PART I SALES (Arts.

1458-1637)

Chapter 1- Nature and Form of the Contract

I. Definitions
1. Contract of sale
- Is a contract whereby one of the parties obligates himself to
deliver something to the other who, on his part, binds himself to
pay therefore a sum of money or it’s equivalent ( known as the
price).
2. Natural elements
- Those which are deemed to exist in certain contracts, in the
absence of any contrary stipulations like warranty against eviction
or hidden defects.
3. Sale by description
- Sale by description occurs where a seller sells things as being of
a particular kind, the buyer not knowing whether the seller’s
representations are true or false, but relying on them as true; or,
as otherwise stated, where the purchaser has not seen the article
sold and relies on the description given him by the vendor, or has
been the goods but the want of identity is not apparent on
inspection. If the bulk of the goods delivered do not correspond
with the description, the contract may be rescinded.
4. Fungible goods
- It means goods of which any unit is, from its nature or by
mercantile usage, treated as the equivalent of any other unit such
as grain, oil ,wine, gasoline, etc.
5. Conditional sale
- Where the sale contemplates a contingency, and in general,
where the contract is subject to certain conditions, usually the full
payment of the purchase price. The delivery of the thing sold does
not transfer ownership until the condition is fulfilled.
II. Discussion
1. Distinguish earnest money from option money
- (1) Earnest money is part of the purchase price, while option money is
the given as distinct consideration for the option contract;
(2) Earnest money is given only where there is already a sale, while option
money applies to a sale not yet perfected; and
(3) When earnest money is given, the buyer is bound to pay the balance,
while when the would-be-buyer gives option money, he is not required to
buy.
But option money may become earnest money if the parties so agree.
2. (A) What remedies are available to a vendor in sale of personal
property payable in installments?
- (1) Elect fulfillment upon the vendee's failure to pay;
(2) Cancel the sale, if the vendee’s shall have failed to pay two or more
installments; or
(3) Foreclose the chattel mortgage, if one has been constituted, if the
vendee shall have failed to pay two or more installments.
(B) Is the vendor allowed to recover the unpaid balance of the price?
- It depends if (a) the vendor chose to exact the fulfillment of the obligation
is not limited to the proceeds of the sale, on execution, of the mortgaged
goods, the vendor may still recover from the purchaser the unpaid balance
of the price, if any on the real and personal properties of the purchaser not
exempt by law from attachment or execution.
(b) the vendor chooses rescission or cancellation of the contract upon the
vendee’s failure to pay two or more installments, the latter can demand
only the return of payments already made useless there is a stipulation
about forfeiture.
(c ) the vendor chooses remedy foreclosure of the chattel mortgage, he
shall have no further action against the vendee for the recovery of any
unpaid balance of the price and any agreement to the contrary is void.
3. Give the characteristics of a contract of sale. Explain at least three of
them.
-(1) Consensual because it is perfected by mere consent without any
further act at the moment there is meeting of minds upon the thing which
is the object of the contract and upon the price.
(2) Onerous because the thing sold is conveyed in consideration of the
price and vice versa
(3) Commutative because the thing sold is considered the equivalent of
the price paid and vice versa.
4. Under the Statue of Frauds, what contract of sale must be in writing
to be enforceable by court action?
-(a) Sale of personal property at a price not less than P500.00
(b) Sale of real property or an interest therein regardless of the price
involved
(c ) Sale of property not to be performed within a year from the date
thereof regardless of the nature of the property and the price involved.
5. Give at least three distinctions between a contract of sale and a
contract of agency to sell.
-(1) In a sale, the buyer receives the goods as owner; in an agency to sell,
the agent receives the goods ass the good of the principal who retains his
ownership over them.
 (2) In a sale, the buyer has to pay the price; in an agency to sell, the agent
has simply to account for the proceeds of the sale he may make on the
principal’s behalf.
(3) In a sale, the buyer can deal with the thing sold as he pleases, being
the owner; in an agency to sell, the agent is dealing with the thing
received, must act and is bound according to the instructions of his
principal.
III. Problems
1. S sold B certain goods. At the time of the sale, C is not the owner of
the goods. May there be a valid sale to B?
- Yes, because as long as S(seller) have the right to transfer the
ownership thereof at the time it is delivered or if it may be a future
goods
2. Same example. The only problem now is that the goods sold have
not yet been identified at the same time of the contract? May there be
a valid sale to B?
- Yes, the general rule is that the object of every contract must be
determinate as to its kind but it is sufficient that the thing is
determinable without the necessity of a new further agreement
between the parties to ascertain its identity, quantity or quality.
The fact that such an agreement is still necessary constitutes an
obstacle to existence of the contract and renders it void.
3. The property sold by S is a portion of a parcel of land without
indicating the specific portion thereof. May there be a valid sale to
B?
- Yes, if S is the sole owner of the property or only a specific
portion, or an undivided interest therein and such interest may be
designated as an aliquot part of the whole. The legal effect of the
sale is to make B(buyer) a co-owner in the thing sold.
4. Same example. The only problem now is that S and B have not
agreed upon a definite price at the time of sale. May there still be a
valid contract of sale between them?
- Yes, as long as the decision or determination of the price is left to
the judgement of a specific person or persons. This third person
should not be in bad faith or else the court would fix the price.
5. Same example. The only problem in the case is that the price was
fixed only by S. Is the sale valid?
- Yes, as long as the other party(B) would agree or accept the price
fixed by S, therefore the contract or sale would be perfected
because in this case, there exists a true meeting of minds upon
the price.
Chapter 2- Capacity to Buy or Sell
I. Definitions
1. Necessaries
- Are those things which are needed for sustenance, dwelling,
clothing and medical attendance, in keeping with the financial
capacity of the family of the incapacitated person.
2. Compromise
- The relative incapacity provided in articles 1490 and 1491 applies
also to sales by virtue of legal redemption, compromises and
renunciations.
II. Discussions
1. Are husband and wife allowed to sell property to each other?
- The husband and the wife are prohibited by this article from
selling property to each other. I see you between husband and
wife in violation of article 1490 is inexistent and void from the
beginning because such contract is expressly prohibited by law,
except:
(1) When a separation of property was agreed upon in the
marriage settlements; or
(2) When there has been a judicial separation of property
2. Under the law, who may enter into a contract of sale?
- As a general rule, all persons, whether natural or juridical, who
can bind themselves by contract have also legal capacity to buy
and sell. There are exceptions to this rule in those cases when
the law determines that party suffers from either absolute or
relative incapacity.
III. Problems
1. B, a minor, bought a pair of imported shoes worth P3,000.00 from a
department store. Can F, father, cancel the sale on the ground of the
minority of B?
- Yes, because if the financial capacity of the family of B(minor)
can’t afford that goods or may not be considered as necessary,
therefore F(father) could cancel the sale on the ground of the
minority of B. But even if B is a minor, he still bought a necessary
good, he must pay a reasonable price as long as it is in the
financial capacity of their family.
2. H and W are husband and wife. After selling his property to W, H
borrowed a big amount of money from C. It appears that H is now
bankrupt. Has C the right to question the sale of H's property to W in
order to have said property answer for H's indebtedness to him?
- No, although certain transfers between husband and wife are
prohibited under the article 1490, such prohibition can be taken
advantage of only by persons who bear such relation to the
parties making the transfer or to the property itself that such
 transfer interferes with their rights or interests. Thus creditors at
the time of the transfer, can attack the validity of the sale but not
creditors who became such only after the transaction.
Chapter 3- Effects of the contract when the thing sold has been lost
I. Definitions
1. Specific goods
- Goods identified and agreed upon at the time a contract of sale is
made
2. Divisible contract
- A contract is divisible when its consideration is made up of
several parts.
II. Discussions
1. When is a thing sold considered lost?
- A thing is lost when it perishes or goes out of commerce or
disappears in such a way that its existence is unknown or it
cannot be recovered.
2. Give the effect in case the thing sold is
A. Lost totally
- Where the thing is entirely lost at the time of perfection, the
contract is inexistent and void because there is no objection
B. Lost partially
- If the subject matter is only partially lost, the vendee may elect
between withdrawing from contract and demanding the remaining
part, paying it’s proportionate price.
III. Problems
1. S sold to B 100 bags of sugar at P70.00 per bag for a total price of
P70,000 S was able to deliver only 98 bags because the two bags
where stolen without the fault of S. Has S the right to insist that B
pay for the 98 bags since there was no fault in his past and only two
bags are lacking? What rights, if any, are given by law to B?
- No, even S without knowledge lost the goods, S doesn’t have the
right to insist B to pay the remaining goods.
- B has the right to withdraw from the contract without the obligation
to pay for the bags of sugar or he can demand for the 98 bags but
binding him to pay the agreed price of P69,860.00.
2. Same example. The price was fixed at P70,000 for the whole lot,
irrespective of the number of bags which happens to be also 100
bags. Will your answer be the same?
- Yes, this contract is indivisible but B is only liable to pay for the 98
bags not the 100 bags.