Professional Documents
Culture Documents
Article 1245. Dation in payment, whereby Article 1468. If the consideration of the contract
property is alienated to the creditor in consists partly in money, and partly in another
satisfaction of a debt in money, shall be thing, the transaction shall be characterized by
governed by the law of sales. (n) the manifest intention of the parties. If such
intention does not clearly appear, it shall be
Article 1619. Legal redemption is the right to be considered a barter if the value of the thing given
subrogated, upon the same terms and conditions as a part of the consideration exceeds the amount
stipulated in the contract, in the place of one who of the money or its equivalent; otherwise, it is a
acquires a thing by purchase or dation in sale. (1446a)
payment, or by any other transaction whereby
ownership is transmitted by onerous title. CONTRACT OF SALE BARTER
(1521a) The consideration is the The consideration is the
giving of the price certain, giving of another
CONTRACT OF SALE DACION EN PAGO in money or its equivalent determinate thing
There is no pre-existing There is a pre-existing
credit credit 5. Contract for a Piece of Work
Obligations are
Obligations are created
extinguished Article 1467. A contract for the delivery at a
Greater freedom in Less freedom in certain price of an article which the vendor in the
determining the price determining the price ordinary course of his business manufactures or
Payment is received by the procures for the general market, whether the
Buyer has to pay the price debtor before the contract is same is on hand at the time or not, is a contract
perfected
of sale, but if the goods are to be manufactured
specially for the customer and upon his special
4. Barter order, and not for the general market, it is a
contract for a piece of work. (n)
Article 1638. By the contract of barter or
exchange one of the parties binds himself to give
Article 1713. By the contract for a piece of work
one thing in consideration of the other's promise
the contractor binds himself to execute a piece of
to give another thing. (1538a)
work for the employer, in consideration of a
certain price or compensation. The contractor
Article 1639. If one of the contracting parties,
may either employ only his labor or skill, or also
having received the thing promised him in barter,
furnish the material. (1588a)
should prove that it did not belong to the person
who gave it, he cannot be compelled to deliver
Article 1714. If the contractor agrees to produce
that which he offered in exchange, but he shall
the work from material furnished by him, he
be entitled to damages. (1539a)
shall deliver the thing produced to the employer
and transfer dominion over the thing. This
Article 1640. One who loses by eviction the
contract shall be governed by the following
thing received in barter may recover that which
articles as well as by the pertinent provisions on
he gave in exchange with a right to damages, or
warranty of title and against hidden defects and
he may only demand an indemnity for damages.
the payment of price in a contract of sale. (n)
However, he can only make use of the right to
recover the thing which he has delivered while
Article 1715. The contract shall execute the
the same remains in the possession of the other
work in such a manner that it has the qualities
party, and without prejudice to the rights
agreed upon and has no defects which destroy or
acquired in good faith in the meantime by a third
lessen its value or fitness for its ordinary or
person. (1540a)
stipulated use. Should the work be not of such
quality, the employer may require that the
contractor remove the defect or execute another
Article 1868. By the contract of agency a person Article 1485. The preceding article shall be
binds himself to render some service or to do applied to contracts purporting to be leases of
something in representation or on behalf of personal property with option to buy, when the
another, with the consent or authority of the lessor has deprived the lessee of the possession
latter. (1709a) or enjoyment of the thing. (1454-A-a)
Article 1459. The thing must be licit and the Article 1465. Things subject to a resolutory
vendor must have a right to transfer the condition may be the object of the contract of
ownership thereof at the time it is delivered. (n) sale. (n)
Article 1460. A thing is determinate when it is 1st requisite: the object must be LICIT
particularly designated or physical segregated Must be lawful
from all others of the same class. Article 1409. The following contracts are
inexistent and void from the beginning:
The requisite that a thing be determinate is
satisfied if at the time the contract is entered into, (1) Those whose cause, object or purpose is
the thing is capable of being made determinate contrary to law, morals, good customs, public
without the necessity of a new or further order or public policy;
agreement between the parties. (n)
(2) Those which are absolutely simulated or
Article 1461. Things having a potential fictitious;
existence may be the object of the contract of
sale. (3) Those whose cause or object did not exist at
the time of the transaction;
The efficacy of the sale of a mere hope or
expectancy is deemed subject to the condition (4) Those whose object is outside the commerce
that the thing will come into existence. of men;
The sale of a vain hope or expectancy is void. (n) (5) Those which contemplate an impossible
service;
Article 1462. The goods which form the subject
of a contract of sale may be either existing (6) Those where the intention of the parties
goods, owned or possessed by the seller, or relative to the principal object of the contract
goods to be manufactured, raised, or acquired by cannot be ascertained;
the seller after the perfection of the contract of
sale, in this Title called "future goods." (7) Those expressly prohibited or declared void
by law.
There may be a contract of sale of goods, whose
acquisition by the seller depends upon a These contracts cannot be ratified. Neither can
contingency which may or may not happen. (n) the right to set up the defense of illegality be
waived.
Article 1463. The sole owner of a thing may sell
an undivided interest therein. (n)
Must not be outside the commerce of men
Article 1464. In the case of fungible goods, there Article 1347. All things which are not outside
may be a sale of an undivided share of a specific the commerce of men, including future things,
Sale of animals with contagious disease, or All services which are not contrary to law,
if they were found to be unfit for the use or morals, good customs, public order or public
service which they were acquired for » void policy may likewise be the object of a contract.
(1271a)
Article 1575. The sale of animals suffering from
contagious diseases shall be void.
Article 1348. Impossible things or services
A contract of sale of animals shall also be void if cannot be the object of contracts. (1272)
the use or service for which they are acquired has
been stated in the contract, and they are found to Article 1462. The goods which form the subject
be unfit therefor. (1494a) of a contract of sale may be either existing
goods, owned or possessed by the seller, or
2nd requisite: the object must be DETERMINATE goods to be manufactured, raised, or acquired by
or DETERMINABLE the seller after the perfection of the contract of
Determinate: must be particularly designated sale, in this Title called "future goods."
or physically segregated from the same class There may be a contract of sale of goods, whose
Determinable: sufficient that it is capable of acquisition by the seller depends upon a
being determinate without the need of a new contingency which may or may not happen. (n)
or further agreement to ascertain its identity,
quantity, or quality. a. Emptio Rei Speratae v. Emptio Spei
otherwise, it would be an obstacle to the
existence of the contract » void EMPTIO REI
EMPTIO SPEI
Article 1460. A thing is determinate when it is SPERATAE
particularly designated or physical segregated Sale of the thing having Sale of a mere hope or
from all others of the same class. (determinate) potential existence expectancy
Object is a future thing Object is a present thing
The requisite that a thing be determinate is Uncertainty is with regard
to the quality and quantity Uncertainty is with regard
satisfied if at the time the contract is entered into, of the thing, but not to its to the existence of the thing
the thing is capable of being made determinate existence
without the necessity of a new or further Produces no effect if he
agreement between the parties. (determinable) Produces effect even though
thing does not come into
the thing does not come into
existence because the sale is
existence, unless it is a vain
subject to the condition that
hope
the thing should exist
a) If simulated: void, but act may be shown GR: price fixed by a 3rd person designated
to have been a donation or some other act or by the parties is binding upon them
contract. XPNs:
b) If false: void, unless proven to be 1. If the 3rd party is unable and
founded on another true and lawful price unwilling: sale is inefficacious
Article 1471. If the price is simulated, the sale is - also contemplates a scenario
void, but the act may be shown to have been in wherein a 3rd party was prevented
reality a donation, or some other act or contract. from fixing the price by another 3rd
(n) person
2. If there was bad faith or mistake:
Article 1353. The statement of a false cause in price will be fixed by the courts
contracts shall render them void, if it should not - bad faith: disregarding specific
be proved that they were founded upon another instructions
cause which is true and lawful. (1276) - mistake: contrary to instructions
3. If prevented from fixing price by
Presumption: that there is a cause and such the fault of a contracting party:
is lawful innocent party may avail of the
(no price stated v. no price at all) remedies
- rescission or fulfillment, with
Article 1354. Although the cause is not stated in
damages in both cases
the contract, it is presumed that it exists and is
lawful, unless the debtor proves the contrary. Article 1469. In order that the price may be
(1277) 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 special person or persons.
Article 44. The following are juridical persons: Article 1397. The action for the annulment of
contracts may be instituted by all who are
(1) The State and its political subdivisions; thereby obliged principally or subsidiarily.
However, persons who are capable cannot allege
(2) Other corporations, institutions and entities for the incapacity of those with whom they
public interest or purpose, created by law; their contracted; nor can those who exerted
personality begins as soon as they have been intimidation, violence, or undue influence, or
constituted according to law; employed fraud, or caused mistake base their
action upon these flaws of the contract. (1302a)
(3) Corporations, partnerships and associations for
private interest or purpose to which the law grants a Article 1399. When the defect of the contract
juridical personality, separate and distinct from that consists in the incapacity of one of the parties,
of each shareholder, partner or member. (35a) the incapacitated person is not obliged to make
any restitution except insofar as he has been
Article 46. Juridical persons may acquire and possess benefited by the thing or price received by him.
property of all kinds, as well as incur obligations and (1304)
bring civil or criminal actions, in conformity with the
laws and regulations of their organization. (38a)
Art. 194. Support compromises everything Between spouses: 1donation, and 2cannot
indispensable for sustenance, dwelling, clothing, sell property to each other
medical attendance, education and Between common-law spouses: donation
transportation, in keeping with the financial Article 133. Every donation between the spouses
capacity of the family. during the marriage shall be void. This
prohibition does not apply when the donation
The education of the person entitled to be takes effect after the death of the donor.
supported referred to in the preceding paragraph
shall include his schooling or training for some Neither does this prohibition apply to moderate
profession, trade or vocation, even beyond the gifts which the spouses may give each other on
age of majority. Transportation shall include the occasion of any family rejoicing. (1334a)
expenses in going to and from school, or to and
from place of work. (290a) Article 1490. The husband and the wife cannot
sell property to each other, except:
4
contracts entered into during a state of
drunkenness or during a hypnotic spell (1) When a separation of property was agreed
Article 1328. Contracts entered into during a upon in the marriage settlements; or
lucid interval are valid. Contracts agreed to in a
state of drunkenness or during a hypnotic spell (2) When there has been a judicial separation of
are voidable. (n) property under article 191. (1458a)
Article 399. Emancipation by marriage or by Article 1492. The prohibitions in the two
voluntary concession shall terminate parental preceding articles are applicable to sales in legal
authority over the child's person. It shall enable redemption, compromises and renunciations. (n)
the minor to administer his property as though he
were of age, but he cannot borrow money or V. FORMATION OF THE CONTRACT OF
alienate or encumber real property without the SALE
consent of his father or mother, or guardian. He
Stages in the Life of a Contract of Sale:
can sue and be sued in court only with the
a) NEGOTIATION/PREPARATORY –
assistance of his father, mother or guardian.
begins from the time the prospective
(317a)
contracting parties indicate interest in the
contract and ends at the moment of their
C. SPECIAL DISQUALIFICATIONS agreement;
b) PERFECTION – takes place when the
the contracts entered into by these person parties agree upon all the essential elements
with regard to the specific prohibited of the contract; and
property are void for being expressly c) CONSUMMATION – occurs when the
prohibited by law parties fulfill or perform the terms agreed
Article 1491. The following persons cannot upon, culminating in the extinguishment
acquire by purchase, even at a public or thereof.
judicial auction, either in person or through the
mediation of another:
A simple mistake of account shall give rise to its a contract by which the owner of the
correction. (1266a) property agrees with another person that he
shall have the right to buy his property at a
fixed price within a certain time
Sale by Description – where the seller sells Article 1485. The preceding article shall be
things as being of particular kind, the buyer applied to contracts purporting to be leases of
not knowing whether seller’s representations personal property with option to buy, when the
are true or false, but relying on them as true. lessor has deprived the lessee of the possession
Article 1481. In the contract of sale of goods by or enjoyment of the thing. (1454-A-a)
description or by sample, the contract may be
rescinded if the bulk of the goods delivered do Article 1486. In the case referred to in the two
not correspond with the description or the preceding articles, a stipulation that the
sample, and if the contract be by sample as well installments or rents paid shall not be returned to
as description, it is not sufficient that the bulk of the vendee or lessee shall be valid insofar as the
goods correspond with the sample if they do not same may not be unconscionable under the
also correspond with the description. circumstances. (n)
The buyer shall have a reasonable opportunity of Article 1487. The expenses for the execution
comparing the bulk with the description or the and registration of the sale shall be borne by the
sample. (n) vendor, unless there is a stipulation to the
contrary. (1455a)
Article 1565. In the case of a contract of sale by
sample, if the seller is a dealer in goods of that Two conditions for Art. 1485 to apply:
kind, there is an implied warranty that the goods 1) contract purports to be a lease of
shall be free from any defect rendering them personal property with option to
unmerchantable which would not be apparent on buy
reasonable examination of the sample. (n) 2) lessor has deprived the lessee of
possession or enjoyment of the
Conditions: thing
1) The goods must correspond with Stipulations that paid rentals will not be
the sample or description in quality returned are valid, unless unconscionable
the parties treated the
sample or description as d. Expropriation
the standard of quality
they contracted with Article 1488. The expropriation of property for
reference to the sample or public use is governed by special laws. (1456)
description
2) The buyer must have reasonable Requirements for a valid exercise of eminent
opportunity of comparing the bulk domain power:
with the sample, or thing with the 1) a statute or ordinance granted the
description local chief executive or the
to ascertain whether they President to exercise such power
are in conformity with the 2) that the taking is for public use,
contract purpose, or welfare
3) The goods shall be free from any 3) payment of just compensation
defect which is not apparent on
Article 1483. Subject to the provisions of the if the law requires a document a special
Statute of Frauds and of any other applicable form, the parties can compel each to observe
statute, a contract of sale may be made 1in that from
writing, or 2by word of mouth, or 3partly in Article 1357. If the law requires a document or
writing and partly by word of mouth, or 4may be other special form, as in the acts and contracts
inferred from the conduct of the parties. (n) enumerated in the following article, the
contracting parties may compel each other to
GR: contracts shall be obligatory in observe that form, once the contract has been
whatever form they may have been entered perfected. This right may be exercised
into simultaneously with the action upon the contract.
XPN: when the law requires that a contract (1279a)
be on some form in order that it may be
valid and enforceable 2. Statute of Frauds
that requirement is absolute and aims to prevent and not to protect fraud
indispensable does not deprive the parties of the right
including transactions under Statute to contract but merely regulates the
of Frauds formalities of the contract necessary to
Article 1356. Contracts shall be obligatory, in render it enforceable
whatever form they may have been entered into, for convenience or evidentiary purposes
provided all the essential requisites for their only
validity are present. However, when the law simply provides the method by which
requires that a contract be in some form in order the contracts enumerated in the Statute
that it may be valid or enforceable, or that a of Frauds may be proved, but it does not
contract be proved in a certain way, that declare them invalid because they are
requirement is absolute and indispensable. In not reduced to writing
such cases, the right of the parties stated in the applicable only to executory contracts
following article cannot be exercised. (1278a)
Article 1403. The following contracts are
Article 1358. The following must appear in a
unenforceable, unless they are ratified:
public document:
(1) Acts and contracts which have for their (2) Those that do not comply with the Statute of
object the creation, transmission, modification or Frauds as set forth in this number. In the
extinguishment of real rights over immovable following cases an agreement hereafter made
property; sales of real property or of an interest shall be unenforceable by action, unless the
therein are governed by articles 1403, No. 2, and same, or some note or memorandum, thereof, be
1405; in writing, and subscribed by the party charged,
or by his agent; evidence, therefore, of the
(2) The cession, repudiation or renunciation of agreement cannot be received without the
hereditary rights or of those of the conjugal writing, or a secondary evidence of its contents:
partnership of gains;
(a) An agreement that by its terms is not to be
(3) The power to administer property, or any performed within a year from the making
other power which has for its object an act thereof;
appearing or which should appear in a public
document, or should prejudice a third person; (d) An agreement for the sale of goods, chattels
or things in action, at a price not less than five
(a) Where the law requires a document to be (a) A method is used to identify the party sought
in writing, that requirement is met by an to be bound and to indicate said party's access to
electronic document if the said electronic the electronic document necessary for his
document maintains its integrity and reliability consent or approval through the electronic
and can be authenticated so as to be usable for signature;
subsequent reference, in that -
(b) Said method is reliable and appropriate for
i. The electronic document has remained the purpose for which the electronic document
complete and unaltered, apart from the addition was generated or communicated, in the light of
of any endorsement and any authorized change, all circumstances, including any relevant
or any change which arises in the normal course agreement;
of communication, storage and display; and
(c) It is necessary for the party sought to be
ii. The electronic document is reliable in the light bound, in or order to proceed further with the
of the purpose for which it was generated and in transaction, to have executed or provided the
the light of all relevant circumstances. electronic signature; and
(b) Paragraph (a) applies whether the (d) The other party is authorized and enabled to
requirement therein is in the form of an verify the electronic signature and to make the
obligation or whether the law simply provides decision to proceed with the transaction
consequences for the document not being authenticated by the same.
presented or retained in its original from.
If the obligor 1delays, or 2has promised to (3) When the thing deteriorates without the fault
deliver the same thing to two or more persons of the debtor, the impairment is to be borne by
who do not have the same interest, he shall be the creditor;
responsible for any fortuitous event until he has
effected the delivery. (4) If it deteriorates through the fault of the
debtor, the creditor may choose between the
Effect of loss through fortuitous events of: rescission of the obligation and its fulfillment,
1) Determinate thing – with indemnity for damages in either case;
GR: extinguishment of obligation if it
was lost without his fault and before (5) If the thing is improved by its nature, or by
he has incurred in delay time, the improvement shall inure to the benefit
XPNs: still liable for damages: of the creditor;
1) if provided by law
2) by stipulation (6) If it is improved at the expense of the debtor,
3) if nature of the obligation he shall have no other right than that granted to
requires assumption of risk the usufructuary. (1122)
2) Generic thing –
GR: does not extinguish the 1. Loss by Fault of a Party and through
obligation Fortuitous Events
Article 1262. An obligation which consists in
the delivery of a determinate thing shall be Rules in regard as to who bears the loss after
extinguished if it should be 1lost or destroyed perfection but before delivery in fungible
without the fault of the debtor, and 2before he things:
has incurred in delay.
This rule shall apply to the sale of fungible application of Art. 1189 rules:
things, 1made independently and for a single Article 1538. In case of loss, deterioration or
price, or without consideration of their weight, improvement of the thing before its delivery, the
number, or measure. rules in article 1189 shall be observed, the
vendor being considered the debtor. (n)
Should fungible things be 2sold for a price fixed
according to weight, number, or measure, the
Article 1636. In the preceding articles in this
risk shall not be imputed to the vendee until they
have been weighed, counted, or measured and Title governing the sale of goods, unless the
delivered, unless the latter has incurred in delay. context or subject matter otherwise requires:
(1452a)
(1) "Document of title to goods" includes any
bill of lading, dock warrant, "quedan," or
GR: goods remain at the seller’s risk until warehouse receipt or order for the delivery of
the ownership therein is transferred to the goods, or any other document used in the
buyer ordinary course of business in the sale or transfer
XPNs: of goods, as proof of the possession or control of
1. unless otherwise agreed the goods, or authorizing or purporting to
2. delivery of the goods has been authorize the possessor of the document to
made to the buyer or to a bailee for transfer or receive, either by indorsement or by
the buyer but the ownership of the delivery, goods represented by such document.
goods has been retained by the
seller merely to secure performance "Goods" includes all chattels personal but not
by the buyer of his obligations things in action or money of legal tender in the
under the contract = buyer bears the Philippines. The term includes growing fruits or
risk from such delivery crops.
3. actual delivery has been delayed
through the fault of either the buyer "Order" relating to documents of title means an
or seller = party at fault bears the order by indorsement on the documents.
risk
when the ownership is transferred to the "Quality of goods" includes their state or
buyer the goods are at the buyer's risk condition.
whether actual delivery has been made or
not "Specific goods" means goods identified and
“Res Perit Domino” – thing agreed upon at the time a contract of sale is
perishes with the owner made.
(3) Goods are in a "deliverable state" within the (2) As valid in all of the existing goods or in so
meaning of this Title when they are in such a much thereof as have not deteriorated, and as
state that the buyer would, under the contract, be binding the buyer to pay the agreed price for the
bound to take delivery of them. (n) goods in which the ownership will pass, if the
sale was divisible. (n)
2. Fruits or Improvements
GR: the vendor is obliged to deliver to the 3. After Perfection but Before Delivery:
buyer the thing sold as well as the fruits and GR: in accordance with their stipulation
accessions that accrue from the moment of XPN: in accordance with Arts. 1480 and
the perfection of the contract of sale 1538
XPN: unless there is a stipulation to the
contrary 4. After the Delivery of the Determinate
all the fruits of the thing which accrue or Thing: buyer is the new owner = buyer
collected before the fulfillment of the bears the risk
condition shall still pertain to the owner
thereof VII: RIGHTS AND OBLIGATIONS OF THE
Article 1537. The vendor is bound to deliver the VENDOR
thing sold and its accessions and accessories in
the condition in which they were upon the A. TRANSFER OWNERSHIP AND TITLE
perfection of the contract. GR: ownership of the thing sold shall be transferred
to the vendee upon the actual or constructive delivery
All the fruits shall pertain to the vendee from the thereof
day on which the contract was perfected. (1468a) XPN: parties may stipulate that ownership in the
thing shall not pass to the purchaser until he has fully
B. EFFECT OF LOSS OF THING SOLD paid the price
1. Before perfection: seller still owns the Article 1477. The ownership of the thing sold
determinate thing = seller bears the risk shall be transferred to the vendee upon the actual
or constructive delivery thereof. (n)
2. At the Time of Perfection:
a) if entirely lost = without any effect Article 1478. The parties may stipulate that
b) if lost in part only = 1withdraw ownership in the thing shall not pass to the
from the contract or 2demand the purchaser until he has fully paid the price. (n)
remaining part and pay a
proportionate part thereof Specific exceptions:
Article 1493. If at the time the contract of sale is 1) Conditional Sales – the execution of a
perfected, the thing which is the object of the contract of conditional sale does not
contract has been entirely lost, the contract shall immediately transfer title to the
be without any effect. property to be sold from the seller to
buyer; it is retained by the seller until
But if the thing should have been lost in part the fulfillment of the positive
only, the vendee may choose between suspensive condition
withdrawing from the contract and demanding
vii. Delivery Through a Carrier or Where goods are shipped, and by the bill of
Courier and Effect of Form of Bill lading the goods are deliverable to the seller or
of Lading his agent, or to the order of the seller or of his
GR: Delivery of the goods to a agent, the seller thereby reserves the ownership
carrier is deemed to be delivery of in the goods. But, if except for the form of the
the goods to the buyer bill of lading, the ownership would have passed
XPNs: to the buyer on shipment of the goods, the
1) the contrary intention seller's property in the goods shall be deemed to
appears be only for the purpose of securing performance
2) the seller reserves the right by the buyer of his obligations under the
of possession until certain contract.