SALES: Chapter 1 (c) Consummation

Article 1458. By the contract of sale one of the Kinds of Sales

contracting parties obligates himself to transfer (a) As to the nature of the subject matter:
the ownership and to deliver a determinate thing, 1) Sale of real property
and the other to pay therefor a price certain in 2) Sale of personal property
money or its equivalent. (b) As to the value of the things exchanged:
1) Commutative sale
A contract of sale may be absolute or conditional. 2) Aleatory sale
(c) As to whether the object is tangible or
Contract of Sale intangible:
- The New Civil Code of the Philippines 1) Sale of property
defines a contract of sale as a contract 2) Sale of a right
whereby one of the contracting parties (d) As to the validity or defect of the
obligates himself to transfer the ownership transaction:
of and to deliver a determinate thing, and 1) Valid sale
the other to pay therefor a price certain in 2) Rescissible sale
money or its equivalent. 3) Voidable sale
4) Unenforceable sale
Sale 5) Void sale
- It is a contract where one party obligates (e) As to the legality of the object:
himself to transfer the ownership of and to 1) Sale of a licit object
deliver a determinate thing, while the 2) Sale of an illicit object
other party obligates himself to pay for (f) As to the presence or absence of
said thing a price certain in money or its conditions:
equivalent. 1) Absolute sale
- Roman Law: avenditio 2) Conditional sale
- French: venta (g) As to whether wholesale or retail:
- Spaniards: venta 1) Wholesale
2) Retail
Essential Characteristics of Contract of (h) As to proximate inducement for the sale:
Sale 1) Sale by description
(a) Consensual 2) Sale by sample
(b) Bilateral reciprocal 3) Sale by description and sample
(c) Onerous (i) As to when the price is tendered:
(d) Commutative 1) Cash sale
(e) Principal 2) Sale on the installment plan
(f) Nominate

Elements of Contract of Sale SALE DATION IN

PAYMENT
(a) Essential elements:
1) Consent or meeting of the minds 1. There is no 1. There is
2) Determinate subject matter pre-existing pre-existing
3) Price certain in money or its credit. credit.
equivalent
(b) Natural elements: 2. Gives rise to 2. Extinguishes
obligation. obligation.
1) Warranty against eviction
2) Warranty against hidden defects 3. The cause or 3. The cause or
(c) Accidental elements consideration consideration
here is the here, from the
Stages in Contract of Sale price, from the viewpoint of
(a) Generation or negotiation viewpoint of the person
(b) Perfection the seller; or offering the
the obtaining dation in
 of the object, payment, is payment of the
from the the price.
viewpoint of extinguishing
the buyer. of his debt; 3. After delivery 3. Since the seller
from the has been retains
viewpoint of made, the ownership,
the creditor, it seller has lost despite
is the ownership and delivery, he is
acquisition of cannot recover enforcing and
the object it unless the not rescinding
offered in lieu contract is the contract if
of the original resolved or he seeks to
credit. rescinded. oust the buyer
for failure to
4. There is 4. There is less pay.
greater freedom in
freedom in the determining
determination the price. Sale distinguished from Cession
of the price. - Assignment of property in assignment of
creditors
5. The giving of 5. The giving of - Cesion de bienes
the price may the object in - In cession, the assignee (creditor) does not
generally end lieu of the acquire ownership over the things
the obligation credit may
assigned, but only the right to sell said
of the buyer. extinguish
completely or things. From the proceeds of such sale, the
partially the creditors are to be paid what is due them.
credit - Concept of cession: Article 1255 of the
depending on Civil Code - The debtor may cede or assign
the agreement. his property to his creditors in payment of
his debts. This cession, unless there is
stipulation to the contrary, shall only
CONTRACT OF CONTRACT TO
SALE SELL release the debtor from responsibility for
the net proceeds of the thing assigned. The
1. The 1. The payment agreements which, on the effect of the
non-payment in full of the cession, are made between the debtor and
of price is a price is a his creditors shall be governed by special
resolutionary positive
laws.
condition, i.e., suspensive
the contract of condition, - Definition by Manresa: cession is that
sale may by hence, if the which “consists in the abandonment of all
such price is not the property of the debtor for the benefit
occurrence put paid, it is as if of his creditors in order that the latter may
an end to a the obligation apply the proceeds thereof to the
transaction of the seller to satisfaction of their credits.”
that once upon deliver and to
a time existed. transfer
ownership DATION IN CESSION
never became PAYMENT
effective and
binding. 1. One creditor is 1. There must be
sufficient. two or more
2. Title over the 2. Ownership is creditors.
property retained by the
generally seller, 2. Not all 2. All the debtor’s
passes to the regardless of properties of properties are
buyer upon delivery and is the debtor are conveyed.
delivery. not to pass conveyed.
until full
 Licit Object
3. Debtor may be 3. Cession takes
solvent or place only if (a) Licit means lawful, i.e., within the
insolvent. the debtor is commerce of man.
insolvent. (b) Things may be illicit:
1) Per se (of its nature)
4. The creditor 4. The creditors 2) Per accidens (made illegal by
becomes the do not become provision of the law)
owner of the owners of the
thing thing (c) If the object of the sale is illicit, the
conveyed. conveyed. contract is null and void, and cannot,
therefore, be ratified.
(d) The right of redemption may be sold. So
Sale distinguished from Loan
also may literary, artistic, and scientific
- In a loan, the amount is substantially
works. A usufruct may also be sold.
smaller than the value of the security
given.
Transfer of Ownership
(a) It is essential for a seller to transfer
Sale distinguished from Lease
ownership and, therefore, the seller must
- In a sale, the seller transfers ownership
be the owner of the subject sold. This
- In a lease, the lessor or landlord transfers
stems from the principle that nobody can
merely the temporary possession and use
dispose of that which does not belong to
of the property.
him (nemo dat quad non habet).
(b) But although the seller must be the owner,
Kinds of Extrajudicial Foreclosure Sale
he need not be the owner at the time of the
1. Ordinary execution sale (Rule 39, Rules of
perfection of the contract. It is sufficient
Court)
that he is the owner at the time the object
2. Judicial foreclosure sale (Rule 68, Rules of
is delivered; otherwise, he may be held
the Court)
liable for breach of warranty against
3. Extrajudicial foreclosure sale (Act 3135, as
eviction. Be it noted that the contract of
amended by Act 4118 - An Act to Regulate
sale by itself, is not a mode of acquiring
the Sale of Property Under Special Powers
ownership. The contract transfers no real
Inserted In or Annexed to Real Estate
rights; it merely causes certain obligations
Mortgages)
to arise.
(c) Indeed, the seller need not be the owner at
Contract of Sale or Disposition of a
the time of perfection because, after all,
Security
“future things or goods,” inter alia, may be
- The registration requirement under the
sold.
law apply to all sales of securities,
(d) A person who has a right over a thing may
“including every contract of sale as
sell such right. Hence, a usufructuary may
disposition of a security,” regardless of the
generally sell his usufructuary right.
stage of development of the project on
(e) Of course, if the buyer was already the
which the securities are based.
owner of the thing sold at the time of sale,
there can be no valid contract for then how
can ownership be transferred to one who
Article 1459. The thing must be licit and the
already has it?
vendor must have a right to transfer the
ownership thereof at the time it is delivered.
Article 1460. A thing is determinate when it is
Lawfulness of the Object and Right to
particularly designated or physical segregated
Transfer Ownership (RULES):
from all others of the same class.
(a) The object must be licit.
(b) The vendor must have the right to transfer The requisite that a thing be determinate is
ownership at the time the object is satisfied if at the time the contract is entered into,
delivered. the thing is capable of being made determinate
without the necessity of a new or further
agreement between the parties.
Article 1462. The goods which form the subject
Determinate of a contract of sale may be either existing goods,
(a) The object of the sale must be owned or possessed by the seller, or goods to be
determinate, i.e., specific, but it is not manufactured, raised, or acquired by the seller
essential really that at the time of after the perfection of the contract of sale, in this
perfection, the object be already specific. Title called "future goods."
It is sufficient that it be capable of being
determinate without need of any new There may be a contract of sale of goods, whose
agreement. acquisition by the seller depends upon a
(b) However, from the viewpoint of risk or contingency which may or may not happen.
loss, not until the object has really been
made determinate can we say that the Sale of Goods
object has been lost, for as is well known, - Goods may be future or existing goods
“generic things cannot be lost.”
Future goods are those still to be:
Rule if new agreement is needed (a) Manufactured or printed;
- If there is a necessity of making a new (b) Raised, or future agricultural products like
agreement to determine the amount and copra still to be manufactured;
the quality of the object sold, this (c) Acquired by seller after the perfection of
necessarily constitutes an obstacle to the the contract;
perfection of the contract. (d) Things whose acquisition depends upon a
contingency which may or may not
happen.
Article 1461. Things having a potential existence
may be the object of the contract of sale.
Article 1463. The sole owner of a thing may sell
The efficacy of the sale of a mere hope or an undivided interest therein.
expectancy is deemed subject to the condition
that the thing will come into existence. Sale of an undivided interest
- (insert example)
The sale of a vain hope or expectancy is void.
Source of Article
Things with a potential existence - Section 1 of the Uniform Sales Act (insert)
(a) All rice harvest for next year;
(b) Young animals not yet in existence or still Letter of Credit
ungrown fruits; - A financial device developed by merchants
(c) The wine that a particular vineyard is as a convenient and relatively safe mode of
expected to produce; dealing with sales of goods to satisfy the
(d) The wool that shall grow upon a sheep; seemingly irreconcilable interests of a
(e) The expected goodwill of a business seller, who refuses to part with his goods
enterprise. before he is paid, and a buyer, who wants
to have control of his goods before paying.
Emptio Rei Speratae and Emptio Spei
(DIFFERENCE)
(a) The sale of an expected thing (emptio rei Article 1464. In the case of fungible goods, there
speratae) - deals with a future thing may be a sale of an undivided share of a specific
(b) The sale of the hope itself (emptio spei) - mass, though the seller purports to sell and the
deals with a present thing buyer to buy a definite number, weight or
measure of the goods in the mass, and though the
Vain Hope or Expectancy number, weight or measure of the goods in the
- If the hope or expectancy itself is vain, the mass, and though the number, weight or measure
sale is itself void.
of the goods in the mass is undetermined. By such
to him.
a sale the buyer becomes owner in common of
such a share of the mass as the number, weight or (c) The seller (c) The agent who
measure bought bears to the number, weight or warrants. sells assumes
measure of the mass. If the mass contains less no personal
than the number, weight or measure bought, the liability as long
buyer becomes the owner of the whole mass and as he acts
within his
the seller is bound to make good the deficiency authority and
from goods of the same kind and quality, unless a in the name of
contrary intent appears. the principal.

Sale of share in a specific mass

- (insert example)
Article 1467. A contract for the delivery at a
Shares of stock in a sales or any other
certain price of an article which the vendor in the
mode of conveyance
ordinary course of his business manufactures or
- The corporation whose shares of stocks
procures for the general market, whether the
are the subject of a transfer transaction
same is on hand at the time or not, is a contract of
need not be a party to the transaction.
sale, but if the goods are to be manufactured
- However, to bind the corporation as well
specially for the customer and upon his special
as third parties, it is necessary that the
order, and not for the general market, it is a
transfer is recorded in the books of the
contract for a piece of work.
corporation.
Rules to determine if the contract is one of
sale or a piece of work
Article 1465. Things subject to a resolutory
(a) If ordered in the ordinary course of
condition may be the object of the contract of sale.
business - SALE
(b) If manufactured specially and not for the
Examples:
market piece of work contract
-
Schools of thought
(a) Massachusetts rule: if specially done at the
Article 1466. In construing a contract
order of another, this is a contract for a
containing provisions characteristic of both the
piece of work.
contract of sale and of the contract of agency to
(b) New York rule: if the thing already exists,
sell, the essential clauses of the whole instrument
it is a sale; if not, work.
shall be considered.
(c) English rule: if material is more valuable,
sale; if skill is more valuable, work.
CONTRACT OF AGENCY TO SELL
SALE
Article 1468. If the consideration of the contract
(a) The buyer pays (a) The agent
consists partly in money, and partly in another
the price. delivers the
price which in thing, the transaction shall be characterized by
turn he got the manifest intention of the parties. If such
from his buyer. intention does not clearly appear, it shall be
considered a barter if the value of the thing given
(b) The buyer after (b) The agent who as a part of the consideration exceeds the amount
delivery is supposed to of the money or its equivalent; otherwise, it is a
becomes the sell does not
owner. become the sale.
owner, even if
the property Rules to determine whether contract is one
has already of sale or barter
been delivered (a) First rule - INTENT
 (b) If intent does not clearly appear - (c) In the cases provided for under Art 1472,
1) If thing is more valuable than Civil Code.
money - BARTER
2) If 50-50 - SALE Refusal of one party to go ahead with an
3) If thing is less valuable than the agreed appraisal
money - SALE - If the buyer and seller agreed on sale and
on determining the price by a joint
appraisal, the sale is still valid even if the
Article 1469. In order that the price may be buyer later on refuses to join the appraisal.
considered certain, it shall be sufficient that it be - The bad faith of the buyer holds him liable
so with reference to another thing certain, or that for the true value of the object.
the determination thereof be left to the judgment - The true value can be established by
of a special person or persons. competent evidence.

Should such person or persons be unable or

unwilling to fix it, the contract shall be Article 1470. Gross inadequacy of price does not
inefficacious, unless the parties subsequently affect a contract of sale, except as it may indicate a
agree upon the price. defect in the consent, or that the parties really
intended a donation or some other act or contract.
If the third person or persons acted in bad faith or
by mistake, the courts may fix the price.
Effect of gross inadequacy of price
Where such third person or persons are prevented (a) In ordinary sale, the sale remains valid
from fixing the price or terms by fault of the seller even if the price is very low. If there was
or the buyer, the party not in fault may have such vitiated consent, the contract may be
remedies against the party in fault as are allowed annulled but only due to such vitiated
the seller or the buyer, as the case may be. consent.
(b) In execution of judicial sales: While mere
Certainty of the price inadequacy of price will not set aside a
- The price must be certain; otherwise there judicial sale of real property, still if the
is no true consent between the parties. price is so inadequate as to shock the
- There can be no sale without a price. conscience of the court, it will be set aside.
- If the price is fixed but is later on remitted
or condoned, this is perfectly all right, for In case contract was really a donation
then the price would not be fictitious. - It is possible that a donation, not a sale,
- The failure to pay the agreed price does was really intended. In such a case, the
not cancel a sale for lack of consideration, parties may prove that the low price is
for the consideration is still there, namely, sufficiently explained by the consideration
the price. of liberality.
- If the money paid is counterfeit, would the
sale be still valid? Yes, for we cannot say
that the consideration or cause of the Article 1471. If the price is simulated, the sale is
contract is the illegal currency and the real void, but the act may be shown to have been in
consideration or cause is still the value or reality a donation, or some other act or contract.
price agreed upon.
Simulated price
When no specific amount is stipulated, the (a) The price must not be fictitious. If the
price is still considered certain: price is merely stimulated, the contract of
(a) If it be certain with reference to another sale is void. It may be valid as a donation
certain thing; or some other agreement, provided the
(b) If the determination of the price is left to requirements of donations or other
the judgment of a specified person or agreements have been complied with.
persons; (b) A stimulated price is fictitious. There
being no price, there is no cause or
 consideration; hence, the contract is void (b) If the buyer has made use of it, he should
as a sale. A rescission of the price will not not be allowed to enrich himself unjustly
invalidate the sale. at another’s expense, and must pay a
reasonable price. The seller’s price must
Fictitious sale be the one paid if the buyer knew how
- If the sale of conjugal property is fictitious much the seller was charging and there
and therefore non-existent, the widow was an acceptance of the goods delivered.
who has an interest in the property subject
of the sale may be allowed to contest the
sale, even before the liquidation of the Article 1475. The contract of sale is perfected at
conjugal partnership, making the executor the moment there is a meeting of minds upon the
a party-defendant if he refuses to do so. thing which is the object of the contract and upon
the price.

Article 1472. The price of securities, grain, From that moment, the parties may reciprocally
liquids, and other things shall also be considered demand performance, subject to the provisions of
certain, when the price fixed is that which the the law governing the form of contracts.
thing sold would have on a definite day, or in a
particular exchange or market, or when an Nature of Contract
amount is fixed above or below the price on such - Sale is a consensual contract perfected by
day, or in such exchange or market, provided said mere consent.
amount be certain. - Delivery or payment is not essential for
perfection
Example:
- Requirements for perfection
(a) When parties are face-to-face, when an
offer is accepted without conditions and
Article 1473. The fixing of the price can never be without qualifications.
left to the discretion of one of the contracting (b) When contract is through correspondence
parties. However, if the price fixed by one of the or through telegram, there is perfection
parties is accepted by the other, the sale is when the offeror receives or has
perfected. knowledge of the acceptance by the
offeree.
Price cannot be left to one party’s (c) When a sale is made subject to a
discretion suspensive condition, perfection is had
- Why? The other could not have consented from the moment the condition is fulfilled.
to the price, for he did not know what it
was. Before perfection
- No mutual rights and obligations exist
between the would-be buyer and the
Article 1474. Where the price cannot be would-be seller.
determined in accordance with the preceding - The same thing is true when perfection is
articles, or in any other manner, the contract is conditioned upon something, and that
inefficacious. However, if the thing or any part thing is not performed.
thereof has been delivered to and appropriated by
the buyer he must pay a reasonable price therefor. Accepted bilateral promise to buy and sell
What is a reasonable price is a question of fact - In the Philippines, an accepted bilateral
dependent on the circumstances of each promise to buy and sell is in a sense
particular case. similar to, but not exactly the same as a
perfected contract of sale.
Effect if the price cannot be determined - Expressly permitted under the first
(a) The sale is void for the buyer cannot fulfill paragraph of Art. 1479, Civil Code (insert)
his duty to pay.
Formalities for perfection (under the made, any bidder may retract his bid; and
Statute of Frauds) the auctioneer may withdraw the goods
(a) The sale of real property from the sale unless the auction has been
(b) The sale of personal property (Art. 1403) announced to be without reserve.
(3) A right to bid may be reserved expressly by
Perfection in the case of advertisements or on behalf of the seller, unless otherwise
- Advertisements are mere invitations to provided by law or by stipulation.
make an offer (Art. 1325), and one cannot (4) Where notice has not been given that a
compel the advertiser to sell. sale by auction is subject to a right to bid
on behalf of the seller, it shall not be
Transfer of ownership lawful for the seller to bid himself or to
(a) Mere perfection of the contract does not employ or induce any person to bid at
transfer ownership. Ownership of the such sale on his behalf or for the
object sold is transferred only after auctioneer, to employ or induce any
delivery, actual, legal, or constructive. person to bid at such sale on behalf of the
After delivery of the object, ownership is seller or knowingly to take any bid from
transferred. the seller or any person employed by him.
(b) Even with delivery, there will be no change Any sale contravening this rule may be
or transfer of ownership till the purchase treated as fraudulent by the buyer. (n)
price has been fully paid. But this
stipulation is not binding on innocent When sale by auction is perfected
third persons such as customers at a store - When the auctioneer announces its
and they must not be prejudiced. perfection by the fall of the hammer or in
other customary manner.
Sales tax
- Even if the object sold has not yet been Before the fall of the hammer,
delivered, once there has been a meeting (a) The bidder may retract his bid.
of the minds, the sale is perfected and the (b) The auctioneer may withdraw the goods
sales tax is already due. from the sale.
- It accrues on perfection, not on the
consummation of the sale. The seller can bid under the following
conditions:
Effect of perfection (a) Such a right to bid was reserved;
- After perfection, the parties must now (b) Notice was given that the sale by auction is
comply with their mutual obligations. subject to a right to bid on behalf of the
seller.
No perfected sales
- Lack of consensus as to the price prevents Seller may employ others to bid for him
the perfection of the sale. - Provided he has notified the public that
- By law, a contract of sale is perfected at the auction is subject to the right to bid on
the moment there is a meeting of the behalf of the seller.
minds upon the thing that is the object of - People who bid for the seller, but are not
the contract and upon the price. themselves bound, are called “by-bidders”
or “puffers”.
- In view of the notice, there would not be
Article 1476. In the case of a sale by auction: any fraud, and the transaction with the
(1) Where goods are put up for sale by auction rest should be considered as valid
in lots, each lot is the subject of a separate - No notice = buyer is fraudulent, which
contract of sale. means the purchaser could be relieved
(2) A sale by auction is perfected when the from his bid.
auctioneer announces its perfection by the
fall of the hammer, or in other customary Rule in case of a private sale
manner. Until such announcement is
 - A private sale authorized by a private
court cannot be assailed by a person who First mutual promise
is not an “interested party”. - Definition:
- One who merely offered a higher price is - Example:
not an interested party, but it would have
been different had there been a public Accepted unilateral promise
auction. - Definition:
- Example:
Negotiated contract
- Aone that is awarded on the basis of a Policitacion
direct agreement between the Government - A unilateral promise to buy or to sell
and the contractor without going through which is not accepted.
the normal procurement process, like - Produces no juridical effect, and creates
obtaining the prior approval from another no legal bond.
authority, or a competitive bidding - A mere offer and has not yet been
process. conversed into a contract.

Bilateral promise
Article 1477. The ownership of the thing sold - A bilateral promise to buy and sell a
shall be transferred to the vendee upon the actual certain thing for a price certain gives to
or constructive delivery thereof. the contracting parties personal rights in
that each has the right to demand from the
When ownership is transferred other the fulfillment of the obligation.
- Not by perfection, but by delivery.
Unilateral promise
Kinds of Delivery (a) The acceptance of a unilateral promise to
(a) Actual (Art. 1497) sell must be plain, clear, and
(b) Constructive (Art. 1498-1602, 1496) unconditional. If there is a qualified
acceptance with terms different from the
offer, there is no acceptance, that is, there
Article 1478. The parties may stipulate that is no promise to buy and there is no
ownership in the thing shall not pass to the perfected sale.
purchaser until he has fully paid the price. (b) If an option is granted, how long is the
offer bound by his promise? If no period
When ownership is not transferred despite has been stipulated, the court will fix the
delivery term.
- Ownership may still be with the seller till (c) Is the right to buy a right that may be
full payment of the price is made, if there transmitted to others? Yes, unless it was
is a stipulation to this effect. granted for purely personal
- Innocent parties cannot be prejudiced. considerations.
- The stipulation is usually pactum (d) What is an Option?
reservati dominii and is common in sales - A contract granting a person the
on the installment plan. privilege to buy or not to buy
certain objects at any time within
the agreed period at a fixed price.
Article 1479. A promise to buy and sell a - The contract of option is a separate
determinate thing for a price certain is and distinct contract from the
reciprocally demandable. contract which the parties may
enter into upon the consummation
An accepted unilateral promise to buy or to sell a of the contract; therefore, an
determinate thing for a price certain is binding option must have its own cause or
upon the promisor if the promise is supported by consideration.
a consideration distinct from the price.
Contract to sell rescinded if the bulk of the goods delivered do not
- The obligation of the seller to sell becomes correspond with the description or the sample,
demandable only upon the occurrence of and if the contract be by sample as well as
the suspensive condition. description, it is not sufficient that the bulk of
goods correspond with the sample if they do not
Contract to sell is not an absolute sale also correspond with the description.
- A contract or promise to sell is not a
contract of sale. The buyer shall have a reasonable opportunity of
- Such a contract to sell would exist when a comparing the bulk with the description or the
thing is promised to be sold, and title sample.
given only after the down payment and the
monthly installment therefore shall have Definition of sale by description or by
all been paid. sample
- Failure to make the needed payment is (a) Sale by description - where seller sells
failure to comply with the needed things as being of a certain kind, the buyer
suspensive condition. merely relying on the seller’s
representation or description.
(b) Sale by sample - that where the seller
Article 1480. Any injury to or benefit from the warrants that the bulk of the goods shall
thing sold, after the contract has been perfected, correspond with the sample in kind,
from the moment of the perfection of the contract quality, and character.
to the time of delivery, shall be governed by (c) Sale by description and sample - must
articles 1163 to 1165, and 1262. satisfy the requirements in both, and not
only in one.
This rule shall apply to the sale of fungible things,
made independently and for a single price, or Effect of mere exhibition of sample
without consideration of their weight, number, or - Does not necessarily make it a sale by
measure. sample.
- Exhibition must have been the sole basis
Should fungible things be sold for a price fixed or inducement of the sale.
according to weight, number, or measure, the risk
shall not be imputed to the vendee until they have
been weighed, counted, or measured and Article 1482. Whenever earnest money is given
delivered, unless the latter has incurred in delay. in a contract of sale, it shall be considered as part
of the price and as proof of the perfection of the
Who bears the risk of loss? contract.
(a) If the object has been lost before
perfection, the seller bears the loss. There Earnest money
was no contract, for there was no cause or - Arras
consideration. - Something of value to show that the buyer
(b) If the object was lost after delivery to the was really in earnest, and given to the
buyer, clearly the buyer bears the loss. seller to bind the bargain.
(Res perit domino)
(c) If the object is lost after perfection but Significance of earnest money under the
before delivery. Exception to the rule of Civil Code:
res perit domino. (a) Part of the purchase price
(b) As proof of the perfection of the contract.
Fungibles
- Are personal property which may be When arras must be returned
replaced with equivalent things. - If merchandise cannot be delivered.
- This right may be renounced since neither
the law nor public policy is violated.
Article 1481. In the contract of sale of goods by
description or by sample, the contract may be
 - The remedies enumerated in the article
Article 1483. Subject to the provisions of the are not cumulative but alternative.
Statute of Frauds and of any other applicable - If one is exercised, the others cannot be
statute, a contract of sale may be made in writing, made use of.
or by word of mouth, or partly in writing and
partly by word of mouth, or may be inferred from Cancellation requires mutual restitution
the conduct of the parties. - When the remedy of cancellation is availed
of, there must be a mutual restitution of
If sale is made through an agent whatever had been received by either
- Void unless the agent’s authority is in party.
writing.
- True even if the sale itself is in a public Instances when this Art. cannot be applied
instrument, or even registered. (a) Real estate mortgage.
(b) Sale of personal property on straight
Effect if notary public is not authorized terms.
- If the deed of sale of land is notarized by a
notary public whose authority had
expired, the sale would still be valid, since Article 1485. The preceding article shall be
for validity of the sale, a public instrument applied to contracts purporting to be leases of
is not even essential. personal property with option to buy, when the
lessor has deprived the lessee of the possession or
enjoyment of the thing.
Article 1484. In a contract of sale of personal
property the price of which is payable in Reason for this rule
installments, the vendor may exercise any of the - Prevent an indirect violation of Art. 1484
following remedies:
(1) Exact fulfillment of the obligation, should “when the lessor has deprived the lessee of
the vendee fail to pay; the possession or enjoyment of the thing”
(2) Cancel the sale, should the vendee's failure - Means that for failure to pay, the lessor is
to pay cover two or more installments; apparently exercising the right of an
(3) Foreclose the chattel mortgage on the unpaid seller, and has taken possession of
thing sold, if one has been constituted, the property.
should the vendee's failure to pay cover
two or more installments. In this case, he When lease construed as sale
shall have no further action against the - Even if the word “lease” is employed,
purchaser to recover any unpaid balance when a sale on installment is evidently
of the price. Any agreement to the intended, it must be construed as a sale.
contrary shall be void.

Requisites before this Art. may be applied Article 1486. In the case referred to in the two
(a) There must be a contract preceding articles, a stipulation that the
(b) The contract must be one of sale installments or rents paid shall not be returned to
(c) What is sold is personal property the vendee or lessee shall be valid insofar as the
(d) The sale must be on the installment plan same may not be unconscionable under the
circumstances.
Purpose of this Art.
- To prevent abuse in the foreclosure of Non-return of installments paid
chattel mortgages by selling at a low price (a) A case of rescission or cancellation of the
and then suing for the deficiency. sale requires mutual restitution, that is, all
- Otherwise, the buyer would find himself partial payments of price or rents must be
without the property, and still indebted. returned.
(b) By way of exception, it is valid to stipulate
Alternative remedies 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.

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.

As a rule, the seller pays for the expenses

of:
(a) The execution of sale
(b) Its registration

Article 1488. The expropriation of property for

public use is governed by special laws.

Nature of Expropriation
- Involuntary in nature
- The owner may be compelled to surrender
the property after all the essential
requisites have been complied with.
- Does not result in sale.

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.

Essential requisites for expropriation

(a) Taking by competent authority
(b) Observance of due process of law
(c) Taking for public use
(d) Payment of just compensation

Just compensation
- Market value + consequential damages, if
any - consequential benefits, if any.
- The benefits may be set off only against
the consequential damages, and not
against the basic value of the property
taken.