SALES

Chapter 1 Nature and Form of the Contract

CHAPTER 1 Note: By way of exception, some contracts are aleatory. Ex: Sale of a
genuine sweepstakes ticket.
NATURE AND FORM OF THE CONTRACT
e. Principal (as distinguished from accessory contract) there is no
Article 1458 . By contract of sale one of the contracting parties obligate necessity for it to depend upon the existence of another valid
himself to transfer the ownership and to deliver a determinate thing, and contract. (Ex: Contracts of pledge and mortgage)
the other to pay therefore a price certain in money or its equivalent.
f. Nominate (as distinguished from an innominate contract) a
Sales a contract where one party (seller or vendor) obligates himself to special designation or name. (Ex: the contract of sale)
transfer the ownership of and to deliver a determinate thing, while the
other party (buyer or vendee) obligates himself to pay for said thing a Elements of the Contract of Sale
price certain in money or its equivalent.
a. Essential elements (those without which there can be no valid
Under Roman Law, sale was termed avenditio. Today the French refer to sale)
the contract as a venta
1. Consent or meeting of the minds (Ex: consent to transfer
The vendor need not be the owner at the time the sale is perfected. ownership I exchange for the price.
It is sufficient that he is the owner at the time the thing sold is
2. Determinate subject matter (generally there is no sale of
deliver.
generic thing; moreover, if the parties differ as to the object,
Suppose Art. 1458 did not specify that the seller must transfer the there can be no meeting of the minds.
ownership of the object, he still have this obligation for after all the
3. Price certain in money or its equivalent (This is the cause or
transfer of ownership is the fundamental aim of the contract. A
consideration) (The price need not be in money.)
buyer is not interested in a mere physical transfer, he is after the
ownership. b. Natural elements (those which are inherent in the contract, and
which in the absence of any contrary provision, are deemed to
Essential Characteristics of the Contract of Sale
exist in the contract.)
a. Consensual perfected by mere consent.
1. warranty against eviction (deprivation of the property bought)
b. Bilateral reciprocal both parties are bound by obligations
2. warranty against hidden defects
dependent upon each other.
c. Accidental elements (those which may be present or absent in the
c. Onerous to acquire the rights, valuable consideration must be
stipulation, such as the place or time of payment, or the presence of
given.
conditions.)
d. Commutative the values exchanged are almost equivalent to
Stages in the Contract of Sale
each other.
a. Generation or negotiation
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Chapter 1 Nature and Form of the Contract

b. Perfection meeting of the minds 3. voidable sale

c. Consummation when the object is delivered and the price is 4. unenforceable sale
paid.
5. void sale
Kinds of Sales
e. As to the legality of the object
a. As to the nature of the subject matter
1. sale of a licit object
1. sale of real property
2. sale of an illicit object
2. sale of personal property

b. As to the value of the things exchanged

1. commutative sale
f. As to the presence or absence of conditions
2. aleatory sale
1. absolute sale (no condition)

2. conditional sale (as to whether there is a sale with a pacto de retro,

c. As to whether the object is tangible or intangible
1. sale of property (tangible or corporeal)
2. sale of a right (assignment of a right or a credit, or some other
intangibles such as a copyright, a trademark, or goodwill.)
tangible chose of possession.
a right to repurchase or redeem; or when there are suspensive
conditions, or when the things sold merely possess a potential
existence, such as the sale of the future harvest of a designated
parcel of land; or when, for example, all the personal properties in
an army depot would be sold except all combat materials that
may be found therein. Therefore such combat materials should be
excluded from sale.)

intangible chose of action. g. As to whether wholesale or resale

The term goods as used in the Uniform Sales Act does not 1. wholesale if to be resold for a profit the goods being unaltered
ordinarily include choses in action (things in action). Neither does when resold, the quantity being large.
the term include money.
2. retail if otherwise (also sold to tailors)
d. As to the validity or defect of the transaction
h. A to the proximate inducement for the sale
1. valid sale
1. sale by description
2. rescissible sale
2. sale by sample
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Chapter 1 Nature and Form of the Contract

3. sale by description and sample

i. As to whether the price is tendered

1. cash sale

2. sale on the installment plan Contract of Sale distinguished from Contract to Sell

Sale distinguished from Dation in Payment (Adjudicacion en Pago, or
Dacion en Pago or Dacion en Solutum)
SALE
1. There is no pre-existing
credit.
2. Gives rise to obligations.
3. The cause or consideration
here is the price, from the
viewpoint of the seller, or the
obtaining of the object, for
the viewpoint of the buyer.
4. There is greater freedom in
the determination of the
price.
5. The giving of the price may
generally end the obligation
of the buyer.
CONTRACT OF SALE CONTRACT TO SELL
1. The non-payment of price is 1. The payment in full of the
DATION IN PAYMENT a resolutory condition. (ex: the price is a positive suspensive
contract of sale may by such condition. Hence, if the price
1. There is a pre-existing
occurrence put an end to a is not paid, it is as if the
credit.
transaction that once upon a obligation of the seller to
2. extinguishes obligations. time existed.) deliver and to transfer
ownership never became
3. The cause or consideration 2. Title to the property effective and binding.
here, from the viewpoint of generally passes to the buyer
the person offering the dation upon delivery. 2. Ownership is retained by
in payment, is the extinguishin the seller, regardless of
3. After delivery has been delivery and is not to pass until
of his debt; from the viewpoint
made, the seller has lost full payment of the price.
of the4 creditor, it is the
ownership and cannot
acquisition of the object
recover it unless the contract 3. Since the seller retains
offered in lieu of the original
is resolved or rescinded. ownership, despite delivery,
credit.
he is enforcing and not
4. There is less freedom in the rescinding the contract if he
determination of the price. seeks to oust the buyer for
failure to pay.
5. The giving of the object in
lieu of the credit may
extinguish completely or
partially the credit
(depending on the
agreement)
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Chapter 1 Nature and Form of the Contract

Sale distinguished from Assignment of Property in Favor of Creditors 1. Ordinary execution governed by the pertinent provisions
(Cession or Cession de Bienes) of Rule 39 of the Rules of Court.

SALE CESSION 2. Judicial foreclosure governed by Rule 68 of the Rules of

1. As defined, there is transfer
of ownership and delivery of a
determinate thing.
Court.
1. The assignee or creditor
does not acquire ownership 3. Extrajudicia foreclosure governed by Act 3135, as
over the things assigned, but amended by Act 4118, otherwise known as An Act to
only the right to sell said Regulate the Sale of Property Under Special Powers Inserted
things. In or Annexed to Real Estate Mortgages.

Cession consists in the abandonment of all the property of the debtor Article 1459. The thing must be licit and the vendor must have a right to
for the benefit of his creditors in order that the latter may apply the transfer the ownership thereof at the time it is delivered.
proceeds thereof to the satisfaction of their credits.
Lawfulness of the Object and Right to Transfer Ownership
Dacion in payment distinguished from Cession
Two rules:
DATION IN PAYMENT CESSION
a. The object must be LICIT.
1. One creditor is sufficient. 1. There must be two or more
b. The object must have the RIGHT to transfer OWNERSHIP at the time
creditors.
2. Not all properties of the the object is delivered.
debtor are conveyed. 2. All the debtors properties
Licit lawful, within the commerce of man.
are conveyed.
3. Debtor may be solvent or
Things may be illicit:
insolvent. 3. Cession takes place only if
the debtor is insolvent. 1. per se (of its nature) Ex: Sale of human flesh for human pleasure.
4. The creditor becomes the
owner of the thing conveyed. 4. The creditors do not 2. per accidens (made illegal by provision of the law) Ex: sale of land to an
become owners of the thing alien after the effective date of the Constitution; Sale of illegal lottery
conveyed. tickets.

Sale distinguished from lease
In a sale, the seller transfers ownership; in a lease, the lessor or landlord
transfers merely the temporary possession and use of the property.
Kinds of Extrajudicial Foreclosure Sale
* If the object of sale is illicit, the contract is null and void. (Art 1409), and
cannot, be ratified.
* The right of redemption may be sold. So also may literary, artistic, and
scientific works. A usufruct may also be sold.
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Chapter 1 Nature and Form of the Contract

Transfer of Ownership
a. It is essential for a seller to transfer ownership (Art. 1458) and, therefore,
the seller must be the owner of the subject sold. Nemo dat quad non habet
nobody can dispose of that which does not belong to him.
b. But although the seller must be the owner, he need not be the owner at
the time of the perfection of the contract. It is sufficient that he is the
owner at the time the object is delivered; otherwise he may be held liable
for breach of warranty against eviction.
* The contract of sale by itself, is not a mode of acquiring ownership.
* The contract transfers no real rights; it merely causes certain obligations
to arise.
c. The seller need not be the owner at the time of perfection because,
after all, future things or goods inter alia, ,may be sold.
However, from the viewpoint of risk or loss, not until the object has
really been made determinate can we say that the object has
been lost, for as is well known, generic thins cannot be lost.
Article 1461. Things having a potential existence may be the object of the
contract of sale.
The efficacy of the sale of a mere hope or expectancy is deemed subject
to the condition that the thing will come into existence.
The sale of a vain hope or expectancy is void.
Selling a thing having a potential existence this is a future thing that may
be sold.
Examples:
a. young animals not yet in existence or still ungrown fruits.

* While there can be sale of future property, there can generally be no b. the wine that a particular vineyard is expected to produce.
donation of future property.
c. the wool that shall, thereafter, grow upon a sheep
d. A person has a right over a thing (although he is not the owner of the
d. the expected goodwill of a business enterprise
thing itself) may sell such right. Hence, a usufructuary may generally sell his
usufructuary right/ the sale of a mere hope or expectancy should refer to a sale of an
expected thing not to the hope or expectancy for the hope or
e. If the buyer was already the owner of the thing sold at the time of sale,
expectancy already exists.
there can be no valid contract.

Article 1460. A thing is determinate when it is particularly designated or

physically segregated from all others of the same class.

The 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.

Determinate specific, but it is not essential really that at the time of

perfection, the object be already specific. It is sufficient that it be capable
Emptio Rei Sperati (Sale of an expected thing) distinguished form Emptio
of being determinate without need of any new agreement. Thus, there
Spei (Sale of the hope itself)
can be a sale of 20 kilos of sugar of a named quality.
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Chapter 1 Nature and Form of the Contract

Emptio Rei Sperati (Sale of an
expected thing)
1. If the expected thing does
not materialize, the sale is not
effective.
2. Deals with a future thing
that which is expected.
Ex: Sale of a valid
sweepstakes ticket whether it
wins or not, the sale itself is
valid.
Emptio Spei (Sale of the hope b. Those still to be raised (like young animals, whether already conceived
itself) or not at the same time of perfection of the contract), or future agricultural
products (like copra still to be manufactured.)
1. It does not matter whether
the expected thing c. Those still to be acquired by seller after the perfection of the contract
materialized or not, what is (like land which the seller expects to buy.) This is also referred to as the sale
important is that the hope of hereafter-acquired property.)
itself validly existed.
d. Things whose acquisition depends upon a contingency which may or
2. Deals with a present thing may not happen. Ex: I can sell you now a specific car which my father
for certainly the hope or promised to give me, should I pass the bar next year. The moment I get the
expectancy already exists. car however, in accordance with my fathers promise you do not
necessarily become its owner, for before title can pass to you, I must first
deliver the car to you, actually or constructively.

* If the hope or expectancy itself is vain, the sale is itself void. BE it noted
that this is not an aleatory contract for while in an aleatory contract there
is an element of chance, here, there is completely no chance. (Ex: Sale of
a losing ticket for a sweepstakes already run. Except if the ticket be a
collectors item)
Article 1462. The goods which form the subject of a contract of sale may
be either existing goods, owned or possessed by the seller, or goods to be
manufactured, raised, or acquired by the seller after the perfection of the
contract of sale, in this Title called future goods.
There may be a contract of sale of goods, whose acquisition by the seller
depends upon a contingency which may or may not happen.
Goods may be future or existing goods.
Future goods
a. Those still to be manufactured (like a future airplane) or printed (like a
subscription to a newpaper)
Article 1463. The sole owner of a thing may sell an undivided interest
therein.
Example of Sale of undivided interest
a. If I own a house, I may sell an aliquot part thereof (say or 1/3) to
somebody, in which case he and I will become co-owners.
b. A full owner may sell the usufruct of his land leaving the naked
ownership to himself.
Article 1464. In the case of fungible goods, there may be a sale of an
undivided share of a specific mass, though the seller purports to sell and
the buyer to buy a definite number, weight or measure of the goods in the
mass, and though the number, weight or measure of the goods in the mass
undetermined. By such a sale the buyer becomes owner in common of
such a share of the mass as the number, weight or measure bought bears
to the number, weight or measure of the mass. If the mass contains less
than the number, weight or measure bought, the buyer becomes the
owner of the whole mass and the seller is bound to make good the
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Chapter 1 Nature and Form of the Contract

deficiency from goods of the same kind and quality, unless a contrary has already been delivered to
intent appears. him.

Example of Share in a Specific Mass 3. The agent who sells

In a stock of rice, the exact number of cavans which is still unknown, Jose
buys 100 cavans. If there are really 150, Jose becomes co-owner of the
whole lot, his own share being 2/3 thereof. The sale is of a specific object
since the mass is specific.
Article 1465. Things subject to a resolutory condition may be the object of
the contract sale.
Sale of things subject to a Resolutory Condition
assumes no personal liability
as long as he acts within his
authority and in the name of
the principal.
Article 1467. A contract for the delivery at a certain price of an article
which the vendor in the ordinary course of his business manufactures or
procures for the general market, whether the same is on hand at the time
or not, is a contract of sale, but if the goods are to be manufactured
specially for the customer and upon his special order, and not for the
general market, it is a contract for a piece of work.

a. A property subject to reserve troncal may be sold. Rules to Determine if the Contract is One of Sale or a Piece of Work

b. A usufruct that may end when the naked owner becomes a lawyer may
be sold.
Article 1466. In construing a contract containing provisions characteristic
of both the contract of sale and of the contract of agency to sell, the
essential clauses of the whole instrument shall be considered.
a. If ordered in the ordinary course of business - SALE
b. If manufactured specially and not for the market piece of work contract
Schools of Thought
a. Massachusetts Rule If specially done at the order of another, this is a
contract for a piece of work.

Contract of Sale distinguished from Agency to Sell (like a Consignment for
Sale)
CONTRACT OF SALE
1. The buyer pays the price.
2. The buyer after delivery
becomes the owner.
3. The seller warrants.
AGENCY TO SELL
1. The agent delivers the price
which in turn he got from his
buyer.
2. The agent who is supposed
to sell does not become the
owner, even if the property
b. New York Rule If the thing already exists, it is a SALE; if not, WORK.
c. English Rule If material is more valuable, sale; if skill is more valuable,
work.
Article 1468 If the consideration of the contract consists partly in money,
and partly in another thing, the transaction shall be characterized by the
manifest intention of the parties. If such intention does not clearly appear, it
shall be considered a barter if the value of the thing given as a part of the
consideration exceeds the amount of the money or its equivalent;
otherwise, it is a sale.
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Rules to determine whether contract is one of Sale or Barter
a. First rule Intent.
b. If intent does not clearly appear
1. If thing is more valuable than money BARTER
2. If 50-50 SALE
3. If thing is less valuable than the money SALE
Article 1469. In order that the price may be considered certain, it shall be
sufficient that it be so with reference to another thing certain, or that the
determination thereof be left to the judgment of a specified person or
persons.
Should such person or persons be unable or unwilling to fix it, the contract
shall be inefficacious, unless the parties subsequently agree upon the
price.
If the third person or persons acted in bad faith, or by mistake, the courts
may fix the price.
Where such third person or persons are prevented from fixing the price or
terms by fault of the seller or the buyer, the party in fault as are allowed the
seller or the buyer, as the case may be.
Certainty of the Price
The price must be certain; otherwise, there is no true consent
between the parties.
There can be no sale without a price.
If the price is fixed but is later on remitted or condoned, this is
perfectly all right, for then the price would not be fictitious.
The failure to pay the agreed price does not cancel a sale for lack
of consideration, for the consideration is still there, namely, the
price.
If the money paid is counterfeit, the sale would still be valid for we
cannot say that the consideration or cause of the contract is the
illegal currency. The real consideration or caused is still the VALUE
or price agreed upon.
When no specific amount is stipulated
If no specific amount has been agreed upon, the price is still
considered certain:
a. If it be certain with reference to another thing certain.
b. If the determination of the price is left to the judgment of a specified
person or persons.
c. In the cases provided for under Art. 1472, Civil Code.
Article 1470. Gross inadequacy of price does not affect a contract of sale
except as it may indicate a defect in the consent, or that the parties really
intended a donation or some other act or contract.
Effect of Gross Inadequacy of Price
a. In ordinary sale, the sale remains valid even if the price is very low. If
there was vitiated consent (such as fraud, or undue influence is present)
the contract may be annulled but only due to such vitiated consent.
b. In execution of judicial sales While mere inadequacy of price will not
set aside a judicial sale of real property, still if the price is so inadequate as
to shock the conscience of the Court, it will not be set aside.
In case Contract was really a Donation
It is possible that a donation, not a sale, was really intended. In such a
case, the parties may prove that the low price is sufficiently explained by
the consideration of liberality.
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Chapter 1 Nature and Form of the Contract
Article 1471. If the price is simulated, the sale is void, but the act may be
shown to have been in reality a donation, or some other act or contract.
Simulated price
a. The price must not be fictitious. Therefore if the price is merely simulated,
the contract as a sale is void. It may however be valid as a donation or
some other agreement, provided the requirements of donations or other
agreements have been complied with. If these requirements do not exist,
then, as a sale, the contract is absolutely void, not merely voidable. An
action for annulment is therefore not essential.
b. A simulated price is fictitious. There being no price, there is no cause or
consideration; hence, the contract is void as a sale. However, it is enough
that the price be agreed on at the time of perfection. A rescission of the
price will not invalidate the sale.
Fictitious sale
If the sale of conjugal property is fictitious and therefore non-existent, the
widow who has an interest in the property subject of the sale may be
allowed to contest the sale, even BEFORE the liquidation of the conjugal
partnership, making the executor a party-defendant if he refuses to do so.
Article 1472. The price of securities, grain, liquids, and other things shall
also be considered certain, when the price fixed is that which the thing
sold would have on a definite day, or in a particular exchange or market,
or when an amount is fixed above or below the price on such day, or in
such exhange or market, provided said amount be certain.
Certainty of Price of Securities
Ex: I can sell to you today my Mont Blanc fountain pen at the price
equivalent to the stock quotation two days from today of 100 shares of
PLDT.
If stock market price cannot be ascertained
If the stock quotation price two days later cannot really be ascertained at
that time (2 days later), the sale is inefficacious.
Article 1473. The fixing of the price can never be left to the discretion of
one of the contracting parties. However, if the price fixed by one of the
parties is accepted by the other, the sale is perfected.
Price cannot be left to ones partys discretion
Reason: The other could not have consented to the price, for he did not
know what is was.
Article 1474. Where the price cannot be determined in accordance with
the preceding articles, or in any other manner, the contract is
inefficacious. However, if the thing or any part thereof has been delivered
to and appropriated by the buyer, he must pay a reasonable price
therefore. What is a reasonable price is a question of fact dependent on
the circumstances of each particular case.
Effect if the price cannot be determined
a. If the price cannot really be determined, the sale is void for the buyer
cannot fulfill his duty to pay.
b. If the buyer has made use of it, he should not be allowed to enrich
himself unjustly at anothers expense. So he must pay a reasonable
price. The sellers price, however, must be the one paid if the buyer knew
how much the seller was charging and there was an acceptance of the
goods delivered. Here, there is an implied assent to the price fixed.
Article 1475. The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract and
upon the price.
From that moment, the parties may reciprocally demand performance,
subject to the provisions of the law governing the form of contracts.
Nature of Contract
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Chapter 1 Nature and Form of the Contract

Sale is a consensual contract (perfected by mere consent). Therefore,
delivery or payment is not essential for perfection.
Note: The contract of sale is consummated upon delivery and payment.
Requirements for Perfection
a.When parties are face to face, when an offer is accepted without
conditions and without qualifications. (A conditional acceptance is a
counter-offer.)
Note: if negotiated thru a phone, it is as if the parties are face to face.
b.When contract is thru correspondence or thru telegram, there is
perfection when the offeror receives or has knowledge of the acceptance
by the offeree.
Note: If the buyer has already accepted, but the seller does not know yet
of the acceptance, the seller may still withdraw.
c.When a sale is made subject to a suspensive condition, perfection is had
from the moment the condition is fulfilled.
thereafter sells an object of the same kind to another at a lesser price is
no ground for the previous buyer to be entitled to claim the excess, his
contract being independent of the other.
Formalities for Perfection
Under the statute of Frauds, the sale of:
a. Real Property (regardless of the amount)
b. Personal Property (if 500 or more must be in writing to be enforceable.
* If orally made, it cannot be enforced by a judicial action, except if it has
been completely or partially executed, or except if the defense of the
Statute of Frauds is waived.
Note: Also in writing should be sales which are to be performed only after
more than one year (from the time the agreement was entered into)
regardless as to whether the property is real or personal, and regardless of
the price involved.

Before perfection Perfection in the Case of Advertisements

Before perfection of the contract of sale, no mutual rights and Advertisements are mere invitations to make an offer (Art. 1325,
obligations exist between the would-be buyer and the would-be Civil Code) and, therefore, one cannot compel the advertiser to
seller. The same thing is true when perfection is conditioned upon sell.
something, and that thing is not performed.

Accepted Bilateral Promise to Buy and Sell

Transfer of Ownership
In a sense similar to, but not exactly the same as, a perfected
a.Mere perfection of the contract does not transfer ownership. Ownership
contract of sale.
of the object sold is transferred only after delivery (tradition), actual, legal
Note: From the moment the parties have agreed upon the kind of rice or constructive.
and the price thereof, they are deemed to have entered into a
The rule is, therefore, this: After delivery of the object, ownership is
perfected contract of purchase and sale, the terms and conditions of
transferred.
which may not be held to depend on subsequent events or acts of the
parties unless the contrary is stipulated. The mere fact that the seller
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Chapter 1 Nature and Form of the Contract

b.It is valid If it is stipulated that even with delivery there will be no change not a real right. Hence, if the seller sells again a parcel of land to a stranger
or transfer of ownership till the purchase price has been fully paid. (But the who is in good faith, the proper remedy of the buyer would be to sue for
stipulation is not binding on innocent third persons such as customers at a damages.
store. The customers must not be prejudiced.

The Sales Tax

Even if the object sold has not yet been delivered, once there has been a
meeting of the minds, the sale is perfected and, therefore, the sales tax
(15% on the gross) is already due. It accrues on perfection, not on the
consummation of the sale.

Retail sales of flour to bakeries to be manufactured into bread are

subject to tax; if wholesale, they are not subject to tax.

To determine if a sale is wholesale or retail, we must not consider
the quantity sold, but the character of the purchase. If the buyer
buys the commodity for his own consumption, the sale is RETAIL, if
for resale, the sale is deemed wholesale, regardless of quantity,
and is not subject to the particular tax referred to.
In sales of textiles, if it be bought for resale at a profit, the goods
being unaltered when resold, the original sale is wholesale. If he
resells the goods only after altering them by using his skill (as when
he transforms them to shirts), the original sale is retail. Same rule
applies in the case of the retail of the following:
1. Copra for the manufacture of soap or oleomargarine.
Article 1476. In the case of a sale by auction:
(1) Where goods are put up for sale by auction in lots, each lot is the
subject of a separate contract of sale.
(2) A sale by auction is perfected when the auctioneer announces its
perfection by the fall of the hammer, or in other customary manner. Until
such announcement is made, any bidder may retract his bid; and the
auctioneer may withdraw the goods from the sale unless the auction has
been announced to be without reserve.
(3) A right to bid may be reserved expressly by on behalf of the seller,
unless otherwise provided by law or by stipulation.

2. Hemp used to make twine or rope
3. In general, raw materials that are used in or that entered
into the manufacture of finished products.
Effect of Perfection
After perfection the parties must now comply with their mutual obligations.
Thus, for example, the buyer can now compel the seller to deliver to him
the object purchased. In the meantime, the buyer has only the personal,
(4) Where notice has not been given that a sale by auction is subject to a
right to bid on behalf of the seller, it shall not be lawful for the seller to bid
himself or to employ or induce any person to bid at such sale on behalf of
the seller or any person employed by him. Any sale contravening this rule
may be treated as fraudulent by the buyer.
When Sale by Auction is Perfected
The sale is perfected when the auctioneer announces its perfection
by the fall of the hammer or in other customary manner.
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Chapter 1 Nature and Form of the Contract
Before the Fall of the Hammer
- The bidder may retract hi bid because every bidding is merely an
offer and, therefore, before it is accepted, it may be withdrawn.
The assent is signified on the part of the seller by knocking down the
hammer.
- The Auctioneer may withdraw the goods from the sale, unless the
auction has been announced to be without reserve. Reason: The
bid is merely an offer, not an acceptance of an offer to sell.
Therefore, it can be rejected. What the auctioneer does in
withdrawing is merely reject the offer.
Conditions when a seller may bid
a. Provided such a right to bid was reserved;
b. and notice was given that the sale by auction is subject to a right to
bid on behalf of the seller.
A seller may employ others to bid for him provided he has notified
the public that the auction is subject to the right to bid on behalf of
the seller. People who bid for the seller, but are not themselves
bound, are called by-bidders or puffers. In view of the notice,
there would not be any fraud, and the transaction with the rest
should be considered as valid. Without the notice, any sale
contravening the rule may be treated by the buyer as fraudulent.
In other words, the purchaser could be relieved from his bid.
Note: It may happen that the owner is not himself the auctioneer.
Now then if the auctioneer employs puffers and gives no notice to
the public, the sale would still be fraudulent, whether or not the
owner of the goods knew what the auctioneer had don
Rule in case of a Private Sale
A private sale authorized by a probate court (and without
objection on the part of the heirs or creditors) cannot be assailed
by a person who is not an interested party (such as an heir or
creditor). One who merely offered a higher price (without actually
buying the property) is not interested party. It would have been
different had there been a public auction.
Article 1477. The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.
When Ownership is Transferred
Ownership is not transferred by perfection but by delivery.
(This is true even f the sale has been made on credit; payment of the
purchase price is NOT essential to the transfer of ownership, as long as the
property sold has been delivered. (Gabriel et. al. v. Encarnacion et. al.) A
contrary stipulation is, however, VALID.
KINDS OF DELIVERY
a. Actual (Art. 1497, Civil Code)
b. Constructive (Arts. 1498 1601, Civil Code), including any other manner
signifying an agreement that the possession is transferred. (Art. 1496, Civil
Code)
Article 1478. The parties may stipulate that ownership in the thing shall not
pass to the purchaser until he has fully paid the price.
When ownership is not transferred despite delivery
Generally, ownership is transferred upon delivery, but even if delivered, the
ownership may still be with the seller till full payment of the price is made, if
there is a stipulation to this effect. This stipulation is usually known as
pactum reservati dominii and is common in sales on the installment plan.
But of course, innocent third parties cannot be prejudiced.
Article 1479. A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.
 SALES
Chapter 1 Nature and Form of the Contract

An accepted unilateral promise to buy or to sell a determinate thing for a A contract or promise to sell, a parcel of land for example, is not a
price certain is binding upon the promissory if the promise is supported by contract of sale. Such a contract to sell would exist when for instance, land
a consideration distinct from the price. is promised to be sold, and title given only after the down payment and
the monthly installment therefor shall have all been paid. Failure to make
First paragraph Second paragraph the needed payment is failure to comply with the needed suspensive
(MUTUAL PROMISE) (ACCEPTED UNILATERAL condition. Hence, promissor was never really obliged to convey title.
PROMISE) Nothing wrong if he sells the property to another, after an unsuccessful
A promise to buy something Only one makes the promise. demand for said price.
and B promises to sell it at an This promise is accepted by
agreed price. (This is a the other. Hence, A promise
promise to buy and sell, to sell to B accepts the
Article 1480.Any injury to or benefit from the thing sold, after the contract
clearly a bilateral reciprocal promise, but does not in turn
has been perfected, from the moment of the perfection of the contract to
contract.) promise to buy.
the time of delivery, shall be governed by Articles 1163 to 1166, and 1262.
Policitacion a unilateral promise to buy or to sell which is not accepted. (Art. 1163. Every person obliged to give something is also obliged to take
This produces no juridical effect, and creates no legal bond. This is a mere care of it with the proper diligence of a good father of a family, unless the
offer, and has not yet been conversed into a contract. law or the stipulation of the parties requires another standard of care.
(1094a))

Bilateral Promise to buy and sell a certain thing for a price certain gives
to the contracting parties personal rights in that each has the right to
demand from the other the fulfillment of the obligation.
Unilateral Promise The acceptance of a unilateral promise to sell must be
plain, clear, and unconditional. Therefore, if there is a qualified
acceptance with terms different from the offer, there is no acceptance,
that is, there is no promise to buy and there is no perfected sale.
(Art. 1164. The creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises. However, he shall acquire no real right over it
until the same has been delivered to him. (1095))
(Art. 1165. When what is to be delivered is a determinate thing, the
creditor, in addition to the right granted him by Article 1170, may compel
the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be
complied with at the expense of the debtor.

Option a contract granting a person the privilege to buy or not to buy

certain objects at any time within the agreed period at a fixed price.
The contract of option is a separate and distinct contract from the
contract which the parties may enter into upon the consummation of the
contract; therefore, an option must have its own cause or consideration.
Contract to SELL is NOT an Absolute Sale
If the obligor delays, or has promised to deliver the same thing to two or
more persons who do not have the same interest, he shall be responsible
for any fortuitous event until he has effected the delivery. (1096))
(Art. 1166. The obligation to give a determinate thing includes that of
delivering all its accessions and accessories, even though they may not
have been mentioned. (1097a))
 SALES
Chapter 1 Nature and Form of the Contract
(Art. 1262. An 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 in delay.
When by law or stipulation, the obligor is liable even for fortuitous events,
the loss of the thing does not extinguish the obligation, and he shall be
responsible for damages. The same rule applies when the nature of the
obligation requires the assumption of risk. (1182a))
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 delay.
Who Bears the Risk of Loss
a. If the object has been lost before perfection, the seller bears the loss.
Reason: There was no contract, for there was no cause or consideration.
Being the owner, the seller bears the loss. This means that he cannot
demand payment of the price.
b. If the object was lost after delivery to the buyer, clearly the buyer bears
the loss. (Res perit domino the owner bears the loss.)
c. If the object is lost after perfection but before delivery, the buyer bears
the loss, as exception to the rule of res perit domino.
Exceptions to the rule that between perfection and delivery, the buyer
bears the loss:
a. If the object sold consists of fungibles sold for a price fixed according to
weight, number, or measure. (Here, if there has been no delivery yet, the
seller bears the loss, unless the buyer is in mora accipiendi.) Last par. 1480
b. If the seller is guilty of fraud, negligence, default, or violation of
contractual term. Arts. 1165, 1262, 1170)
c. When the object sold is generic because genus does not perish
(genus nunquam perit) Note: the unfortunate effect of Art. 1504 on the
question of the risk of loss is discussed under said article.)
Fungibles personal property which may be replaced with equivalent
things.
Consumables and non-consumables distinguished from fungibles and non-
fungibles
The former is based on the nature of the thing, while the latter is based on
the intention.
Article 1481. In the contract 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 by 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 by description Where seller sells things as being of a certain kind, the
buyer merely relying on the sellers representations or descriptions.
Generally, the buyer has not previously seen the good, or even if he has
seen them, he believes (sometimes erroneously) that the description tallies
with the goods he has seen.
Sale by sample that where the seller warrants that the bulk (not the major
part or the majority of the goods but the goods themselves) of the goods
shall correspond with the sample in kind, quality, and character. On the
 SALES
Chapter 1 Nature and Form of the Contract
sample is exhibited. The bulk is not present, and so there is no opportunity
to examine or inspect it.
Sale by description and sample must satisfy the requirements in both,
and not in only one.
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 (arras) something of value to show that the buyer was
really in earnest, and given to the seller to bind the bargain.
Significance of earnest money
a. Part of the purchase price. (Hence, from the total price must be
deducted the arras; the balance is all that has to be paid.)
b. Proof of the perfection of the contract.
Option money applies to a sale not yet perfected; the money is not part
of the purchase price; the would be buyer is not required to buy.
When arras must be returned
If merchandise cannot be delivered, the arras must be returned. Of
course, this right may be renounced since neither the law nor public policy
is violated.
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.
If sale is made thru an Agent
The sale of a piece of land or interest therein when made thru an agent is
void. (not merely unenforceable) unless the agents authority is in writing.
(Art. 1874). This is true even if the sale itself s in a public instrument, or even
registered.
Interest therein refers to easement or usufruct for example.
If notary public is not authorized, the sale would still be valid since
for validity of the sale, a public instrument is not even essential.
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 vendees failure to pay cover two or more
installments;
(3)Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendees 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.
Requisites before Art. 1484 may be applied
a. There must be a contract
b. The contract must be one of sale (absolute sale, not a pacto de retro
transaction, where redemption is effected in installments)
c. What is sold is personal property (sale of real property in installments is
governed by RA 6552 the Maceda Law which took effect on the date
of its approval Sept. 14, 1972.
 SALES
Chapter 1 Nature and Form of the Contract
d. The sale must be on the installment plan (an installment is any part or
portion of the buying price, including the down payment)
Purpose of the Rules For Sale of Personal Property on the Installment Plan
- To prevent abuse in the foreclosure of chattel mortagages by
selling at a low price and then suing for the deficiency, is the
precise purpose of this article. Otherwise, the buyer would find
himself without the property, and still indebted.
Cancellation requires mutual restitution
- It is clear that when the remedy of cancellation is availed of, there
must be a mutual restitution of whatever had been received by
either party.
Ex: When the seller of a car on installment asks for cancellation of
the sale, the car must be returned to him, and he in turn must give
back all installments he has received, including the downpayment.
Instances when Art. 1484 cannot be applied
a.Real estate mortgage because it can only be foreclosed only in
conformity with special provisions.
b. Sale of personal property on straight terms, in which the balance, after
the payment of the initial sum should be paid in its totality at the time
specified. Therefore, in a sale on straight terms, the mortgagee-seller will still
be entitled to recover the unpaid balance.
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.
Leases of Personal Property with Option to Buy
- This may really be considered a sale of personal property in
installments. Therefore, the purpose of Art. 1485 is to prevent an
indirect violation of Art. 1484.
when the lessor has deprived lessee of the possession or enjoyment of the
thing
For failure to pay, the lessor is apparently exercising the right of an unpaid
seller, and has taken possession of the property. This is so even if the
property had been given up in obedience to the lessors extrajudicial
demand, such surrender not really being voluntary.
When lease construed as sale
Even if the word lease is employed, when a sale on installment is evidently
intended, it must be construed as a sale.
Article 1486. In the cases 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 be
unconscionable under the circumstances.
Non-return of Installments Paid
a. As a general rule, it is required that a case of rescission or cancellation
of the sale requires mutual restitution, that is, all partial payments of price
or rents must be returned.
b. However, by way of exception, it is valid to stipulate that there should
be NO returning of the price that has been partially paid or of the Rents
given, provided the stipulation is not unconscionable.
SALE OF REAL PROPERTY IN INSTALLMENTS
REPUBLIC ACT No. 6552
AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON
INSTALLMENT PAYMENTS. (Rep. Act No. 6552)
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Chapter 1 Nature and Form of the Contract
Section 1. This Act shall be known as the "Realty Installment Buyer Act."
Section 2. It is hereby declared a public policy to protect buyers of real
estate on installment payments against onerous and oppressive
conditions.
Section 3. In all transactions or contracts involving the sale or financing of
real estate on installment payments, including residential condominium
apartments but excluding industrial lots, commercial buildings and sales to
tenants under Republic Act Numbered Thirty-eight hundred forty-four, as
amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of
succeeding installments:
(a) To pay, without additional interest, the unpaid installments due
within the total grace period earned by him which is hereby fixed
at the rate of one month grace period for every one year of
installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of
the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer
the cash surrender value of the payments on the property
equivalent to fifty per cent of the total payments made, and, after
five years of installments, an additional five per cent every year but
not to exceed ninety per cent of the total payments made:
Provided, That the actual cancellation of the contract shall take
place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to
the buyer.
Down payments, deposits or options on the contract shall be included in
the computation of the total number of installment payments
made.lawphi1
Section 4. In case where less than two years of installments were paid, the
seller shall give the buyer a grace period of not less than sixty days from
the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace
period, the seller may cancel the contract after thirty days from receipt by
the buyer of the notice of cancellation or the demand for rescission of the
contract by a notarial act.
Section 5. Under Section 3 and 4, the buyer shall have the right to sell his
rights or assign the same to another person or to reinstate the contract by
updating the account during the grace period and before actual
cancellation of the contract. The deed of sale or assignment shall be done
by notarial act.
Section 6. The buyer shall have the right to pay in advance any installment
or the full unpaid balance of the purchase price any time without interest
and to have such full payment of the purchase price annotated in the
certificate of title covering the property.
Section 7. Any stipulation in any contract hereafter entered into contrary
to the provisions of Sections 3, 4, 5 and 6, shall be null and void.
Section 8. If any provision of this Act is held invalid or unconstitutional, no
other provision shall be affected thereby.lawphi1
Section 9. This Act shall take effect upon its approval.
Approved: August 26, 1972.
Raison d Etre of the Maceda Law
- To help especially the low income lot buyers, delineating the rights
and remedies of lot buyers and protect them from one-sided and
pernicious contract stipulations. The Acts declared public policy is
to protect buyers or real estate or installment basis against onerous
and oppressive conditions. More specifically, the Act provided for
the rights of the buyer in case of default in the payment of
succeeding installments, where he has already paid at least two
years of installments.
- The act seeks to address the acute housing shortage problem in
our country that has prompted thousands of middle or lower class
 SALES
Chapter 1 Nature and Form of the Contract
buyers of houses, lots, and condominium units to enter into all sorts
of contracts with private housing developers involving installment
schemes.
Art. 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.
Who Pays for Expenses in Execution and Registration
Observe that as a rule the seller pays for the expenses of:
a.The execution (of the deed) of sale;
b. its registration.
NOTE: There can, however, be a contrary stipulation.
Art. 1488. The expropriation of property for public use is governed by
special laws.
Expropriation involuntary in nature, that is, the owner may be
compelled to surrender the property after all the essential requisites
have been complied with. Therefore, generally expropriation does not
result in a sale.
One exception to the rule
Gutierrez v. CTA SC held that the acquisition by the government of
private properties thru the exercise of eminent domain, said properties
being justly compensated, is a sale or exchange within the meaning of
the income tax laws and profits derived therefrom are taxable as
capital gain; and this is so although the acquisition was against the will
of the owner of the property and there was no meeting of the minds
between the parties.
When Transaction is one of Sale
If the property owner voluntarily sells the property to the government,
this would be a sale, and not an example of expropriation.
Eminent Domain distinguished from Expropriation
Eminent Domain refers to the right given to the state, whereas,
expropriation usually refers to the process.
Essential requisites for Expropriation
1. Taking by competent authority
2. Observance of due process of law.
3. Taking for public use.
4. Payment of just compensation.
Just Compensation market value (the price which the property will
bring when it is offered for sale by one who desires but is not obliged to
sell it, and is bought by one who is under no necessity of having it) PLUS
the consequential damages, if any, MINUS the consequential benefits,
if any. BUT the benefits may be set off only against the consequential
damages, and not against the basic value of the property taken.
The fixing of just compensation in expropriation proceedings shall
be made in accordance with Rule 67 of the Rules of Court and not
on the basis of the valuation declared in the tax declaration of the
subject property by the owner or assessor which ahs been
declared unconstitutional.
CHAPTER 2
CAPACITY TO BUY OR SELL
Art. 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. (1457a)
 SALES
Chapter 1 Nature and Form of the Contract
Incapacity to Buy may be Absolute or Relative
a.Absolute incapacity when party cannot bind himself in any case.
b.Relative incapacity when certain person, under certain circumstances,
cannot buy certain property. (Wolfson v. Estate of Martinez)
Note: Among people relatively incapacitated are those mentioned in Arts.
1490 and 491, Civil Code.)
Purchase by Minors
When minors buy, the contract is generally voidable, but in the
case of necessaries, where necessaries are sold and delivered to
a minor or other person without capacity to act, he must pay a
reasonable price therefor.
Necessaries include everything that is indispensable for sustenance,
dwelling, clothing, and medical attendance, according to the social
position of the family.
Support also includes education of the person entitled to be supported
until he completes his education or training for some profession, trade, or
vocation, even beyond the age of majority. (Art. 290, Civil Code)
Husbands
Under this Code, the husband may sell, alienate, or encumber, even
without the consent of his wife, his exclusive property acquired before the
effectivity of the Civil Code. The wife cannot even ask for the annulment of
the sale on the ground that it is in fraud of her rights when the purpose of
the transaction is to benefit the family, that is, to raise money for a business
venture. (See Arts. 166 and 173 of the Code)
If the deed of sale of the land lists as purchasers both the husband
and the wife, the presumption is that it is paraphernal property.
(Castillo v. Castillo)
If a Filipino sells a parcel of land to a Chinese who later sells the
same to another Filipino, the second sale is VALID because the
purpose of the Constitution of preserving the land in favor of
Filipinos has not been frustrated.
Art. 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 or property under Article
191. (1458a)
NOTE: Under these two exceptions, the sale is generally valid, but of
course, should there be vitiated consent (as in the case of undue
influence) the sale is voidable.
Just as a married couple cannot generally sell to each other, they
also generally cannot donate to each other. This prohibition also
applies to common-law husband and wife on the theory that here
there can be an even greater degree of undue influence.
Reason why Generally a Husband and Wife cannot Sell to Each Other
1. To avoid prejudice to third persons;
2. To prevent one spouse from unduly influencing the other;
3. To avoid by indirection the violation of the prohibition against
donations.
Effect of Sale
Generally, a sale by one spouse to another is void. However, not
everybody can assail the validity of the transaction.
 SALES
Chapter 1 Nature and Form of the Contract
(Thus creditors who became such after the transaction cannot
assail its validity for the reason that they cannot be said to have
been prejudiced. But prior creditors (creditors at the time of
transfer) as well as the heirs of either spouse may invoke the nullity
of the sale.
Art. 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
entrusted 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. (1459a)
This article refers to relative incapacity.
Reason for the Law
Public policy prohibits the transactions in view of the fiduciary
relationship involved.
Purchase Thru Another
Thru the mediation of another - this must be proved, that is, that
there was really an agreement between the intermediary and the
person disqualified; otherwise, the sale cannot be set aside.
(Rodriguez v. Mactual)
Purchase by Agent for Himself
An agent is not allowed, without his principals permission, to sell to
himself what he has been ordered to buy; or to buy for himself
what he has been ordered to sell. (Moreno v. Villones)
-The fiduciary relations between them estop the agent from
asserting a title adverse to that of the principal. And therefore such
a sale to himself would be ineffectual and void, because it is
expressly prohibited by law. The agent may, of course, buy after
the termination of the agency.
NOTE: Under Art. 1459 of the old Civil code, an agent or
administrator was disqualified from purchasing property in his hands
for sale or management. However, under Art. 1491 of the new Civil
Code, this prohibition was modified in that the agent may now buy
the property placed in his hand for sale or administration, provided
the principal gives his consent thereto.
Purchase by Attorney
A lawyer is not allowed to purchase the property of his client which
is in litigation. To do otherwise would be a breach of professional
conduct, and would constitute malpractice.
But assigning the amount of judgment by the client to his attorney,
who did NOT take any part in the case where said judgment was
rendered, is valid.
 SALES
Chapter 1 Nature and Form of the Contract

When a thing is said to be in litigation
A thing is said to be in litigation not only if there is some contest or
litigation over it in court, but also from the moment that it became
subject to the judicial action of the judge.
If a wards property is sold, the guardian, even if he be an adjacent owner,
and even if all the other requisites for legal redemption are present, cannot
exercise the right of legal redemption.

Art. 1491 does not prohibit a lawyer from acquiring a certain

percentage of the value of the properties in litigation that may be
awarded to his client. A contingent fee based on such value is
allowed.
Cross Reference
If however the attorney participates in the sale, not as buyer but as
agent for the buyer, there is no violation of the law. Legal Redemption the right to be subrogated upon the same terms and
conditions stipulated in the contract. (Art. 1619, Civil Code)

Compromises Contract whereby the parties, by making reciprocal

Meaning of Any others specially disqualified by law
This refers to prohibited by reason of the fiduciary relationship involved.
Aliens though not allowed to buy land under the Constitution, they
do not fall under the above phrase. Thus, while those disqualified
under Art. 1490 and 491 may not become lessees (Art. 1646), still
aliens may become lessees even if they cannot buy lands.
concessions, avoid a litigation or to put an end to one already
commenced. (Art. 2028, Civil Code)
Renunciation rights may be waived, unless the waiver is contrary to law,
public order, public policy, morals or good customs or prejudicial to a third
person with right recognized by law. (Art. 6, Civil Code)
Renunciation - condonation or remission is essentially gratuitous and
requires the acceptance by the obligor. May be made expressly or
impliedly. (Art. 1270, Civil Code)

Status of the Sale

Generally, sales entered into in disregard of the prohibition under this

article are not void. They are merely voidable. (Wolfson v. Estate of
Martinez)

Art. 1492. The prohibitions in the two preceding articles are applicable to
sales in legal redemption, compromises and renunciations.

Applicability of Relative Incapacity to Legal Redemption, Compromises,

and Renunciation

Example:
 SALES
Chapter 1 Nature and Form of the Contract

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
CHAPTER 3
(2) As valid in all of the existing goods or in so much thereof as have not
EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST
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.
Art. 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
Loss of Specific Goods
without any effect.
This article practically reiterates the principle involved in the preceding
But if the thing should have been lost in part only, the vendee may choose article.s
between withdrawing from the contract and demanding the remaining
part, paying its price in proportion to the total sum agreed upon. (1460a)
REMEDIES:

1. Cancellation (avoidance);

Lost of the object before sale 2. Specific performance as to the remaining existing goods. (if the
sale was divisible).
This refers to a case of loss of the object even before the perfection of the
contract. It is evident that there would be no cause or consideration;
hence, the contract is void. Observe that it is the seller here who naturally
will have to bear the loss.

Complete Loss Distinguished from Partial Loss

When the object has been Partly or Partially Lost

REMEDIES:

1. Withdrawal or rescission.
2. Specific performance as to remainder by payment of proportional
price.

Art. 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