if the goods persons
are to be manufactured specially for the customer It must be understood that the last two cases
and upon his special order, and not for the general are applicable only when no specific amount has
market, it is a contract for a piece of work. been stipulated by the parties.

Contract for a piece of work the contractor binds Effect when price fixed by third person designated.
himself to execute a piece of work for the employer, in (1) When the third person acts in bad faith or by
consideration of a certain price or compensation. mistake as when the third person fixed the price
having in mind not the thing which is the object
Contract for a piece of work the thing of the sale, but another analogous or similar
transferred is one not in existence and which thing, in which case the court may fix the price.
But mere error in judgment cannot serve as exchange or market, provided said amount be
basis for disregarding the price fixed; and certain.
(2) When the third person disregarding specific
instructions or the procedure laid down by the Article 1473. The fixing of the price can never be left
parties, or the data given him, fixed an arbitrary to the discretion of one of the contracting parties.
price. However, if the price fixed by one of the parties is
accepted by the other, the sale is perfected.
Effect when price not fixed by third person
designated. Article 1474. Where the price cannot be determined
(1) If the third person designated by the parties to fix in accordance with the preceding articles, or in any
the price refuses or cannot fix it (w/o fault of the other manner, the contract is inefficacious. However,
seller and the buyer), the contract shall become if the thing or any part thereof has been delivered to
ineffective, as if no price had been agreed upon and appropriated by the buyer, he must pay a
unless of course, the parties subsequently agree reasonable price therefor. What is a reasonable price
upon the price. is a question of fact dependent on the circumstance
(2) If such third person is prevented from fixing the of each particular case.
price by the fault of the seller or the buyer, the
party not in fault may obtain redress against the The reasonable price or value of goods is
party in fault which consists of a choice between generally the market price at the time and place
rescission or fulfillment, with damages in either fixed by the contract or by law for the delivery of
case. If the innocent party chooses fulfillment, the goods.
the court shall fix the price.
Article 1475. The contract of sale is perfected at the
Article 1470. Gross inadequacy of price does not moment there is a meeting of minds upon the thing
affect a contract of sale, except as it may indicate a which is the object of the contract and upon the
defect in the consent, or that the parties really price.
intended a donation or some other act or contract. From the moment, the parties may reciprocally
demand performance, subject to the provisions of
Effect of gross inadequacy of price in voluntary the law governing the form of contracts.
sales.
(1) General rule while a contract of sale is Stages of contract of sale.
commutative, mere inadequacy of the price or (1) Negotiation covering the period from the time
the fact that the bargain was a hard one the prospective contracting parties indicate
generally does not affect its validity when both interest in the contract to the time the contract is
parties are in a position to form an independent perfected;
judgment concerning the transaction. (2) Perfection which takes place upon the
(2) where low price indicates defect of the consent concurrence of the essential elements of the
the inadequacy of price may indicate a defect sale which are the meeting of the minds of the
in the consent such as when fraud, mistake, or parties as to the object of the contract and upon
undue influence is present in which case the the price;
contract may be annulled not because of the (3) Consummation which begins when the parties
inadequacy of the price but because the consent perform their respective undertakings under the
is vitiated; or where the price is so grossly contract of sale, culminating in the
inadequate or low as to be shocking to courts extinguishment thereof.
conscience that no man in his right mind would
accept. Right of owner to fix his own price.
(1) The owner of a thing has the right to quote his
Effect of gross inadequacy of price in involuntary or own price, reasonable or unreasonable. It is up
execution sales. to the prospective buyer to accept or reject it.
(1) A judicial or execution sale one made by a (2) He is also well within his right to quote a small or
court with respect to the property of a debtor for nominal consideration and such consideration is
the satisfaction of his unpaid indebtedness. Like such as effectual and valuable a consideration
in involuntary sale, mere inadequacy of price is as a larger sum stipulated or paid.
not sufficient ground for the cancellation of an
execution sale. Effect of failure to pay price/absence of price
(2) Where price is so low as to be shocking to the (1) Price stipulated the vendors remedy in such
conscience will be set aside by the court case is generally to demand specific
(3) Where seller given the right to repurchase the performance or rescission or cancellation of the
validity of the sale is not necessarily affected sale with damages in either case.
where the law gives to the owner the right to (2) No price stipulated sale is void and non-
redeem, as when a sale is made at public existent as without cause or consideration.
auction, upon the theory that the lesser the
price, the easier it is for the owner to buy back Article 1476. In the case of a sale by auction:
the property. (1) Where goods are put up for sale by auction
in lots, each lot is the subject of a separate
Article 1471. If the price is simulated, the sale is contract of sale.
void, but the act may be shown to have been in (2) A sale by auction is perfected when the
reality a donation, or some other act or contract. auctioneer announces its perfection by the
fall of the hammer, or in other customary
Article 1472. the price of securities, grain, liquids, manner. Until each announcement is made,
and other things shall also be considered certain, any bidder may retract his bid; and the
when the price fixed is that which the thing sold auctioneer may withdraw the goods from the
would have on a definite day, or in a particular sale unless the auction has been announced
exchange or market, or when an amount is fixed to be without reserve.
above or below the price on such day, or in such
(3) A right to bid may be reserved expressly by
or on behalf of the seller, unless otherwise
provided by law or by stipulation.
(4) Where notice has not been given that a sale Effect of accepted unilateral promise
by auction is subject to a right to bid on It does not bind the promisor even if accepted and may
behalf of the seller, it shall not be lawful for be withdrawn at any time. It is only if the promise is
the seller to bid himself or to employ or supported by a consideration distinct and separate from
induce any person to bid at such sale on his the rice that its acceptance will give rise to a perfected
behalf or for the auctioneer, to employ or contract.
induce any person to bid at such sale on The promise has the burden of proving the existence of
behalf of the seller or knowingly to take any such consideration.
bid from the seller or any person employed
by him. Any sale contravening this rule may Article 1480. Any injury to or benefit from the thing
be treated as fraudulent by the buyer. sold, after the contract has been perfected, from the
moment of the perfection of the contract to the time
Rules governing auction sales. of delivery, shall be governed by articles 1163 to
(1) Sales of separate lots by auction are separate 1165, and 1262.
sales. This rule shall apply to the sale of fungible things,
(2) Sale perfected by the fall of the hammer - The made independently and for a single price, or
seller is merely making an invitation to those without consideration of their weight, number, or
present to make offers which they do by making measure.
bids, one of which is ultimately accepted. Should fungible things be sold for a price fixed
However, if the sale has been announced to be according to weight, number, or measure, the risk
without reserve, the auctioneer cannot withdraw shall not be imputed to the vendee until they have
the goods from sale once a bid has been made been weighed, counted, or measured, and delivered,
and the highest bidder has a right to enforce his unless the latter has incurred in delay.
bid.
(3) Right of seller to bid in the auction The seller Risk of loss or deterioration (4 rules)
or his agent may bid in an auction sale provided: (1) If the thing is lost before perfection, the seller
a. Such right was reserved and not the one who intends to purchase it bears
b. Notice was given that the sale is subject the loss in accordance with the principle that the
to a right to bid on behalf of the seller thing perishes with the owner (res perit domino);
c. The right to bid by the seller is not (2) If the thing is lost at the time of perfection, the
prohibited by law or stipulation contract is void or existent. The legal effect is the
same as when the object is lost before the
Article 1477. The ownership of the thing sold shall perfection of the contract of sale.
be transferred to the vendee upon the actual or (3) If the thing is lost after perfection but before its
constructive delivery thereof. delivery, that is, even before the ownership is
transferred to the buyer, the risk of loss is shifted
Article 1478. The parties may stipulate that tot eh buyer as an exception to the rule of res
ownership in the thing shall not pass to the perit domino
purchaser until he has fully paid the price. (4) If the thing is lost after delivery, the buyer bears
the risk of loss following the general rule of res
Article 1479. A promise to buy and sell a determinate perit domino.
thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a Article 1481. In the contract of sale of goods by
determinate thing for a price certain is binding upon description or by sample, the contract may be
the promisor f the promise is supported by a rescinded if the bulk of the goods delivered do not
consideration distinct from the price. correspond with the description or the sample, and if
the contract be by sample as well as by description,
Kinds of promise treated in Article 1479. it is not sufficient that the bulk of goods correspond
(1) An accepted unilateral promise to sell in which with the sample if they do not also correspond with
the promise (acceptor) elects to buy; the description.
(2) An accepted unilateral promise to buy in which The buyer shall have a reasonable opportunity of
the promise (acceptor) elects to sell comparing the bulk with the description or the
(3) A bilateral promise to buy and sell reciprocally sample.
accepted in which either of the parties chooses
to exact fulfillment. Bulk of the goods denotes the goods themselves as
distinguished from the sample and/or description with
Effect of unaccepted unilateral promise. which they must correspond
A unilateral promise or offer to sell or to buy a thing
which is not accepted creates no juridical effect or legal Sale by description occurs where a seller sells things
bond. Such unaccepted offer is called policitation. as being of a particular kind, the buyer not knowing
whether the sellers representations are true or false, but
Option a privilege existing in one person for which he relying on them as true; or, as otherwise stated, where
has paid a consideration which gives him the right to the purchaser has not seen the article sold and relies on
buy/sell, for example, certain merchandise or certain the description given him by the vendor. If the bulk of the
specified property, from/to another person, if he chooses, goods delivered do not correspond with the description,
at any time within the agreed period a fixed price, or the contract may be rescinded.
under, or in compliance with certain terms and
conditions. Sale by sample must appear that the parties
It is a contract, a preparatory contract separate contracted solely with reference to the sample. The
and instinct from the main contract itself. It is vendor warrants that the thing sold and to be delivered
only when the option is exercised when a sale by him shall conform with the sample in kind, character,
may be perfected. and quality.
A sale of a piece of land or interest therein when made
Sale by description and sample the goods must through an agent is void unless the agents authority is in
satisfy all the warranties appropriate to either kind of writing. For the sale of real property to be effective
sale, and it is not sufficient that the bulk of the goods against third persons, the sale must be registered in the
correspond with the sample if they do not also Registry of Deeds of the province or city where the
correspond with the description and vice versa. property is located. The sale must be in a public
instrument or document for otherwise the registration will
Article 1482. Whenever earnest money is given in a be refused.
contract of sale, it shall be considered as part of the The sale of land in a private instrument is valid as
price and as proof of the perfection of the contract. between the parties but it cannot be registered to bind or
affect third persons.
Earnest money money given by the buyer to the seller
to bind the bargain. It is actually a partial payment of the Article 1484. In a contract of sale of personal
purchase price and is considered as proof of the property, the price of which is payable in
perfection of the contract. installments, the vendor may exercise any of the
following remedies:
Earnest money and option money distinguished. (1) Exact fulfillment of the obligation, should
Earnest money part of the purchase price the vendee fail to pay;
Option money money given as distinct (2) Cancel the sale, should the vendees
consideration for the option contract failure to pay cover two or more
installments;
Earnest money given only where there is (3) Foreclose the chattel mortgage on the
already a sale thing sold, if one has been constituted,
Option money applies to a sale not yet should the vendees failure to pay cover
perfected two or more installments. In this case, he
shall have no further action against the
Earnest money when given, the buyer is purchaser to recover any unpaid balance
bound to pay the balance of the price. Any agreement to the
Option money when would-be buyer gives contrary shall be void.
money, he is not required to buy
Remedies of vendor in sale of personal property
Article 1483. Subject to the provisions of the Statute payable in installments:
of Frauds and any other applicable statue, a contract (1) Elect fulfillment upon the vendees failure to pay;
of sale may be made in writing, or by word of mouth, (2) Cancel the sale, if the vendee shall have failed
or partly in writing and partly by word of mouth, or to pay two or more installments; or
may be inferred from the conduct of the parties. (3) Foreclose the chattel mortgage, if one has been
constituted, if the vendee shall have failed to pay
Form of contract of sale. two or more installments.
(1) A contract may be entered into in any form
provided all the essential requisites for its validity Nature of remedies
are present. These remedies are alternative and are not to be
(2) Where contract covered by Statute of Frauds exercised cumulatively or successively and the election
the law requires that it be in writing subscribed of one is a waiver of the right to resort to the others.
by the party charged, otherwise the contract
cannot be enforced by action; and where the Thus, where the vendor asks the court to order the
applicable statute required that the contract of vendee to pay the remaining unpaid sum of the purchase
sale be in a certain form for its validity, the price, the vendor thereby waives the other remedies.
required form must be observed in order that the
contract may be both valid and enforceable. Right of vendor to recover unpaid balance of
purchase price
The following must be in writing, otherwise they (1) Remedy of specific performance The vendor
cannot be enforced in a court litigation: may still recover from the purchaser the unpaid
(1) Sale of personal property at a price not less balance of the price, if any on the real and
than P500.00, personal properties of the purchaser not exempt
(2) Sale of real property or an interest therein by law from attachment or execution
regardless of the price involved; and (2) Remedy of cancellation the vendee can
(3) Sale of property not to be performed within a demand only the return of payments already
year from the date thereof regardless of the made unless there is a stipulation about
nature of the property and the price forfeiture
involved. (3) Remedy of foreclosure the vendor shall have
no further action against the vendee for the
(3) Where form is required in order that a contract recovery of any unpaid balance of the price and
may be valid any agreement to the contrary is void
(4) Where the form is required only for the
convenience of the parties a certain form is Article 1485. The preceding article shall be applied to
required for the convenience of the parties in contracts purporting to be leases of personal
order that the sale may be registered in the property with option to buy, when the lessor has
Registry of Deeds to make effective as against deprived the lessee of the possession or enjoyment
third persons the right acquired under such sale. of the thing.
As between the contracting parties, the form is
not indispensable since they are allowed by law Article 1486. In the cases referred to in two
to compel each other to execute the contract of preceding articles, a stipulation that the installments
sale observing that form. or rents paid shall not be returned to the vendee or
lessee shall be valid insofar as the same may not be
Sale of real property or an interest therein. 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.
CHAPTER 2: CAPACITY TO BUY OR SELL (5) Justices, judges, prosecuting attorneys,
clerks of superior and inferior courts, and
Article 1489. All persons who are authorized in this other officers and employees connected with
Code to obligate themselves, may enter into a the administration of justice, the property
contract of sale, saving the modifications contained and rights in litigation or levied upon an
in the following articles: execution before the court within whose
Where necessaries are sold and delivered to a minor jurisdiction or territory they exercise their
or other person without capacity to act, he must pay respective functions; this prohibition
a reasonable price therefor. Necessaries are those includes the act of acquiring by assignment
referred to in Article 290. (Art 194, Family Code) and shall apply to lawyers, with respect to
the property and rights which may be the
Persons who may enter into a contract. object of any litigation in which they may
As a general rule, all persons, whether natural or take party by virtue of their profession;
juridical, who can bind themselves by contract have also (6) Any others especially disqualified by law.
legal capacity to buy and sell. There are exceptions to
this rule in those cases when the law determines that Prohibition:
party suffers from either absolute or relative incapacity. To prevent frauds on the part of the persons enumerated
therein and minimize temptations to the exertion of
Kinds of incapacity. undue and improper influence. The fear that greed might
Absolute the case of persons who cannot get the better of the sentiments of loyalty and
bind themselves disinterestedness is the reason underlying Article 1491.
Relative it exists only with reference to certain
persons or a certain class of property The law does not trust human nature to resist the
temptations likely to arise out of antagonism between the
Liability for necessaries of minor or other person interest of the seller and the buyer.
without capacity to act.
Necessaries those things which are needed Other persons especially disqualified.
for sustenance, dwelling, clothing and medical a. Aliens who are disqualified to purchase private
attendance, in keeping with the financial agricultural lands
capacity of the family of the incapacitated b. An unpaid seller, having a right of lien or having
person. stopped the goods in transit, who is prohibited from
buying the goods either directly or indirectly in the
The contracts entered into by a minor and
resale of the same at a public or private sale which
other incapacitated persons are voidable.
he may make
However, where necessaries are sold and
c. The officer conducting an execution sale of property
delivered to him (w/o intervention of parent or
to enforce a court judgment rendered against the
guardian), he must pay a reasonable price
owner thereof cannot become a purchaser or be
therefor. The contract is, therefore, valid but the
interested directly, or indirectly in any purchase at
minor has the right to recover any excess above
such sale.
a reasonable value paid by him.
Effect of sale in violation of prohibition
Article 1490. The husband and the wife cannot sell
1) With respect to Nos. 1 to 3, the sale shall only
property to each other, except:
be voidable because in such cases only private
(1) When a separation of property was agreed
interests are affected. The defect can be cured
upon in the marriage settlements; or
by ratification of the seller.
(2) When there has been a judicial separation of
2) With respect, however, to Nos. 4 to 6, the sale
property under article 191. (Article 135,
shall be null and void, public interests being
Family Code)
involved therein.
Reason for prohibition.
Article 1492. The prohibitions in the two preceding
The prohibition is primarily for the protection of third
articles are applicable to sales in legal redemption,
persons who, relying upon supposed property of either
compromises and renunciations.
spouse, enters into a contract with either of them only to
find out that the property relied upon was transferred to
Prohibitions extends to sales in legal redemption,
the other spouse.
etc.
(1) The relative incapacity provided in Articles 1490
Article 1491. The following persons cannot acquire
and 1491 applies also to sales by virtue of legal
by purchase even at a public or judicial auction,
redemption, compromises, and renunciations.
either in person or through the mediation of another:
a. Compromise a contract whereby the
(1) The guardian, the property of the person or
parties, by reciprocal concessions, avoid
persons who may be under his guardianship;
a litigation or put an end to one already
(2) Agents, the property whose administration or
commenced. It is the amicable
sale may have been entrusted to them,
settlement of a controversy.
unless the consent of the principal has been
b. Renunciation a creditor gratuitously
given;
abandons his right against his creditor.
(3) Executors and administrators, the property
The other terms used by the law are
of the estate under administration;
condonation and remission.
(4) Public officers and employees, the property
(2) The persons disqualified to buy referred to in
of the State or of any subdivision thereof, or
Articles 1490 and 1491 are also disqualified to
of any government owned or controlled
become lessees of the things mentioned therein.
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 of the sale;
CHAPTER 3: EFFECTS OF THE CONTRACT WHEN THE THINGS SOLD HAS BEEN LOST

Article 1493. If at the time the contract of sale is perfected, the thing which is the object of the contract has been
entirely lost, the contract shall be without any effect.
But if the thing should have been lost in part only, the vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon.

Effect of loss of thing at the time of sale.


The loss or injury referred to in this article is one which has taken place before or at the time the contract of sale is
perfected. It must be distinguished from the loss or injury mentioned in Articles 1480 and 1504 which occurs after the
contract is perfected but prior to the time of delivery.

(1) Thing entirely lost. where the thing is entirely lost at the time of perfection, the contract is inexistent and void
because there is no object.
(2) Thing only partially lost. If the subject matter is only partially lost, the vendee may elect between withdrawing
from the contract and demanding the remaining part, paying its proportionate price.

When a thing considered lost.


A thing is lost when it perishes or goes out of commerce or disappears in such a way that its existence is unknown or it
cannot be recovered.

The word perishes is sufficiently inclusive as to cover a case where there has been material deterioration or complete
change in the nature of the thing in such a manner that it loses its former utility taking into consideration the time the
contract was entered into.

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.

Effect of loss in case of specific goods.


Article 1493 applies to a sale of specific thing. Article 1494, on the other hand, applies only to sales of goods, that is, the
object of the sale consists of a mass of specific goods which means goods identified and agreed upon at the time a
contract of sale is made.

Both articles have actually the same essence providing two (2) alternative remedies to the buyer in case of deterioration
or partial loss of the object prior to the sale.

(1) Sale divisible The second option is available only if the sale is divisible. A contract is divisible when its
consideration is made up of several parts. When the consideration is entire and single, the contract is
indivisible.
(2) Sale indivisible. - Suppose the sale is not divisible, what price is the buyer to pay for the remaining goods if he
elects to continue with the sale? It is believed that the buyer should be made to pay only the proportionate
price of the remaining goods as provided for in paragraph 2 of the preceding article. If the sale is
indivisible, the object thereof may be considered as a specific thing.
CHAPTER 4: OBLIGATIONS OF THE VENDOR Ways of effecting constructive delivery.
(1) Equivalent to actual delivery Constructive or
SECTION 1. General Provisions legal delivery is equivalent to actual delivery. It
may be effected in any of the following ways:
Article 1495. The vendor is bound to transfer the a. By the execution of a public instrument
ownership of and deliver, as well as warrant the b. By symbolical tradition or traditio
thing which is the object of the sale. symbolica
c. By traditio longa manu
Principal obligations of the vendor: d. By traditio brevi manu
(1) To transfer the ownership of the determinate thing e. By traditio constitutum possessorium
sold f. By quasi-delivery or quasi-traditio
(2) To deliver the thing; (2) Contrary may be stipulated. The parties,
(3) To warrant against eviction and hidden defects however, may stipulate that ownership in the
(4) To take care of the thing, pending delivery, with thing shall pass to the purchase only after he
proper diligence; and has fully paid the price or fulfilled certain
(5) To pay for the expenses for the execution and conditions. In a contract of absolute sale,
registration of the deed of sale, unless there is a ownership is transferred simultaneously with the
stipulation to the contrary delivery of the thing sold.

Obligation to transfer ownership and to deliver.


The vendor need not be the owner of the thing at the SECTION 2. Delivery of the thing sold
time of perfection of the contract; it is sufficient that he
has a right to transfer the ownership thereof at the time Article 1497. The thing sold shall be understood as
it is delivered. The obligation to transfer ownership and delivered, when it is placed in the control and
to deliver is really implied in every contract of sale. possession of the vendee.

One who sells something he does not yet own is bound Tradition a derivative mode of acquiring ownership by
by the sale when he acquires the thing later. virtue of which one who has the right and intention to
alienate a corporeal thing, transmits it by virtue of a just
Obligation to take care of, and preserve, the thing. title to one who accepts the same.
(1) The seller, as a person obliged to give
something, is also obliged to take care of the Importance of tradition.
thing sold with the proper diligence of a good Delivery of the thing, together with the payment of the
father of a family unless the law or the stipulation price, marks the consummation of the contract of sale.
of the parties requires another standard of care. Delivery is also necessary to enable the vendee to enjoy
The seller is bound to deliver the thing sold and and make use of the property purchased.
its accessions and accessories in the condition It is only after the delivery, actual or constructive,
in which they were upon the perfection of the that a vendee acquires a real right or ownership over
contract. it. After delivery, the risk of loss of the thing sold is
(2) The obligation to preserve the thing obligates the borne by the vendee.
seller to not transform, alter, to alienate the thing
sold. He can be made responsible for damage or Actual delivery of thing sold.
injury to the thing as a result of fault, fraud, or (1) When deemed made. This involves physical
negligence on his part during the time between delivery of the thing and is usually done by the
perfection of the contract and delivery to the passing of a movable thing from hand to hand.
buyer. (2) Not always essential to passing of title. The
parties to the contract may agree when and on
Article 1496. The ownership of the thing sold is what conditions that ownership in the subject of
acquired by the vendee from the moment it is the contract shall pass to the buyer.
delivered to him in any of the ways specified in (3) Proof of delivery. Delivery is generally
articles 1497 to 1501, or in any other manner evidenced by a written acknowledgement of a
signifying an agreement that the possession is person that he or she has actually received the
transferred from the vendor to the vendee. thing or the goods, as in delivery receipts.

Transfer of ownership effected by delivery. Article 1498. When the sale is made through a public
(1) Ways of effecting delivery The ownership of instrument, the execution thereof shall be equivalent
the thing sold shall be transferred to the vendee to the delivery of the thing which is the object of the
upon the delivery thereof which may be effected contract, if from the deed the contrary does not
in any of the following ways: appear or cannot clearly be inferred.
a. By actual or real delivery With regard to movable property, its delivery may
b. By constructive or legal delivery also be made by the delivery of the keys of the place
c. By delivery in any other manner or depository where it is stored or kept.
signifying an agreement that the
possession is transferred to the vendee Execution of a public instrument or document
(2) Intention to deliver essential Delivery is an (1) Public instrument it is one which is
indispensable requisite for the transfer of acknowledged before a notary public or any
ownership which under our law cannot be official authorized to administer oath, by the
effected by mere consent. But to transfer person who executed the same. The party
ownership, the act of delivery must be made with making the acknowledgment formally declares
intention of delivering the thing sold. that the instrument is his free act and deed while
(3) Delivery to proper person The delivery must be the officer taking the same attests and certifies
made to the vendee or his authorized that such party is known to him and that he is
representative. the same person who executed the instrument
and acknowledged that the instrument is his free
act and deed.
(2) General rule. The execution of a public transferred to the possession of the vendee at the
instrument as a manner of delivery applies to time of the sale, or if the latter already had it in his
movable as well as immovable property since possession for any other reason.
the law does not make any distinction and it can
be clearly inferred by the use of the word also Traditio longa manu takes place by the mere consent
in paragraph 2 of Article 1498. or agreement of the contracting parties as when the
(3) Exception. If it appears from the document or it vendor merely points to the thing sold which shall
can be inferred therefrom that it was not the thereafter be at the control and disposal of the vendee.
intention of the parties to make delivery, no
tradition can be deemed to have taken place. Traditio brevi manu. happens when the vendee has
Such would be the case, for instance, where a already the possession of the thing sold by virtue of
certain date is fixed when te purchaser should another title as when the lessor sells the thing leased to
take possession of the thing, or where the endor the lessee. Instead of the vendee turning over the thing
reserves the right to use and enjoy the property to the vendor so that the latter may, in turn, deliver it
until a certain period, or where it is stipulated back to him, all these are considered done by fiction of
that until payment of the last installment is made, law.
the title to the property should not be deemed to
have been transmitted. Article 1500. There may also be tradition
constitutum possesorium.
Where the thing not subject to control of vendor.
Symbolic delivery by the execution of a public instrument Traditio constitutum possessorium. The opposite of
is equivalent to actual delivery only when the thing is traditio brevi manu. It takes place when the vendor
subject to the control of the vendor. Hence, the vendor continues in possession of the property sold not as
who executes said public instrument fails in his owner but in some other capacity, as for example, when
obligation to deliver it if the vendee cannot enjoy its the vendor stays as a tenant on the vendee.
possession because of the opposition o resistance of a
third person who is in actual possession. This is another In this case, instead of the vendor delivery the thing to
exception to the general rule that there is presumptive the vendee so that the latter may, in turn, deliver it back
delivery by execution of a public instrument. to the vendor, the law considers that all these have taken
place through the constitutum possessorium agreement,
A seller cannot deliver constructively if he cannot that is, by mere consent or agreement of the parties.
deliver actually even if he wants to.

Symbolic tradition.
Constructive delivery is symbolic when; to effect the
delivery, the parties make use of a toke symbol to
represent the thing delivered.

The delivery of the key where the thing sold is stored or


kept is equivalent to the delivery of the thing because the
key represents a thing.

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

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