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SALES | Midterms Reference: Sualog  Absolute Sale: no stipulation in the contract that title to the
property remains with the seller until full payment of the
NATURE AND FORM OF CONTRACT purchase price
Contracts (Art. Contract of Sale Obligations (Art.  Conditional Sale: ownership remains with the vendor and
1305) (Art. 1458) 1156) does not pass to the vendee until full payment of the
purchase price
A contract is a By the contract of An obligation is a 2. As to the standing or status of the sale
meeting of minds sale one of the juridical necessity to  Valid Sale: sale has all the essential elements for its validity
between two contracting parties give, to do, or not to and produces the desired legal effect
persons whereby obligates himself to do.  Rescissible Sale: although the sale is valid, it has an
one binds himself, transfer the extrinsic defect because of the economic and financial injury
with respect to the ownership and to or prejudice to either of the seller or buyer, or to a third
other, to give, deliver a person
something or to determinate thing,  Voidable Sale: sale is valid until annulled, it presupposes a
render some and the other to pay defect in the consent of the parties. This can be cured by
service. therefor a price ratification.
certain in money or  Unenforceable Sale: sale cannot be enforced by proper
its equivalent. action in court unless it is ratified, because either it is
entered into without or in excess of authority or it does not
Characteristics comply with the statute of fraud or both of the contracting
1. Nominate- the sale has its own individuality and is governed parties do not possess the required legal capacity
by its own set of rules  Void Sale: the sale lacks essential elements to be valid, or
2. Principal- contract of sale can stand on its own, its existence its cause, object or purpose is contrary to law, morals, good
and validity do not depend upon another contract customs, public order, and public policy, is prohibited by law
3. Consensual- contract of sale is perfected by mere consent. or is declared by law to be void.
No particular form required for its validity
4. Bilateral- contract of sale creates and imposes reciprocal Distinguished from other contracts
rights and obligations on both contracting parties
 Vendor- he is entitled to purchase price but he is bound to Contract to Sell a bilateral contract whereby the prospective seller,
deliver and transfer ownership of the determinate thing while expressly reserving the ownership of the property despite delivery
sold thereof to the prospective buyer, binds himself to sell the property
 Vendee- he is entitled to receive the thing sold but he has exclusively to the prospective buyer upon fulfillment of the condition
to pay therefor the price. agreed upon.
5. Onerous- in a contract of sale, the determinate thing is sold
in consideration of another valuable consideration Contract of Sale Contract to Sell
 Vendor- payment of purchase price As to title Seller conveys title Prospective seller
 Vendee- delivery of the determinate thing and the transfer to the property upon explicitly reserves
of the ownership the perfection of the the transfer of title to
6. Commutative- in a contract of sale, the value of the contract the prospective
determinate thing is considered or assumed to be the buyer until the
equivalent of the price happening of an
7. Title- ownership of the thing sold is not transferred by mere event
perfection of the contract of sale, but by tradition or delivery As to ownership Ownership to the Ownership is, by
8. Aleatory- in a sale of hope, the contract of sale is considered property passes to agreement, retained
as aleatory whereby one of the parties or both reciprocally the buyer upon upon by the seller despite
bind themselves to give or to do something in consideration of the delivery of the the delivery and is
what the other shall give or do upon the happening of an event thing sold not to pass to the
which is uncertain, or which is to occur at an indeterminate vendee until full
time. payment of the
purchase price
Essential Requisites As to effect of non- Buyer’s non- Buyer’s full payment
1. Consent- or the meeting of the minds of both contracting payment payment of the price of the price is a
parties is a negative positive suspensive
2. Determinate subject matter resolutory condition condition to the
3. Price certain in money or its equivalent coming into effect of
the agreement
 Dizon v. CA As to remedy of the Buyer in default in If the buyer defaults
seller in case of the payment of the in payment, the
All elements of the sale not present; no meeting of the default purchase price, the seller can only sue
minds of the parties, no consideration, the subject matter seller may either sue for damages
is not determinate. for the collection or
have the contract
Kinds of Sale judicially resolved
1. As to the presence or absence of condition and set aside

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 Luzon Brokerage v. Maritime Building exchange of a price determinate thing

certain out of liberality
The deed of conditional sale is considered as contract to As to governing law Governed by law on Governed by law on
sell because there is a stipulation that, in case of failure of sales donation
the other party to complete the payment, the seller may As to consideration Price certain in Purely the liberality
extrajudicially terminate the operation of the contract, money or its or generosity
refuse conveyance, and retain the sums or instruments equivalent
already received (the stipulation is the basis of the right of As to its perfection Perfected at the Perfected from the
the seller to unilaterally rescind the contract) and validity moment there is a moment the donor
meeting of minds knows of the
 Dignos v. CA acceptance by the
donee
The deed of conditional sale in this case is NOT a contract
to sell because there is no stipulation reserving the title of Dacion en pago an objective novation of the obligation where the thing
the property on the vendors nor does it gives them right to is offered as an accepted equivalent of the performance of an obligation
unilaterally rescind the contract upon the non-payment of is considered as the object of the contract of sale, while debt is
the balance within a fixed period considered as the purchase price.

Art. 1245. Dation in payment, whereby property is alienated to the creditor in

Donation an act of liberality whereby a person disposes gratuitously of satisfaction of a debt in money, shall be governed by the law of sales.
a thing or right in favor of another, who accepts it. Art. 1619. Legal redemption is the right to be subrogated, upon the same terms and
conditions stipulated in the contract, in the place of one who acquires a thing by
Art. 725. Donation is an act of liberality whereby a person disposes gratuitously of a purchase or dation in payment, or by any other transaction whereby ownership is
thing or right in favor of another, who accepts it. transmitted by onerous title.
Art. 726. When a person gives to another a thing or right on account of the latter's
merits or of the services rendered by him to the donor, provided they do not constitute Sale Dation in Payment or Dacion
a demandable debt, or when the gift imposes upon the donee a burden which is less en Pago
than the value of the thing given, there is also a donation.
Art. 745. The donee must accept the donation personally, or through an authorized There is no pre-existing credit There is a pre-existing credit
person with a special power for the purpose, or with a general and sufficient power; Gives rise to obligations Extinguishes the obligation
otherwise, the donation shall be void. Cause or consideration: Cause of consideration:
Art. 746. Acceptance must be made during the lifetime of the donor and of the donee. Seller- price Debtor- extinguishment of the
Art. 747. Persons who accept donations in representation of others who may not do
so by themselves, shall be obliged to make the notification and notation of which
Buyer- object debt
Article 749 speaks. Creditor- acquisition of the
Art. 748. The donation of a movable may be made orally or in writing. object offered in lieu of the
An oral donation requires the simultaneous delivery of the thing or of the document original credit
representing the right donated. There is greater freedom in the There is less freedom in
If the value of the personal property donated exceeds five thousand pesos, the
donation and the acceptance shall be made in writing, otherwise, the donation shall determination of the price determining the price
be void. The giving of the price may The giving the object in lieu of
Art. 749. In order that the donation of an immovable may be valid, it must be made in generally end the obligation of the credit may extinguish
a public document, specifying therein the property donated and the value of the the buyer completely or partially the credit
charges which the donee must satisfy.
Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have
(depending on the agreement of
been in reality a donation, or some other act or contract. the parties)

Sale Donation
As to its essence Transfer of Transfer the
ownership of the ownership of the
determinate thing in

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 Dao Heng Bank v. Sps. Lilia and Reynaldo Laygo
For a dacion en pago to prosper, there is need of the
common consent of the parties, because it extinguishes an
obligation by changing the object of the obligation.
Barter (Art. 1638) By the contract of barter or exchange one of the
parties binds himself to give one thing in consideration of the other's
promise to give another thing.
Art. 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.
Art. 1638. By the contract of barter or exchange one of the parties binds himself to
give one thing in consideration of the other's promise to give another thing.
Art. 1641. As to all matters not specifically provided for in this Title, barter shall be
governed by the provisions of the preceding Title relating to sales.
Rules in case the consideration is partly in money and partly in
another thing
GR: know the intention of the parties
If the contention of the parties does not clearly appear:
1. Thing > Money = Barter
2. Thing = Money = Sale
3. Thing < Money = Sale
Contract for a Piece of Work the goods manufactured especially for
the customer and upon his special order and for the general market
Art. 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.
Art. 1713. By the contract for a piece of work the contractor binds himself to execute
a piece of work for the employer, in consideration of a certain price or compensation.
The contractor may either employ only his labor or skill, or also furnish the material.
Art. 1715. The contract shall execute the work in such a manner that it has the
qualities agreed upon and has no defects which destroy or lessen its value or fitness
for its ordinary or stipulated use. Should the work be not of such quality, the employer
may require that the contractor remove the defect or execute another work. If the
contract fails or refuses to comply with this obligation, the employer may have the
defect removed or another work executed, at the contractor's cost.
 Celestino and Co v. Collector
A manufacturer is not a contract for a piece of work, from the
very start Celestino intended his business to be manufacturer
rather than a contractor of sash doors, windows,
manufactured in his factory
Manufacturer: 1. Mass produces; 2. Habitually makes; 3. For
the general market
 Commissioner v. Engineering Equipment
The aircondition units was especially made for each customer
and installed in a central type of air conditioning system would
not have existed but for the order if the party desiring to acquire
it and if it existed without special order of the Engineering’s
customer, the said air conditioning units were not intended for
sale to the general public
TEST: WON the thing transfer would come into existence were
not for the order of the customer.
SALES|MIDTERMS |3
Agency to Buy or Sell (Art. 1868) by the contract of agency a person
binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of
the latter.
Art. 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.
Art. 1868. By the contract of agency a person binds himself to render some service
or to do something in representation or on behalf of another, with the consent or
authority of the latter.
Sale Agency to Buy or Sell
Parties intended that the delivery Principal retains ownership and
of the property will effect a control over the property and the
relinquishment of title, control, agent merely acts on the
ownership in such a way that the principal’s behalf and under his
recipient may do with the instruction in furtherance of the
property as he pleases objectives for which the agency
was established
 Quiroga v. Parsons
The contract between the parties is not of agency, but of
contract to purchase and sale. There was an obligation on
the part of Parsons to supply bed and on the part of
Quiroga to pay their prices upon delivery. These features
exclude the legal conception of an agency
 G. Puyat and Sons v. Arco Amusement
No agency to sell occurs because: 1. If there is a problem
that will occur, G. Puyat will be held liable. If agent, not
liable; 2. G. Puyat cannot be both agent of the buyer and
the seller; 3. If he is agent of Acro, he will not waive the
discount given , in fact, he will accept the discount for the
benefit of his principal, in this case, G. Puyat never gave
the allotted discount prices to Acro
 Ker and Co. v. Lingad
Sale: if such transfer puts the transferee in the attitude or
position of an owner and makes him liable to the transferor
as a debtor for agreed price and not merely as an agent
who must account for the proceeds of a resale
Agency: the delivery to an agent as the property of the
principal, who remains the owner and has the right to
control sales, fix the price and terms, and receive the
proceeds less the agent’s commission upon sales made
Lease is a consensual, bilateral, onerous, and commutative, the owner
temporarily grants the use of his or her property to another who
undertakes to pay the rent
(Art. 1643) in the lease of things, one of the parties binds himself to give
to another the enjoyment or use of a thing for a price certain, and for a
period which may be definite or indefinite. However, no lease for more
than 99 years shall be valid.
Art. 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 vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's 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.
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Art. 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.
Art. 1643. In the lease of things, one of the parties binds himself to give to another
the enjoyment or use of a thing for a price certain, and for a period which may be
definite or indefinite. However, no lease for more than ninety-nine years shall be valid.
 Bachrach Motor Co. v. Mendoza
No transfer of ownership in lease
 Manila Trading and Supplying Co. v. Reyes
3 remedies in case of non-payment: 1. Fulfillment of
obligation; 2. cancellation of sale; or 3. Foreclosed the
mortgage. Mutually exclusive remedies.
OBJECT OF THE CONTRACT
Requisites of a Valid Subject Matter
1. Must be licit
2. Must be determinable and determinate
3. Must be existing, future or contingent or (not impossible)
Art. 1460. A thing is determinate when it is particularly designated or physical
segregated from all other 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.
I. Must be licit
- object of the sale must not be contrary to law, morals,
good customs, public order, or public policy
- it must not be outside the commerce of men
- the seller does not need to be the owner of the
determinate thing before or during the perfection of
the contract of sale
- for a contract of sale to be validly perfect, the law
merely requires the presence of all essential
elements of the contract
- during the consummation stage of a perfected
contract, the seller must be the owner of the thing, in
order to transfer ownership
Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may
also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly
authorized by law.
All services which are not contrary to law, morals, good customs, public order or public
policy may likewise be the object of a contract.
Art. 1459. The thing must be licit and the vendor must have a right to transfer the
ownership thereof at the time it is delivered.
Art. 1575. The sale of animals suffering from contagious diseases shall be void.
A contract of sale of animals shall also be void if the use or service for which they are
acquired has been stated in the contract, and they are found to be unfit therefor.
Art. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived.
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 Martinez v. CA
The buyer-spouses bought the property knowing that there
is a dispute WON it is a public fishpond or private.
SC: one who buys something with a knowledge of defect
or lack of title in his vendor cannot claim that he acquired
it in good faith.
The fishpond is PUBLIC DOMINION, hence, outside the
commerce of man, it has no title or it is questionable.
II. Must be determinate or determinable
- a thing must be determinate when it is particularly
designated or physically segregated from all other of
the same class
Art. 1349. The object of every contract must be determinate as to its kind. The fact
that the quantity is not determinate shall not be an obstacle to the existence of the
contract, provided it is possible to determine the same, without the need of a new
contract between the parties.
 Melliza v. City of Iloilo
Melliza contends that the donation of land to municipality
of Iloilo to UP is not determinate because the lot in
question is part of her property.
SC: the Arellano plan was determined, for 20 years the
predecessors-in-interest of Melliza did not object with
the said plan
 Atilano v. Atilano
As intended and understood by the parties, the specific
portion where the vendee was then already residing,
constructed a house, and continued to reside was the
intended portion of property which was a simple mistake
that registered as lot A instead of lot E
 Yu Tek v. Gonzales
Only an agreement of promise of sale and not a sale, the
quality of sugar stipulated is not determinate. Hence, it
is a generic sugar, and not sugar from his hacienda
specifically.
 Gaite v. Fonacier
The sale of iron ore is a determinate object because no
provision in the contract for the measuring or weighing
of the ore sold in order to complete or perfect the sale.
“That iron ore” is determinate.
III. Must be existing, future or contingent
- or it must not be impossible
- things which will never be exist are impossible things
- impossible things cannot be the object of a contract
of sale
- a thing that may possible exist with respect to one
person may not possibly exist to other persons
i. emptio rei speratae vs. emptio spei
ii. undivided share
iii. subject to resolutory condition
iv. things in litigation
- Kinds of impossibility:
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o Legal impossibility- contrary to law, morals,  Pichel v. Alonzo

good customs, public order or public policy
o Physical impossibility Sale of coconut fruit is valid, because the sale was for a
o Absolute period of 7 years, which though not yet actually in
o Relative existence, is reasonably certain to come into existence as
- “Goods” includes all chattels and personal but not the natural increment or usual incident of something
things in action or money of legal tender in the
already in existence, and then belonging to the vendor,
Philippines
and the title will vest in the buyer the moment the thing
- GR: Money of legal tender in the Philippines cannot
be an object of sale because they are not included comes into existence
as goods can be an object of sale
XPN: 1. When Philippine money is not being Requisite for future goods to be sold:
considered and utilized as a medium for payment 1. It will reasonably certain to come into existence as the
(numismatist) natural increment or usual incident of something
XPN: 2. Money of legal tender in foreign currency/ies already in existence
can be an object of sale 2. Thing sold shall be owned by the seller at the time of
the sale
Art. 1348. Impossible things or services cannot be the object of contracts.
Art. 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, (b) Undivided Interest
raised, or acquired by the seller after the perfection of the contract of sale, in this Title - also referred as “ideal or abstract quota” or
called "future goods." “proportionate share”
- even if a co-owner has the right to freely sell his
(a) Emptio Rei Speratae vs. Emptio Spei undivided interest in the property owned in common,
Emptio Rei Speratae (sale of things having a potential existence) he cannot sell the entire property without the consent
- Things having a potential existence may be the of the other co-owners (nemo dat quod non habet)
object of the contract of sale - undivided owned by the entire property with their
- These are the future things since they are not yet in entire unidived share
existence at the time of sale Fungible goods goods that can be replaced by another
- Sale is subject to suspensive condition that the thing goods for a same kind or quality
will exist and come into being ̶ at the risk of the seller Rules:
- In sale of future things with potential existence, the 1. sale of an undivided share in a mass of fungible goods
ownership of the thing may be transferred, after the will result in proportionate ownership
thing comes into existence (depend upon the 2. if the quantity is less than the amount estimated by the
agreement of the parties) parties in a specific mass of fungible goods, the vendor is
Emptio Spei (sale of hope) bound to deliver in good faith to the vendee all of the
- A mere hope or expectancy may be the object of a goods in the mass, who becomes the owner thereof; and
contract of sale to supply whatever is lacking from goods of the same kind
- Hope and expectancy are present things and quality unless a contrary intention appears
- Sale is still valid and produces its effects even if the
hope never comes to be, or the expectancy never Art. 1463. The sole owner of a thing may sell an undivided interest therein.
comes to existence Art. 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
- Sale of hope is an aleatory contract (depends on the number, weight or measure of the goods in the mass, and though the number, weight
happening of an event which is UNCERTAIN) or measure of the goods in the mass is undetermined. By such a sale the buyer
- What is VOID is the sale of a VAIN hope and becomes owner in common of such a share of the mass as the number, weight or
expectancy 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 deficiency from
Emptio Rei Speratae Emptio Spei goods of the same kind and quality, unless a contrary intent appears.
Potential existence Mere hope or expectancy
Object: future thing Object: present thing (c) Subject to resolutory condition
Uncertainty: quantity and quality Uncertainty: existence of the - Resolutory condition is wherein the happening of
of the thing thing the event triggers the end of the obligation
Effect: produces no effect if the Effect: sale produces effect even
thing does not come into though the thing does not come Art. 1465. Things subject to a resolutory condition may be the object of the contract
existence, because of the into existence of sale.
condition that the thing should
exist  Arsenal v. IAC

Art. 1461. Things having a potential existence may be the object of the contract of The sale of the homestead patent land could be valid after
sale. the end of the prohibitive period which the awardee cannot
The efficacy of the sale of a mere hope or expectancy is deemed subject to the alienate the land within 5 years. However, being the sale
condition that the thing will come into existence.
within the prohibitive period, the sale is void
The sale of a vain hope or expectancy is void.

(d) Things in litigation

- thing that is under litigation may be the object of a
contract of sale, however, it makes the contract of

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sale rescissible if it is entered into by the defendant
without the knowledge and approval of the litigants
or of the court
Art. 1381. The following contracts are rescissible:
(1) Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which are
the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion
stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority;
(5) All other contracts specially declared by law to be subject to rescission.
Art. 1385. Rescission creates the obligation to return the things which were the object
of the contract, together with their fruits, and the price with its interest; consequently,
it can be carried out only when he who demands rescission can return whatever he
may be obliged to restore.
Neither shall rescission take place when the things which are the object of the contract
are legally in the possession of third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the person causing the
loss.
IV. Quantity of subject matter not essential for perfection
- Not essential that the quantity is determinable,
provided it is possible to determine without entering
a new contract
- Quality:
If specific: quality of the specific thing
If generic: cannot be the inferior quality
THE PRICE
Price signifies the sum stipulated as the equivalent of the thing sold
and also every incident taken into consideration for fixing of the price,
put to the debit of the vendee and agreed to him
- Must be determined as of the time of the sale
- When the sale is preceded by an option contract or
a contract to sell, price must be determined at the
time of that contract
Purchase price understood as consideration in money or its equivalent
which the vendee agreed to pay the vendor in exchange of the latter’s
thing
Requisite for a Valid Price
1. Must be real
2. Must be in money or its equivalent
3. Must be certain or determinable at the time of the perfection of
the contract
4. Manner of payment must be agreed upon
(a) Existence of Price, not simulated
- Price must be true and not fictitious
- If the parties do not intend that a price be paid, the
price is simulated
Simulated Price the price is simulated if the buyer has
no intention to pay the price, while the seller has no
expectation to receive it
- 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
False Price when the one appearing in the deed of sale
is different from the price agreed upon by the parties
SALES|MIDTERMS |6
- false price in the contract will not make the sale void
if the contract should proved that it was founded
upon another cause which is true and lawful
- if the minds of the vendor and the vendee met upon
a true price but they merely concealed their true
agreement by providing a different price, the contract
of sale is still valid, and the vendor and vendee are
still bound by their true agreement
- probable reasons for the concealment of the agreed
price: 1. To evade the payment of higher taxes; 2.
Reduce the costs of transfer and registration
Gross Inadequacy
GR: gross inadequacy of price in a contract of sale does
not affect its validity
XPN: 1. It indicates a defect in the consent (sale is
voidable)
XPN: 2. It indicates that the parties really intended a
donation or some other act or contract (contract is no
longer sale but another form of a valid contract)
XPN: 3. Purely shocking to the conscience (may be
declared null and void for lack or absence of consent)
Rescissible Contracts of Sale Due to Inadequacy of
the Price (Art. 1381 (1) & (2))
1. entered by guardian whenever their wards suffer
lesion by more that ¼ of the value of the thing
2. those agreed upon in representation of absentees, if
the latter suffer the lesion by more than ¼ of the
value of the thing
Non-payment of the price does not make the contract
of sale null and void for lack of consideration, nor does it
render ineffective the obligation to deliver, it only creates
a right to demand payment, or to rescind the contract, or
in criminal prosecution, in case of bouncing checks
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Art. 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 special 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 not in fault may have such remedies against
the party in fault as are allowed the seller or the buyer, as the case may be.
Art. 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.
Art. 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.
Art. 1353. The statement of a false cause in contracts shall render them void, if it
should not be proved that they were founded upon another cause which is true and
lawful.
Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists
and is lawful, unless the debtor proves the contrary.
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not
invalidate a contract, unless there has been fraud, mistake or undue influence.
 Ong v. Ong
Although the cause is not stated in the contract, it is
presumed that it is existing unless the debtor proves the
contrary. There is a legal presumption of sufficient cause
or consideration supporting a contract even such cause is
not stated
RMGDC 2018

 Bagnas v. CA
1 peso plus unspecified and unquantified services for
consideration of a real estate worth of P10,500, are
notoriously low, indicators of actual value plainly and
unquestionably demonstrates that they state a false and
fictitious consideration, and no other true and lawful cause
having been shown, the deed, purports to be sale, are void
ab initio
(b) Certain or ascertainable
- Certain expressed and agreed in term of specific
pesos and/or centavos
- Ascertainable 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/s
- Effect: GR: if the price cannot be determined, the
contract in inefficacious
XPN: if the thing or any part thereof has been
delivered to and appropriated by the buyer he must
pay a reasonable price therefor
o If the parties cannot agree on the certain (c)
price, the court must come to an equitable
decision as to how much the reasonable
price after considering the circumstance
- By contracting parties
GR: contracting parties must both determine and
agree on the price
XPN: when one party fixes the price, and the other
accepted it
- By third persons contracting parties may agree that
the determination of the price be left to the judgment
of a special person
Rules:
1. GR: the price determined and fixed by the
designated 3rd person is binding upon the
contracting parties
XPN: designated person acted in bad faith or by
mistake in his determination
2. GR: designated person/s be unable or unwilling
to fix it, the contract shall be inefficacious
XPN: parties subsequently agree upon the price (d)
3. Where such 3rd person/s are prevented from
fixing the price or terms by fault of the seller or
the buyer, party not in fault may have such
remedies against the party in fault
- By the courts 3rd person/s designated by the
contracting parties to determine and fix the purchase
process acted in bad faith or by mistake in the
determination thereof, the courts may fix the price
- By reference 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 exchange or market, Art. 1245. Dation in payment, whereby property is alienated to the creditor in
satisfaction of a debt in money, shall be governed by the law of sales.
provided said amount be certain Art. 1468. If the consideration of the contract consists partly in money, and partly in
Art. 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 exchange or market, provided said amount
be certain.
SALES|MIDTERMS |7
Art. 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.
Art. 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon the
will of a third person, the obligation shall take effect in conformity with the provisions
of this Code.
Art. 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 therefor. What is a reasonable price is a question of fact dependent
on the circumstances of each particular case.
Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for future fraud is void.
 Tan Tiah v. Yu Jose
The price of the leased land no having been fixed (the
stipulation being: reimbursing 90% of the original net cost
of the construction) and the lessor not having bound
himself to sell it, the essential elements which give life to
the contract are lacking it. It follows that the lessee cannot
compel the lessor to sell the leased land to lessee
Manner of payment
 Velasco v. CA
Velasco admitted that he shall meet with the respondent
and agree on how and when the downpayment and the
installments were to be paid. As such, cannot be said that
there is already perfected sale
Definite agreement on the manner of payment of the
purchase price is an essential element in the formation of
a binding and enforceable contract of sale.
 Toyota Shaw v. CA
Toyota expects fullpayment from Sosa or from BA
Finance, while Sosa expects to pay in installments. Hence,
no meeting of the minds of the parties as to manner of
payment
Payable in money or its equivalent
- GR: all monetary obligations shall be settled in
Philippine currency which is the legal tender in the
Philippines
XPN: the parties may agree that the obligations or
transactions shall be settled in any other currency at
the time of payment
- “or its equivalent” when used in the context of
payment and sale transaction, any other means of
exchange authorized by law, usage or trade to be a
substitute for money which include, negotiable
instruments, money orders, stored value products,
barter, bonds, dacion en pago
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.
RMGDC 2018

 Republic v. Phil Resources Dev
Art. 1458 provides that the purchaser may pay “a price
certain in money or its equivalent” it meant of the price
need not be in money. Whether the “G.I. sheets, M.S.
plates, round bars, and G.I. pipes” claimed by Philippine
Resource Development belonging and delivered to the
Bureau of Prisons, in payment of Apostol’s account, is
sufficient payment
Option money v. Earnest money
Earnest Money Option Money
Part of the purchase price Money given as a distinct
consideration for an option
contract
Given only when there is only Sale not yet perfected
already a sale
Buyer bound to pay the balance Buyer not required to buy, may
even forfeit it depending on the
terms of the option
Art. 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.
 Ang Limson v. CA
Option Contract! There is a stipulation of “10-day option to
purchase the property”, the payment given was not a
purchase price rather an option money, an option period is
not converted into a bilateral promise to buy and sell
Effect of failure
GR: where the price cannot be determined, contract is inefficacious
XPN: if there is partial performance, not inefficacious
PARTIES TO A CONTRACT OF SALE
GR: all persons, whether natural or juridical, who can bind themselves
have of the legal capacity to buy or sell
Natural Persons age of majority
Juridical Persons a juridical personality separate, and distinct from
that of the shareholders, partners or members is expressly recognized
by law, with full juridical capacity and capacity to act to such juridical
persons to obligate themselves and enter into a valid contract.
Capacity to act supposed to attach to a person who has not previously
been declared as incapable and such capacity is presumed to continue
so long as the contrary be not proved
- Essential element of a contract
- Indispensable requisite of a consent
Incapacitated to enter into a contract:
1. Absolute Incapacity their personality is restricted; these
persons cannot enter into a contract by themselves, but only
through their legal representatives. XPN: for necessaries
delivered to them, they are obliged to pay a reasonable price
(Art. 1489)
“Necessaries” not limited to basic needs but also extended
support under Art. 194 of the Family Code
- Sale by minors
- Insane or demented persons
- Deaf-mutes who do not know how to write
SALES|MIDTERMS |8
2. Relative Incapacity an incapacity by reason of the parties’
relation to each other or their relation to the thing which is the
object of the sale
- Contracts with third parties
- Sale between spouses, common law spouses
included
GR: husband and wife cannot sell property to each
other
XPN: 1. When a separation of property was agreed
upon in the marriage settlement
XPN: 2. When there has been a judicial separation
of property
3. Special Disqualification Art. 1491 prohibits certain persons,
by reason of their trust or their peculiar control over the
property, from acquiring such property in their trust or control
either directly or indirecty and “even at a public or judicial
auction”
- Guardians
- Agents
- Administrators
- Public officers and employees, judicial officers and
employees, prosecuting attorneys, and lawyers
- Other especially qualified by law
- Sale entered by the guardian, agent, executor, or
administrator with respect to the property entrusted
to them is VOID, which may be cured through
execution of new contract of sale when the cause of
the nullity of the previous contract ceases.
o The person for interest the prohibition was
establish may only invoke prohibition, since
it is intended to protect a private interest
- The prohibition against public officer and employees
applies only with respect to the sale of the state or
government property of which administration has
been intrusted to them
o Local government official or employee is
prohibited to purchase the property forfeited
in favor of such local government unit for
unpaid taxes or assessment or by virtue of
a legal process at the instance of the said
LGU
- Forbids lawyers from acquiring by purchase or
assignment, property and rights which are the object
of any litigation in which they may take part by virtue
of their profession
o The sale or assignment is prohibited and
considered void by reason of public policy
for it undermines the fiduciary relationship
between the lawyer and his client
GR: prohibition applies during pending of
suit
XPN: when there is a contract for
contingent fee where the transfer takes
effect only after the finality of a favorable
judgment
- The status of the contract of sale entered into by
public officers and employees, by judges, justices,
fiscals, and lawyers are “inexistent and void from
the beginning”
- Other person who are specially disqualified by
law aliens to acquire private lands, although may be
a lessee of private lands
- The prohibitions are applicable to: sales in legal
redemption, compromises, renunciations, and to
become lessee of the thing
RMGDC 2018

- Effects:
Art. 1491- null and void
Sale between spouses- void
Absolute incapacity- voidable
Both incapacitated to enter into a contract of sale-
unenforceable or voidable
Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is
inherent in every natural person and is lost only through death. Capacity to act, which
is the power to do acts with legal effect, is acquired and may be lost.
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.
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.
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.
Art. 1492. The prohibitions in the two preceding articles are applicable to sales in
legal redemption, compromises and renunciations.
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created
by law; their personality begins as soon as they have been constituted according to
law;
(3) Corporations, partnerships and associations for private interest or purpose to
which the law grants a juridical personality, separate and distinct from that of each
shareholder, partner or member.
Art. 46. Juridical persons may acquire and possess property of all kinds, as well as
incur obligations and bring civil or criminal actions, in conformity with the laws and
regulations of their organization.
Art. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write.
Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed
to in a state of drunkenness or during a hypnotic spell are voidable.
Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court.
They are susceptible of ratification.
Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there
is a tacit ratification if, with knowledge of the reason which renders the contract
voidable and such reason having ceased, the person who has a right to invoke it
should execute an act which necessarily implies an intention to waive his right.
Art. 1394. Ratification may be effected by the guardian of the incapacitated person.
Art. 1395. Ratification does not require the conformity of the contracting party who
has no right to bring the action for annulment.
Art. 1396. Ratification cleanses the contract from all its defects from the moment it
was constituted.
Art. 1397. The action for the annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily. However, persons who are capable cannot
allege the incapacity of those with whom they contracted; nor can those who exerted
intimidation, violence, or undue influence, or employed fraud, or caused mistake base
their action upon these flaws of the contract.
SALES|MIDTERMS |9
Art. 1399. When the defect of the contract consists in the incapacity of one of the
parties, the incapacitated person is not obliged to make any restitution except insofar
as he has been benefited by the thing or price received by him.
Art. 194. Support comprises everything indispensable for sustenance, dwelling,
clothing, medical attendance, education and transportation, in keeping with the
financial capacity of the family.
The education of the person entitled to be supported referred to in the preceding
paragraph shall include his schooling or training for some profession, trade or
vocation, even beyond the age of majority. Transportation shall include expenses in
going to and from school, or to and from place of work.
Art. 237. The annulment or declaration of nullity of the marriage of a minor or of the
recorded agreement mentioned in the foregoing. Articles 234 and 235 shall revive the
parental authority over the minor but shall not affect acts and transactions that took
place prior to the recording of the final judgment in the Civil Register.
Art. 290. Support is everything that is indispensable for sustenance, dwelling, clothing
and medical attendance, according to the social position of the family.
Support also includes the 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. 73. Either spouse may exercise any legitimate profession, occupation, business
or activity without the consent of the other. The latter may object only on valid, serious,
and moral grounds.
In case of disagreement, the court shall decide whether or not:
(1) The objection is proper; and
(2) Benefit has occurred to the family prior to the objection or thereafter. If the benefit
accrued prior to the objection, the resulting obligation shall be enforced against the
separate property of the spouse who has not obtained consent.
The foregoing provisions shall not prejudice the rights of creditors who acted in good
faith.
Art. 96. The administration and enjoyment of the community property shall belong to
both spouses jointly. In case of disagreement, the husband's decision shall prevail,
subject to recourse to the court by the wife for proper remedy, which must be availed
of within five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the common properties, the other spouse may assume sole powers
of administration. These powers do not include disposition or encumbrance without
authority of the court or the written consent of the other spouse. In the absence of
such authority or consent, the disposition or encumbrance shall be void. However,
the transaction shall be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.
Art. 133. Every donation between the spouses during the marriage shall be void. This
prohibition does not apply when the donation takes effect after the death of the donor.
Neither does this prohibition apply to moderate gifts which the spouses may give each
other on the occasion of any family rejoicing.
 Lagabala v. Santiago
Lagabala was only a minor when the contract of sale have
been contracted, hence, she could not give her consent to
the contract. If no capacity to give consent, hence, no
contract of sale, no valid contract; she also admitted that it
did not pay any centavo for the property, hence, sale is
void.
 Calimlim-Canullas v. Fortun
The sale is null and void because it was a contract of sale
against moral and public in which the husband sold the
conjugal property in favor of his concubine after
abandoning his family
 Maharlika Pub. Corp v. Tagle
The sale of foreclosed property to Tagle’s spouse is void
because Tagle (husband) is a public official of GSIS which
is in possession of the foreclosed property, which his wife
was awarded of the property from bidding. Even though his
wife was the purchaser he is indirectly participant of the
sale
RMGDC 2018

 Director of Land v. Ababa
What is prohibited is the transfer of property between
lawyer and client “during pendency” of the litigation,
prohibition does not apply to cases after the completion of
the litigation, and when the lawyers accepts on account of
his fees
 Philippine Trust Co. v. Roldan
1 week only had lapse between the sale of the brother-in-
law of the guardian and the ward and the sale between the
brother-in-law and the guardian. The ward is losing ends
for the purported sale did not really benefited from it
because there was a gross inadequacy on the purchase
price for 7 parcels of land
 Rubias v. Batiller
The land was sold to Rubias when the case is still pending
in the CA and Rubias was the counsel on record, the
counsel cannot acquire property under litigation of his
client
 Macariola v. Asuncion
When the judge bought the lots it was when the partition
had attained finality, not when it was under litigation in his
sala. And he bought the land not from the heirs but rather
from Dr. Galapon which the buyer of the heirs, and the sale
between Dr. Galapon and Judge had taken place 1 year
after the decision had attained the finality
FORMATION OF THE CONTRACT OF SALE
Stages in the life of a Contract of Sale
1. Negotiation
2. Perfection
3. Consummation occurs when the parties fulfill or perform the
terms agreed upon, culminating in the extinguishment
- Occurs upon the constructive or actual delivery of the
determinate thing, to the buyer, and the transfer of
the ownership to the latter, and the payment of the
purchase price to the seller
GR: contract of sale is perfected by mere consent of the parties
XPN: when the perfection is subject to a suspensive condition
(a) Preparatory or Negotiation
- Begins from the time the prospective contracting
parties indicate their interest in the contract and ends
at the moment of their agreement
- During this stage, one of them floats an offer to buy
or to sell a determinate thing for a price certain, while
the other will give his acceptance
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
 OFFER
- Offer must be certain
- Acceptance must be absolute
S A L E S | M I D T E R M S | 10
- the offer must be certain and definite with
respect to the cause or consideration and object
of the proposed contract
- the acceptance of this offer, express or implied,
must be unmistakable, unqualified, and identical
in all respects to the offer
Form of offer
Rules:
1. person making the offer may fix the time, place
and manner of acceptance, which must be
complied
2. GR: business advertisements of the things for
sale are not definite offers, but mere invitation
to make an offer
3. GR: advertisements for bidders are simply
invitation to make proposals, and the advertiser
is not bound to accept the highest or lowest
bidder
Offer becomes Ineffective upon death, civil
interdiction, insanity, insolvency of either party before
acceptance is conveyed
Rules when Offeror’s may withdraw his Offer:
1. Offeror may withdraw his offer at any time even
without communicating such withdrawal to the
offeree
2. When the offeror has allowed the offeree a
certain period to accept. He may withdraw his
offer at any time before its acceptance by the
offeree, by communicating such withdrawal
3. When there has been an acceptance already,
the offeror may still withdraw his offer at any time
before the acceptance is made known to him by
the offeree, by communicating such withdrawal
to the latter
Form of Acceptance
Rules:
1. Acceptance may be express or implied
2. Express acceptance: definitive “yes”, affixing
of the signature to the written document
Implied acceptance: inferred from the
contemporaneous and subsequent acts of the
contracting parties
3. Acceptance through a letter or telegram does
not bind the offeror except from the time it came
to his knowledge “cognition theory”, it is
presumed to have been entered into in the place
where the offer was made
4. Acceptance of an offer made through an
agent accepted from the time acceptance is
communicated to him (Art. 1322)
5. Acceptance on behalf of the corporation
must be made by authorized officer
6. Acceptance within the prescribed period or
reasonable time
GR: offeror is not bound by the acceptance of
his offer
XPN: offeree makes his acceptance known to
the offeror within the time prescribed for his
acceptance, if no period, within reasonable time
Vices vitiating consent when bilateral contracts are
vitiated with vices of consent, they are rendered
VOIDABLE.
- Acts that vitiate consent: mistake, violence,
intimidation, undue influence, or fraud
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 S A L E S | M I D T E R M S | 11

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds Elements of a Valid Option Contract
upon the thing which is the object of the contract and upon the price. 1. Consent meeting of the minds of the optioner
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. and the optionee
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon -concurrence between the offer and the
the thing and the cause which are to constitute the contract. The offer must be certain acceptance upon the subject matter, and
and the acceptance absolute. A qualified acceptance constitutes a counter-offer. consideration, the option contract is produced
Acceptance made by telegram does not bind the offerer except from the time it came 2. Subject Matter the option right, or the privilege
to his knowledge. The contract, in such case, is presumed to have been entered into
the place where the offer was made. to buy or se;; a specified determinate thing for a
Art. 1325. Unless it appears otherwise, business advertisements of things for sale price certain within a fixed period
are not definite offers, but mere invitations to make an offer. 3. Consideration granting the privilege must be
Art. 1326. Advertisements for bidders are simply invitations to make proposals, and supported by consideration which is separate
the advertiser is not bound to accept the highest or lowest bidder, unless the contrary and distinct from the purchase price
appears.
Art. 1330. A contract where consent is given through mistake, violence, intimidation, Rules:
undue influence, or fraud is voidable. 1. If the option is without any consideration, the
Art. 1331. In order that mistake may invalidate consent, it should refer to the offeror may withdraw his offer by communicating
substance of the thing which is the object of the contract, or to those conditions which such withdrawal to the offeree at anytime before
have principally moved one or both parties to enter into the contract. acceptance
Mistake as to the identity or qualifications of one of the parties will vitiate consent only
when such identity or qualifications have been the principal cause of the contract. If founded upon a consideration, the offeror cannot
A simple mistake of account shall give rise to its correction. withdraw his offer before the lapse of the period
Art. 1332. When one of the parties is unable to read, or if the contract is in a language agreed upon
not understood by him, and mistake or fraud is alleged, the person enforcing the 2. The option money or consideration given by
contract must show that the terms thereof have been fully explained to the former. optionee is separate and distinct from the
Art. 1333. There is no mistake if the party alleging it knew the doubt, contingency or
risk affecting the object of the contract. purchase price
Art. 1334. Mutual error as to the legal effect of an agreement when the real purpose 3. Until acceptance is made, the option contract
of the parties is frustrated, may vitiate consent. does not vest, or transfer any title to or any
Art. 1338. There is fraud when, through insidious words or machinations of one of the interest or right in the object
contracting parties, the other is induced to enter into a contract which, without them, 4. The optionee has to decide whether to buy or
he would not have agreed to.
Art. 1390. The following contracts are voidable or annullable, even though there may not, and has no obligation to make any payment
have been no damage to the contracting parties: 5. option contract is a sale of the right or privilege
(1) Those where one of the parties is incapable of giving consent to a contract; purchase
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue 6. The obligation to sell of the owner of the
influence or fraud. determinate thing arises the moment the
These contracts are binding, unless they are annulled by a proper action in court.
They are susceptible of ratification. optionee makes his decision to buy, or makes
his acceptance of the offer to sell known to the
 Villonco v. Bormaheco owner
Art. 1324. When the offerer has allowed the offeree a certain period to accept, the
It’s true that an acceptance may contain a request for offer may be withdrawn at any time before acceptance by communicating such
certain changes in the terms of the offer and yet be binding withdrawal, except when the option is founded upon a consideration, as something
acceptance so long as it’s clear that the meaning of the paid or promised.
acceptance is positively and unequivocally to accept offer,
whether such request is granted or not, a contract is  De la Cavada v.Diaz
formed
No incompatibility with the offer and the counter-offer Option Contract: present
because both was accepted Consideration: application for Torrens System
Enriquez complied with the consideration, however, Diaz,
 Zayco v. Serra refused to give all the hacienda to Enriquez (which is the
option right), only want to give portion of the land
The acceptance made by Zayco was not an acceptance
formed in their agreement, because, Zayco created a new  Carcellar v. CA
offer, however, Serra did not acceded with the new offer of
Zayco Can still exercise the option to buy even there is lapse of
18 days, because there is both intent on the parties to buy
Counter-offer is not acceptance, because it had new sets and sell the property. The request for an extension of the
of conditions from the previous offer 6 months in a form of letter to generate funds is an intent
to exercise the option to buy
 OPTION CONTRACT
- Second paragraph of Art. 1479 consists of An option is preparatory contract in which one party grants
unilateral promise that creates a mere to the other, for a fixed period and under specified
entitlement, right, or privilege on the part of the conditions, the power to decide, whether or not to enter
other person to whom the promised is given to into a principal contract. It binds the party who has given
buy the property at a definite price within a fixed the option, not to enter into the principal contract with any
period other person during the period designated and, within that
- Although an option contract is just a preparatory period, to enter into such contract with the one to whom
contract to a contract of sale, it is still and the option was granted, if the latter should deciude to use
independent contract the option. It is a separate agreement distinct from the

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contract which the parties may enter into upon the
consummation of the option
 JMA House Inc. v. Sta. Monica Industrial and Development
Did not exercise the option to buy by notifying Sta. Monica
or by paying the 3.5% additional installment per month as
notification of agreeing to option to buy
Option Contract: present
Consideration: 3.5% per month
Elements of option contract
1. Offer to sell, which does not become a contract until
accepted
2. The completed contract to lease the offer for a
specified time
 Villamor v. CA
No valid option contract for lack of consideration
Consideration is "the why of the contracts, the essential
reason which moves the contracting parties to enter into
the contract." The cause or the impelling reason on the part
of private respondent executing the deed of option as
appearing in the deed itself is the petitioner's having
agreed to buy the 300 square meter portion of private
respondents' land at P70.00 per square meter "which was
greatly higher than the actual reasonable prevailing price."
 RIGHT OF FIRST REFUSAL
- Form right of first refusal need not be written to
be enforceable and may be proven by oral
evidence
- Legal Effect the grantor of the right of first
refusal may not sell to a third person his
determinate thing without first offering to sell it to
the grantee
- Right of first refusal gives the
grantee the privilege to be offered
first of the determinate once the
grantor decides to sell it , only after
the grantee has failed to exercise
his right of first priority could the
grantor sell the property to other
buyers under the same terms and
conditions offered to the grantee
- Consideration based on the reciprocal
obligations of the parties
- Effects of the Violation while valid, is
rescissible, and such violation is enforceable
through an action for specific performance
Option Contract Right of First Refusal
The owner of the property It is a contractual grant, not of
agrees with another person that the sale of a property, but of the
the latter shall have the right to first priority to buy the property in
buy the former’s property at a the event the owner sells the
fixed price within a certain time same
2 essential elements: No essential elements
1. Option granted to the
offeree is for a fixed
period
2. Determined price
S A L E S | M I D T E R M S | 12
Need for separate and distinct No need
consideration
Independent contract Built-in on principal contract
Has definite period where the No definite period, can be only
optioner can exercise the right exercised when the grantor
grants the same
 Equitorial Realty v. Mayfair
Right of first refusal is incorporated into the contract of
lease for the benefit of lessee, that it shall be given the first
crack or first option to buy the property at the price which
Carmelo(lessor) is willing to accept
Since Mayfair had the right of first refusal, the fraudulent
sale can be rescinded
Right of first refusal is violated, remedy: conveyance to
Carmelo and cancellation of the sale
 Paranaque Kings v. CA
The basis of the right of first refusal must be the current
offer to sell to any prospective buyer. Only after the grantee
fails to exercise the right under the same terms and within
the period contemplated, could the owner validly offer to
sell to a 3rd person, with the same terms as offered to
grantee
 Ang Yu Asuncion v. CA
If there is a breach of right of first refusal, the remedy is
damages, and not the writ of execution.
In a right of first refusal, while the object might be made
determinate, the exercise of the right, however, would be
dependent not only on the grantor's eventual intention to
enter into a binding juridical relation with another but also
on terms, including the price, that obviously are yet to be
later firmed up.
 Rosencor v. Inquing
Right of first refusal does not within the purview of Statute
of Frauds, the right made only orally, since it is made oral,
no constructive notice to the new buyer, hence, he was
buyer in good faith. Rescission is only granted when there
is bad faith to exclude the right of first refusal
 Mutual Promise to Buy and Sell
- First paragraph of Art. 1479 consists of mutual
promises that create an executory bilateral
agreement that contemplates reciprocity of
obligations
- It consist of mutual promises, made by the one
who is willing to sell and the other who is willing
to buy
- The mutual promises creates an executory
bilateral agreement that contemplates the
reciprocity of obligations vis-à-vis enforceable
rights
(b) Perfection of Contract
- takes place when the parties agree upon all the
essential elements of the contract
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- GR: contract of sale is perfected by mere consent of
the parties
XPN: when the perfection is subject to a suspensive
condition
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
 EFFECT OF PERFECTION
- from the moment that the contract of sale is
perfected, the parties may reciprocally demand
performance subject to the law governing the
form of contracts
- contract of sale becomes an independent
source of obligation and serves as a binding
juridical relation between the parties
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
Art. 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.
 Ortega v. Leonardo
The relinquishment, survey and tender of payment
effected as a partial performance. Art 1475, 2nd paragraph,
there is a meeting of the minds upon the partial
performance. Hence, by having a perfected contract,
Ortega can reciprocally demand of specific performance to
Leonardo
 PLACE OF PERFECTION
- The place of perfection is where the offer is
made (Art. 1319, 2nd paragraph)
 EXPENSES OF EXECUTION AND
REGISTRATION
- GR: expenses for execution and registration of
the sale shall be borne by the vendor
 SPECIAL SALES
Sale by auction is perfected when the
auctioneer announces its perfection by the fall of
the hammer, or in other customary manner
- “other customary manner”
includes the drop of the gavel,
shouting the term “sold” while
pointing the highest bidder, or the
announcement of the highest
bidder without the fall of the
hammer
- GR: in sale of auction without reserve, the owner
or auctioneer cannot withdraw the goods from
the sale after the auctioneer has called for bids
XPN: when no bids is made within a reasonable
period of time
- “caveat emptor” buyer beware, is applicable
in sale by auction; the highest bidder-buyer
takes the risk regarding the fitness or quality of
the property purchased XPN: when there is a
warranty or stipulation
Sale by sample or description
Rules on sales by sample: (also applicable to
sale by description)
S A L E S | M I D T E R M S | 13
1. The goods must correspond with the
sample in quality (or description)
2. The buyer must have a reasonable
opportunity of comparing the bulk with the
sample (or description)
3. The goods shall be free from any defect
which is not apparent on the reasonable
examination of the sample and which
would render the goods unmerchantable
- Sale by description may exist regardless of
whether the buyer has seen or not seen the
goods, as long as the buyer buys them on the
basis of the description given by the seller
Leases with option to buy conditions to be
present for applying Art. 1485:
1. Contract purports to be a lease of personal
property with option to buy
2. Lessor has deprived the lessee of
possession or enjoyment of the thing
Expropriation of Property power of eminent
domain of the state
- Special laws are: RA 8974 “An act to facilitate the
acquisition of right-of-way, site, location for national
government infrastructure projects anf for other
purposes” and RA 7160, Sec. 19 “Local Government
Code” under eminent domain.
Art. 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 or on behalf of the seller, unless
otherwise provided by law or by stipulation.
(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 his behalf or for the auctioneer, to employ
or induce any person to bid at such sale on behalf of the seller or knowingly to take
any bid from the seller or any person employed by him. Any sale contravening this
rule may be treated as fraudulent by the buyer.
Art. 1481. In the contract of sale 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 description, it
is not sufficient that the bulk of goods correspond with the sample if they do not also
correspond with the description.
Art. 1565. In the case of a contract of sale by sample, if the seller is a dealer in goods
of that kind, there is an implied warranty that the goods shall be free from any defect
rendering them unmerchantable which would not be apparent on reasonable
examination of the sample.
Art. 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.
Art. 1486. In the case 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 not be unconscionable under the circumstances.
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.
FORMALITIES OF THE CONTRACT
Formation of the contract
GR: No form is required for the validity of a contract of sale as long as
all its essential elements are present (it may be orally, in writing, partly
in writing and partly by word of mouth, or may be inferred from the
conduct of the parties)
XPN: 1. Sale transaction under Statute of Frauds
XPN: 2. Sale that is required by law to be in a specific form in order to
be valid
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Effect of not complying with the required formalities:
1. Instrument still valid and binding between the contracting
parties but not against the 3rd persons
2. The essence of the formalities in convenience and not
essential to validity and enforceability
Statute of Frauds purpose of Statute of Frauds to prevent and not to
protect fraud
- the form required in Statute of Frauds is for
convenience or evidentiary purposes only
- simply provides the method by which the contracts
may be proved, but it does not declare them invalid
because they are not reduce to writing, they can be
proved by evidence of agreement or secondary
evidence of its contents
- the objection on the admissibility of evidence on the
basis of the Statute of Frauds may be waived if not
timely raised
- Statute of Frauds applies only to executory contracts
Required by law to be in a Specific Form in order to be valid:
1. Sale of an immovable property through an agent
- the contract of agency oral, however, the authority to
sell by the agent should be written, for the validity of
the sale of a piece of land or interest, otherwise it is
void
2. Sale of large cattle
- The transfer of ownership of large cattle from the
owner-seller to the buyer requires registration of
such transfer before the municipal treasurer in order
to be valid, because a mere oral sale of large cattle
cannot be recorded and registered
Art. 1356. Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form in order that it may
be valid or enforceable, or that a contract be proved in a certain way, that requirement
is absolute and indispensable. In such cases, the right of the parties stated in the
following article cannot be exercised.
Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article, the contracting parties may compel each
other to observe that form, once the contract has been perfected. This right may be
exercised simultaneously with the action upon the contract.
Art. 1358. The following must appear in a public document:
(1) Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property; sales of real
property or of an interest therein are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the
conjugal partnership of gains;
(3) The power to administer property, or any other power which has for its object an
act appearing or which should appear in a public document, or should prejudice a
third person;
(4) The cession of actions or rights proceeding from an act appearing in a public
document.
All other contracts where the amount involved exceeds five hundred pesos must
appear in writing, even a private one. But sales of goods, chattels or things in action
are governed by articles, 1403, No. 2 and 1405.
Art. 1874. When a sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void.
Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum, thereof, be in writing, and subscribed
by the party charged, or by his agent; evidence, therefore, of the agreement cannot
be received without the writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from the making
thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to
marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price not less
than five hundred pesos, unless the buyer accept and receive part of such goods and
S A L E S | M I D T E R M S | 14
chattels, or the evidences, or some of them, of such things in action or pay at the time
some part of the purchase money; but when a sale is made by auction and entry is
made by the auctioneer in his sales book, at the time of the sale, of the amount and
kind of property sold, terms of sale, price, names of the purchasers and person on
whose account the sale is made, it is a sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the sale of
real property or of an interest therein;
( f ) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of article
1403, are ratified by the failure to object to the presentation of oral evidence to prove
the same, or by the acceptance of benefit under them.
 Dalion v. CA
Form is needed for convenience and not for enforceability.
Art. 1358, the necessity of a public document is only for
convenience, and not for validity or enforceability. It is not
requirement for the validity of a contract of sale of a parcel
of land that is should be embodied in a public instrument
 City Lite v. CA
The authority to sell is not in writing, hence the sale is void,
and because the sale of immovable property is an act of
strict dominion, needs special power of attorney, however,
what they only have is general power, which only allows
administrative acts only
 Inigo v. Maloto
Statute of Frauds applies in executory contracts, and not
in partial performance
 Paredes v. Espino
The letters of the telegram by the seller and the buyer
constitutes as written memorandum, which happen to have
all the essential elements of a contract of sale, hence, the
Statute of Frauds cannot be invoked since the secondary
evidence was in writing, even though the contract itself is
not.
 Claudel v. CA
Under Statute of Frauds, the contract of sale should be in
writing to enforce against of 3rd persons, the claimant
cannot prove any sale to claim against the heirs (3 rd
persons), hence, has no means to enforce the contract
Electronic Commerce Act RA 8792 Sec. 7, 8 and 11
Sec. 7. Legal Recognition of Electronic Documents - Electronic documents shall have
the legal effect, validity or enforceability as any other document or legal writing, and -
(a) Where the law requires a document to be in writing, that requirement is met by an
electronic document if the said electronic document maintains its integrity and
reliability and can be authenticated so as to be usable for subsequent reference, in
that -
i. The electronic document has remained complete and unaltered, apart from the
addition of any endorsement and any authorized change, or any change which arises
in the normal course of communication, storage and display; and
ii. The electronic document is reliable in the light of the purpose for which it was
generated and in the light of all relevant circumstances.
(b) Paragraph (a) applies whether the requirement therein is in the form of an
obligation or whether the law simply provides consequences for the document not
being presented or retained in its original from.
(c) Where the law requires that a document be presented or retained in its original
form, that requirement is met by an electronic document if -
i. There exists a reliable assurance as to the integrity of the document from the time
when it was first generated in its final form; and
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ii. That document is capable of being displayed to the person to whom it is to be pivotal event in determining the rights and obligations
presented: Provided, That no provision of this Act shall apply to vary any and all of the parties in case of its loss
requirements of existing laws on formalities required in the execution of documents
for their validity.
- Determinate thing
For evidentiary purposes, an electronic document shall be the functional equivalent GR: if the determinate thing perishes, is lost
of a written document under existing laws. destroyed or stolen, the risk of loss is borne by the
This Act does not modify any statutory rule relating to admissibility of electronic data owner of the thing at the time of the loss ̶ res perit
massages or electronic documents, except the rules relating to authentication and domino
best evidence.
Sec. 8. Legal Recognition of Electronic Signatures. - An electronic signature on the o Res perit domino ownership is the basis
electronic document shall be equivalent to the signature of a person on a written for consideration of who bears the risk of
document if that signature is proved by showing that a prescribed procedure, not loss
alterable by the parties interested in the electronic document, existed under which - risk of loss of the determinate thing due to
(a) A method is used to identify the party sought to be bound and to indicate said fortuitous event is transferred from the
party's access to the electronic document necessary for his consent or approval
through the electronic signature; seller to the buyer at the time of delivery
(b) Said method is reliable and appropriate for the purpose for which the electronic - Generic thing generic obligation is not extinguished
document was generated or communicated, in the light of all circumstances, including by the loss or destruction of a thing that belongs to a
any relevant agreement; particular genus or class
(c) It is necessary for the party sought to be bound, in or order to proceed further with o Genus nunquan perit a genus of thing can
the transaction, to have executed or provided the electronic signature; and
(d) The other party is authorized and enabled to verify the electronic signature and to never perish
make the decision to proceed with the transaction authenticated by the same. Loss of the determinate thing in the different stages of a sale
Sec, 11. Authentication of Electronic Data Messages and Electronic Documents. - transaction
Until the Supreme Court by appropriate rules shall have so provided, electronic - Before perfection of the contract of sale seller is
documents, electronic data messages and electronic signatures, shall be liable; because it still owns the determinate thing
authenticated by demonstrating, substantiating and validating a claimed identity of a
user, device, or another entity is an information or communication system, among during negotiation
other ways, as follows; - At the time of perfection
(a) The electronic signature shall be authenticated by proof than a letter, character, if loss of the thing ENTIRETY, without effect
number or other symbol in electronic form representing the persons named in and if loss of the thing PARTLY, buyer may:
attached to or logically associated with an electronic data message, electronic 1. Withdraw from the contract
document, or that the appropriate methodology or security procedures, when
applicable, were employed or adopted by such person, with the intention of 2. Demand the remaining part and pay a
authenticating or approving in an electronic data message or electronic document; proportionate price
(b) The electronic data message or electronic document shall be authenticated by - After perfection but before the delivery
proof that an appropriate security procedure, when applicable was adopted and GR: the stipulation of the parties, in absence of
employed for the purpose of verifying the originator of an electronic data message stipulation, then the party at fault shall be liable
and/or electronic document, or detecting error or alteration in the communication,
content or storage of an electronic document or electronic data message from a o if the loss or destruction of the thing is due
specific point, which, using algorithm or codes, identifying words or numbers, to fortuitous event, GR: buyer bears the risk
encryptions, answers back or acknowledgement procedures, or similar security of loss
devices. XPN: 1. in case of fungible things be sold
The Supreme Court may adopt such other authentication procedures, including the for a price accodring to weight, number, or
use of electronic notarization systems as necessary and advisable, as well as the
certificate of authentication on printed or hard copies of the electronic document or measure; and 2. in case of generic thing,
electronic data messages by electronic notaries, service providers and other duly seller bears the risk of loss
recognized or appointed certification authorities. - After the delivery
The person seeking to introduce an electronic data message or electronic document 1. buyer bears the risk of loss
in any legal proceeding has the burden of proving its authenticity by evidence capable 2. seller bears the risk of loss despite transfer of
of supporting a finding that the electronic data message or electronic document is
what the person claims it be. ownership to the buyer
In the absence of evidence to the contrary, the integrity of the information and o actual and physical delivery is delayed
communication system in which an electronic data message or electronic document through the fault of the seller
is recorded or stored may be established in any legal proceeding - o loss of the thing sold with hidden defaults or
a.) By evidence that at all material times the information and communication system defects
or other similar device was operating in a manner that did not affect the integrity of
the electronic data message and/or electronic document, and there are no other
reasonable grounds to doubt the integrity of the information and communication Art. 1480. Any injury to or benefit from the thing sold, after the contract has been
system, perfected, from the moment of the perfection of the contract to the time of delivery,
b.) By showing that the electronic data message and/or electronic document was shall be governed by Articles 1163 to 1165, and 1262.
recorded or stored by a party to the This rule shall apply to the sale of fungible things, made independently and for a single
c.) By showing that the electronic data message and/or electronic document was price, or without consideration of their weight, number, or measure.
recorded or stored in the usual and ordinary course of business by a person who is Should fungible things be sold for a price fixed according to weight, number, or
not a party to the proceedings and who did not act under the control of the party using measure, the risk shall not be imputed to the vendee until they have been weighed,
the record. counted, or measured and delivered, unless the latter has incurred in delay.
Art. 1163. Every person obliged to give something is also obliged to take care of it
with the proper diligence of a good father of a family, unless the law or the stipulation
RISK OF LOSS of the parties requires another standard of care.
Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation
LOSS the thing is lost when it perishes, goes out of commerce, or to deliver it arises. However, he shall acquire no real right over it until the same has
disappears in such a way that its existence is unknown or it cannot be been delivered to him.
recovered. 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.
Risk of loss determines who is liable for the thing if it perishes, is lost, If the thing is indeterminate or generic, he may ask that the obligation be complied
destroyed or stolen with at the expense of the debtor.
- risk of loss is transferred when the ownership of the If the obligor delays, or has promised to deliver the same thing to two or more persons
determinate thing is transferred through delivery, it is who do not have the same interest, he shall be responsible for any fortuitous event
until he has effected the delivery.

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Art. 1262. An obligation which consists in the delivery of a determinate thing shall be Art. 1537. The vendor is bound to deliver the thing sold and its accessions and
extinguished if it should be lost or destroyed without the fault of the debtor, and before accessories in the condition in which they were upon the perfection of the contract.
he has incurred in delay. All the fruits shall pertain to the vendee from the day on which the contract was
When by law or stipulation, the obligor is liable even for fortuitous events, the loss of perfected.
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  Chrysler Philippines v. CA
risk.
Art. 1263. In an obligation to deliver a generic thing, the loss or destruction of anything
of the same kind does not extinguish the obligation. (n) Where thing is less than quality of the agreed, the buyer
Art. 1189. When the conditions have been imposed with the intention of suspending can deny transfer of ownership
the efficacy of an obligation to give, the following rules shall be observed in case of
the improvement, loss or deterioration of the thing during the pendency of the Where the seller delivers to the buyer a quantity of goods
condition:
less than he contracted to sell, buyer may reject them.
(1) If the thing is lost without the fault of the debtor, the obligation shall be
extinguished; General rule, before the delivery, the risk of loss is home
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay by the seller who is still the owner, “res perit domino”
damages; it is understood that the 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  Norkis Distributors v. CA
recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be
The absence pf an express assumption of risk by the
borne by the creditor; buyer, the thing sold remains at seller’s risk until the
(4) If it deteriorates through the fault of the debtor, the creditor may choose between ownership is transferred to the buyer
the rescission of the obligation and its fulfillment, with indemnity for damages in either
case;  Roman v. Grimalt
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the
benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that Vessel sunk in the bay during a severe storm and before
granted to the usufructuary. the owner had complied with the condition exacted by the
Art. 1493. If at the time the contract of sale is perfected, the thing which is the object proposed purchaser, hence, since Grimalt not yet being
of the contract has been entirely lost, the contract shall be without any effect. the owner, not liable for the sunken vessel
But if the thing should have been lost in part only, the vendee may choose between
withdrawing from the contract and demanding the remaining part, paying its price in
proportion to the total sum agreed upon.  Sun Bros. v. Perez
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 wholly or in a material part There was a stipulation by the parties that the loss by fire
so deteriorated in quality as to be substantially changed in character, the buyer may
or fortuitous event was expressly agreed to be borne by
at his option treat the sale:
(1) As avoided; or the buyer and that stipulation is not contrary to law and
(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, public policy
and as binding the buyer to pay the agreed price for the goods in which the ownership
will pass, if the sale was divisible. RIGHTS AND OBLIGATIONS OF THE VENDOR
Art. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but when the ownership therein is
transferred to the buyer the goods are at the buyer's risk whether actual delivery has Principal Obligations of the Vendor
been made or not, except that: 1. Preserve the object of the sale
(1) Where delivery of the goods has been made to the buyer or to a bailee for the 2. Transfer Ownership
buyer, in pursuance of the contract and the ownership in the goods has been retained 3. Deliver
by the seller merely to secure performance by the buyer of his obligations under the
4. Warrant the Object of the sale against Eviction and Hidden
contract, the goods are at the buyer's risk from the time of such delivery;
(2) Where actual delivery has been delayed through the fault of either the buyer or Defects
seller the goods are at the risk of the party in fault.
Art. 1538. In case of loss, deterioration or improvement of the thing before its delivery, (a) Transfer ownership and title
the rules in Article 1189 shall be observed, the vendor being considered the debtor. - Art. 1459 stresses that ownership by the seller on the
Art. 1636. In the preceding articles in this Title governing the sale of goods, unless
thing sold at the time of the perfection of the contract
the context or subject matter otherwise requires:
(1) "Document of title to goods" includes any bill of lading, dock warrant, "quedan," or of sale is not an element for perfection
warehouse receipt or order for the delivery of goods, or any other document used in - what it requires is that the seller has the right to
the ordinary course of business in the sale or transfer of goods, as proof of the transfer ownership at the time the thing sold is
possession or control of the goods, or authorizing or purporting to authorize the delivered
possessor of the document to transfer or receive, either by endorsement or by Ownership is transferred upon Delivery
delivery, goods represented by such document.
"Goods" includes all chattels personal but not things in action or money of legal tender GR: ownership of the thing sold is transferred to the
in the Philippines. The term includes growing fruits or crops. vendee upon delivery
"Order" relating to documents of title means an order by endorsement on the Sale by person not the owner
documents. GR: a seller without title cannot transfer a better title than
"Quality of goods" includes their state or condition.
he has, thus, buyer acquires no better title to the goods
"Specific goods" means goods identified and agreed upon at the time a contract of
sale is made. than the seller had
An antecedent or pre-existing claim, whether for money or not, constitutes "value" o “nemo quad non habet” no one can give
where goods or documents of title are taken either in satisfaction thereof or as security what one does not have
therefor. XPN: buyer can acquire title to the goods if the true owner
(2) A person is insolvent within the meaning of this Title who either has ceased to pay thereof is estopped from denying the seller’s authority to
his debts in the ordinary course of business or cannot pay his debts as they become
due, whether insolvency proceedings have been commenced or not. sell
(3) Goods are in a "deliverable state" within the meaning of this Title when they are in XPN to XPN:
such a state that the buyer would, under the contract, be bound to take delivery of 1. any factors’ act, recording law, or any other provision
them. of law enabling the apparent owner of goods to
dispose of them as if he were the true owner

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2. validity of any contract of sale under statutory power
of sale or under the order of a court of competent
jurisdiction
3. purchases made in a merchant’s store, or on fairs, or
market
Sale by one having voidable title vs. Remedy of
an owner who is unlawfully deprived of his
movable property
Art. 1506 contemplates wherein the seller has
voidable title to the goods but his title thereto has not
yet been annulled at the time of the sale, and the
subsequent buyer of the goods was in good faith (the
sale to the subsequent buyer is valid and he acquires
good title to the goods)
o were one of 2 innocent persons must suffer
by fraud perpetrated by another, the loss
upon the party who, by misplaced
confidence, has enabled the fraud to be
committed
Art. 559 contemplates one who has lost any movable
or who has been unduly deprived thereof can recover
the movable even from a possessor in good faith
XPN: possessor had acquired the movable in good
faith in public sale
- Art. 559 us not applicable when the seller of the
goods has a voidable title thereto, Art. 1506 applies
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as
warrant the thing which is the object of the sale.
Art. 1585. The buyer is deemed to have accepted the goods when he intimates to the
seller that he has accepted them, or when the goods have been delivered to him, and
he does any act in relation to them which is inconsistent with the ownership of the
seller, or when, after the lapse of a reasonable time, he retains the goods without
intimating to the seller that he has rejected them.
Art. 599. The usufructuary may claim any matured credits which form a part of the
usufruct if he has given or gives the proper security. If he has been excused from
giving security or has been able to give it, or if that given is not sufficient, he shall
need the authorization of the owner, or of the court in default thereof, to collect such
credits.
The usufructuary who has given security may use the capital he has collected in any
manner he may deem proper. The usufructuary who has not given security shall
invest the said capital at interest upon agreement with the owner; in default of such
agreement, with judicial authorization; and, in every case, with security sufficient to
preserve the integrity of the capital in usufruct.
Art. 1459. The thing must be licit and the vendor must have a right to transfer the
ownership thereof at the time it is delivered.
Art. 1505. Subject to the provisions of this Title, where goods are sold by a person
who is not the owner thereof, and who does not sell them under authority or with the
consent of the owner, the buyer acquires no better title to the goods than the seller
had, unless the owner of the goods is by his conduct precluded from denying the
seller's authority to sell.
Nothing in this Title, however, shall affect:
(1) The provisions of any factors' act, recording laws, or any other provision of law
enabling the apparent owner of goods to dispose of them as if he were the true owner
thereof;
(2) The validity of any contract of sale under statutory power of sale or under the order
of a court of competent jurisdiction;
(3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with
the Code of Commerce and special laws.
Art. 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.
Art. 1434. When a person who is not the owner of a thing sells or alienates and
delivers it, and later the seller or grantor acquires title thereto, such title passes by
operation of law to the buyer or grantee.
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Art. 1506. Where the seller of goods has a voidable title thereto, but his title has not
been avoided at the time of the sale, the buyer acquires a good title to the goods,
provided he buys them in good faith, for value, and without notice of the seller's defect
of title.
Art. 559. The possession of movable property acquired in good faith is equivalent to
a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof may recover it from the person in possession of the same.
If the possessor of a movable lost or which the owner has been unlawfully deprived,
has acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.
 Aznar v. Yapdiangco
The car was never delivered to the vendee by the vendors
as to complete or consummate the transfer of ownership
by virtue of the contract. While there was indeed contract
of sale between Marella and Santos, the vendee, took
possession of the car(subject matter) by stealing the same
while it was in the custody of the seller’s son. Hence, the
seller can rightfully reconvey the car
 De Garcia v. CA
The right of the original owner cannot be defeated even by
proof that there was good faith in the acquisition by the
possessor. Art. 559 applies because the person who was
unduly deprived of his property cannot be defeated by
possessor in good faith
 EDCA v. Santos
Actual delivery of the books having been made, even
made through deceit and fraud, Cruz acquired ownership
over the books which he could validly transfer to Santos(3rd
person). The fact that he had not paid yet to EDCA was a
matter between him and EDCA, and did not impair the title
acquired by the Santos. Art. 1506 applies because Santos
acquired good title to the goods upon checking that the
invoices of the good were named after Cruz
 Siy Cong Bieng v. HSBC
One to whom the blank negotiable receipts had been duly
negotiated acquires such title to the goods as the person
negotiating the receipt to him, or the depositor or the
person whose order the goods were delivered by term of
the receipt, either had or had ability to convey to a
purchaser in good faith for value
 Hernaez v. Hernaez
Where the true owner of property, for however short a time,
holds out another, or, with knowledge of his own right,
allows another to appear as the owner of or as having full
power of disposition over the property, the same being in
the latter's actual possession, and innocent third parties
are thus led into dealing with such apparent owner, will be
estopped from claiming otherwise
 Jalbuena v. Lizarraga
When a person having title to or an interest in property
knowingly stands by and suffers it to be sold under
judgment or decree, without asserting his title or right or
making it known to the bidders, he cannot afterward set up
his claim.
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Jalbuena had full knowledge of the fact that the property  REAL OR PHYSICAL
was going to be sold to pay the debts of her husband. She
did not communicate her claim to the purchaser, and it is  Bean v. Cadwallader (Constructive Delivery)
now too late to assert such a claim
The mere fact that the Cadwallader, by reason of the
(b) Delivery of thing sold improper equipment of the vessel, was unable to take said
- ownership of the thing sold shall be transferred to the logs aboard such vessel, cannot relieve the latter from
vendee upon the actual or constructive delivery responsibility under the contract. No burden rested upon
thereof the Bean to furnish proper equipment for the vessel of the
- “Delivery” is an act by which one party parts with Cadwallader with which to put on board said logs. That was
the title to and the possession of the property, and the responsibility of the Cadwallader. The responsibility of
the other acquires the right to and the possession of the Bean ceased when he placed the logs alongside the
the same vessel of the Cadwallader.
Methods of Delivery:
1. Actual or Real Delivery- the thing sold shall be  Ocejo v. International Bank
understood as delivered, when it is placed in the
control and possession of the vendee Physical delivery is not necessary to effect or deliver
2. Constructive Delivery- delivery takes place in transfer of ownership, what is important is the buyer had
another manner which is indicative of the intention to possession and control of the buyer
deliver the thing for the purpose of transferring
ownership  CONSTRUCTIVE DELIVERY
- delivery by the execution of a public instrument Requisites for Constructive Delivery:
- traditio symbolica 1. Execution of public instrument is equivalent
- traditio longa manu of delivery of the thing
- traditio brevi manu 2. Purchaser must have control over the thing
- traditio constitutum possessorium sold
- delivery through carrier or courier - GR: execution of a public instrument amounts to
- when goods are in the possession of a 3rd person a constructive delivery of the thing subject of a
who acknowledges that he holds them on behalf of contract of sale
the buyer XPN:
3. Quasi-Tradition- delivery of rights, credits, or 1. contrary is provided in the public instrument
incorporeal(intangible) property is made by: 2. mere presumptive and not conclusive
- placing titles of ownership in the hands of buyer delivery is created in cases where the buyer
- allowing buyer to make use of the rights fails to take material possession of the
4. Tradition by operation of law- when a person who subject of sale
is not the owner of the thing sells or alienates and i. Symbolic Delivery or Traditio Symbolica
delivers it, and later the seller or grantor acquires title o the parties make use of a token or
thereto, such title passes by operation of law to the symbol to represent the thing sold
buyer or grantee (Art. 1434) (i.e. delivery of a car is the keys)
ii. Traditio Longa Manu
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition o if the thing sold cannot be
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
transferred to the possession of
with at the expense of the debtor. the vendee at the time of the sale
If the obligor delays, or has promised to deliver the same thing to two or more persons o the parties may agree for a
who do not have the same interest, he shall be responsible for any fortuitous event specific manner of delivery other
until he has effected the delivery. than actual delivery
Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment
it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any
o consent to this kind of delivery
other manner signifying an agreement that the possession is transferred from the may be express or implied
vendor to the vendee. iii. Traditio Brevi Manu
Art. 1497. The thing sold shall be understood as delivered, when it is placed in the o the buyer already had the thing
control and possession of the vendee. sold in his possession at the time
Art. 1498. When the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if
of sale for any other reason (i.e.
from the deed the contrary does not appear or cannot clearly be inferred. lessee buys the apartment unit he
With regard to movable property, its delivery may also be made by the delivery of the is leasing from his lessor, how
keys of the place or depository where it is stored or kept. possesses it as the new owner
Art. 1499. The delivery of movable property may likewise be made by the mere iv. Tradition Constitutom Possessorium
consent or agreement of the contracting parties, if the thing sold cannot be transferred
to the possession of the vendee at the time of the sale, or if the latter already had it
o it is the reverse of brevi manu
in his possession for any other reason. o the seller continues his
Art. 1500. There may also be tradition constitutum possessorium. possession of the determinate
Art. 1501. With respect to incorporeal property, the provisions of the first paragraph thing, no longer in the concept of
of article 1498 shall govern. In any other case wherein said provisions are not an owner, but under different
applicable, the placing of the titles of ownership in the possession of the vendee or
the use by the vendee of his rights, with the vendor's consent, shall be understood as
capacity (i.e. the seller becomes
a delivery. the lessor of his previous home)
v. Delivery to a Common Carrier

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GR: delivery of the goods to a carrier or
courier is deemed to be a delivery of the
goods to the buyer
XPN:
1. Contrary intention appears
2. Seller reserves the right of possession
or ownership in the goods until certain
conditions have been fulfilled
3. Based on the bill of lading, the goods
are deliverable to the seller or his
agent, or to the order of the seller or of
his agent
4. Based the bill of lading, the goods are
deliverable to order of the buyer or of
his agent, but possession of the bill of
lading is retained by the seller or his
agent
Free on Board or Freight on Board
(FOB)-
o FOB shipment- seller pays to get
the goods to the carrier and risk is
transferred upon placing the
goods in the possession of the
carrier
o FOB destination- seller
transports the goods at his own
expense and risk to that place and
delivers to the buyer there
Free Along Side Ship (FAS)- the goods
pass on delivery at the wharf, dock or
alongside the vessel
o the seller is responsible for the
cost of getting or transporting the
goods to the wharf, dock, or
alongside the vessel
o once the good are considered
delivered, risk is transfer to the
buyer
Cost, Insurance, and Freight (CIF)- price
fixed covers not only the cost of the goods,
but the expenses of freight and insurance to
be paid by the seller
Bill of Lading- is a form of an
acknowledgement receipt of the good
stated therein by a transportation company
or carrier; or a contract between the shipper
and the transportation company or a carrier
for delivering the goods referred to therein
to the person named therein, or to the
person who has right to receive them
Art. 1513. A person to whom a negotiable document of title has been duly negotiated
acquires thereby:
(1) Such title to the goods as the person negotiating the document to him had or had
ability to convey to a purchaser in good faith for value and also such title to the goods
as the person to whose order the goods were to be delivered by the terms of the
document had or had ability to convey to a purchaser in good faith for value; and
(2) The direct obligation of the bailee issuing the document to hold possession of the
goods for him according to the terms of the document as fully as if such bailee had
contracted directly with him.
Art. 1514. A person to whom a document of title has been transferred, but not
negotiated, acquires thereby, as against the transferor, the title to the goods, subject
to the terms of any agreement with the transferor.
If the document is non-negotiable, such person also acquires the right to notify the
bailee who issued the document of the transfer thereof, and thereby to acquire the
direct obligation of such bailee to hold possession of the goods for him according to
the terms of the document.
S A L E S | M I D T E R M S | 19
Prior to the notification to such bailee by the transferor or transferee of a non-
negotiable document of title, the title of the transferee to the goods and the right to
acquire the obligation of such bailee may be defeated by the levy of an attachment of
execution upon the goods by a creditor of the transferor, or by a notification to such
bailee by the transferor or a subsequent purchaser from the transfer of a subsequent
sale of the goods by the transferor.
Art. 1523. Where, in pursuance of a contract of sale, the seller is authorized or
required to send the goods to the buyer, delivery of the goods to a carrier, whether
named by the buyer or not, for the purpose of transmission to the buyer is deemed to
be a delivery of the goods to the buyer, except in the case provided for in Article 1503,
first, second and third paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller must make such contract with
the carrier on behalf of the buyer as may be reasonable, having regard to the nature
of the goods and the other circumstances of the case. If the seller omit so to do, and
the goods are lost or damaged in course of transit, the buyer may decline to treat the
delivery to the carrier as a delivery to himself, or may hold the seller responsible in
damages.
Unless otherwise agreed, where goods are sent by the seller to the buyer under
circumstances in which the seller knows or ought to know that it is usual to insure, the
seller must give such notice to the buyer as may enable him to insure them during
their transit, and, if the seller fails to do so, the goods shall be deemed to be at his
risk during such transit.
Art. 1503. When there is a contract of sale of specific goods, the seller may, by the
terms of the contract, reserve the right of possession or ownership in the goods until
certain conditions have been fulfilled. The right of possession or ownership may be
thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or
other bailee for the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading the goods are deliverable to the
seller or his agent, or to the order of the seller or of his agent, the seller thereby
reserves the ownership in the goods. But, if except for the form of the bill of lading,
the ownership would have passed to the buyer on shipment of the goods, the seller's
property in the goods shall be deemed to be only for the purpose of securing
performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are deliverable to order
of the buyer or of his agent, but possession of the bill of lading is retained by the seller
or his agent, the seller thereby reserves a right to the possession of the goods as
against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of
exchange and bill of lading together to the buyer to secure acceptance or payment of
the bill of exchange, the buyer is bound to return the bill of lading if he does not honor
the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added
right thereby. If, however, the bill of lading provides that the goods are deliverable to
the buyer or to the order of the buyer, or is indorsed in blank, or to the buyer by the
consignee named therein, one who purchases in good faith, for value, the bill of
lading, or goods from the buyer will obtain the ownership in the goods, although the
bill of exchange has not been honored, provided that such purchaser has received
delivery of the bill of lading indorsed by the consignee named therein, or of the goods,
without notice of the facts making the transfer wrongful.
 Aviles v. Arcega
No symbolic delivery of the house to Aviles because there
was an express stipulation to the contrary that the owner
shall retain in possession for such period of time. Art. 1462
states that, “the execution of contract of sale should be
equivalent to delivery of the thing which is the subject
matter of the contract unless, contrary appeared or may be
clearly inferred from such instrument
 Asset Privatization Trust v. T.J. Enterprises
No constructive delivery of the machinery and equipment
upon execution of deed of sale because Creative Lines
had actual possession of the property, and not Asset
Privatization. For constructive delivery to be effected the
seller must have control of the thing sold. Since no delivery
was made, the risk of loss or deterioration shall be borne
by Asset, and will not pass on to the buyer until there is
actual or constructive delivery of the machineries and
equipment
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 Board of Liquidator v. Floro
Floro made an agreement with Malabanan that, it was
agreed that Floro would advance to Malabanan certain
sums of money, not to exceed P25,000.00, repayment,
thereof being secured by quantities of steel mattings which
Malabanan would consign to Floro; that said advances
were to paid within a certain period, and upon default at
the expiration thereof, Floro was, authorized to sell
whatever steel mattings were in his possession under said
contract, in amount sufficient to satisfy the advances.
The agreement between BOF and Floro that upon the
salvage goods were transferred all rights to Floro
 Bautista v. Sioson
Bautista is the lawful owner when Sioson sold the Camarin
to Cruz, with the capacity of being lessee (owner became
lessee through constitutom possessorium) not as the
owner of the Camarin
 Behn Meyer v. Yangco
Facts: A sale of 80 drums of caustic soda was agreed
between Behn, Meyer & Co. and Teodoro Yanco. The
merchandise was shipped from New York to Manila. The
delivery of documents provided for “c.i.f. Manila”. However,
the ship carrying the cargo was detained at Penang and
the 71 of the 80 drums were removed. Respondent
Yangco also refused to accept the 9 remaining and also
refused to accept the offer of Behn Meyer to have the
products substituted with other merchandise, which
however were different from what was ordered.
Held: The place of delivery was Manila and Behn Meyer
has not legally excused default in delivery of the specified
merchandise at that place. In resume, we find that the
Behn Meyer has not proved the performance on its part of
the conditions precedent in the contract. Hence, we
believe that the word Manila in conjunction with the letters
"c.i.f." must mean that the contract price, covering costs,
insurance, and freight, signifies that delivery was to made
at Manila. If petitioner Behn Meyer has seriously thought
that the place of delivery was New York and not Manila, it
would not have gone to the trouble of making fruitless
attempts to substitute goods for the merchandise named
in the contract, but would have permitted the entire loss of
the shipment to fall upon the defendant.
 General Food v. Nacoco
The express agreement that the "Net Landed Weights"
were to govern, and the provision that the balance of the
price was to be ascertained on the basis of outturn weights
and quality of the cargo at the port of discharge, indicate
an intention that the precise amount to be paid by the buyer
depended upon the ascertainment of the exact net weight
of the cargo at the port of destination.
 EXCEPTIONS OR SPECIAL CASES
Sale or return when goods are delivered to the
buyer “on sale or return” to give the buyer an
option to return the goods instead of paying the
price
S A L E S | M I D T E R M S | 20
o Ownership passes to the buyer on
delivery, but he may revest the
ownership in the seller by
returning or tendering the goods
within time fixed in the contract, or
reasonable time, if no time has
been fixed
Sale on Approval or Trial when goods are
delivered to the buyer on approval or trial or on
satisfaction, or other similar terms, the
ownership passes to the buyer:
1. when he signifies his approval or
acceptance to the seller or does any other
act adopting the transaction
2. if he does not signify his approval or
acceptance to the seller, but retains the
goods without giving notice of rejection,
then if time has been fixed for the return of
the goods, on the expiration of such time, or
on expiration of reasonable time, if no time
has been fixed
Sale of Immovable at a rate per unit
- when the vendor delivers less than the area
agreed upon:
1. demand all that may be stated in the
contract if possible
2. to ask for a proportional reduction of
the price
3. rescind the contract, if the lack in the
areas be not less than 1/10
- when the vendor delivers more than the
area agreed upon:
1. accept only area that corresponds to
the amount agreed upon
2. accept the whole area, provided he
pays for the additional area at the
contract rate
Sale of an Immovable made for Lump Sum
GR: in the sale of immovable for lump sum, the
buyer is duty-bound to deliver the whole area
within the boundaries stated, without any
corresponding increase in the price
XPN: when the difference in the area is
obviously sizeable and too substantial to be
overlooked
Art. 1502. When goods are delivered to the buyer "on sale or return" to give the buyer
an option to return the goods instead of paying the price, the ownership passes to the
buyer on delivery, but he may revest the ownership in the seller by returning or
tendering the goods within the time fixed in the contract, or, if no time has been fixed,
within a reasonable time.
When goods are delivered to the buyer on approval or on trial or on satisfaction, or
other similar terms, the ownership therein passes to the buyer:
(1) When he signifies his approval or acceptance to the seller or does any other act
adopting the transaction;
(2) If he does not signify his approval or acceptance to the seller, but retains the goods
without giving notice of rejection, then if a time has been fixed for the return of the
goods, on the expiration of such time, and, if no time has been fixed, on the expiration
of a reasonable time. What is a reasonable time is a question of fact.
 ACCESSORY OBLIGATIONS
- the vendor is bound to deliver the thing sold and
its accession and accessories in the condition in
which they were upon the perfection of the
contract
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- Art. 1189 applies in case of lost, deterioration or

improvements of the accessory obligation (risk
of loss rules)

Art. 1537. The vendor is bound to deliver the thing sold and its accessions and
accessories in the condition in which they were upon the perfection of the contract.
All the fruits shall pertain to the vendee from the day on which the contract was
perfected.
Art. 1538. In case of loss, deterioration or improvement of the thing before its delivery,
the rules in article 1189 shall be observed, the vendor being considered the debtor.
Art. 1539. The obligation to deliver the thing sold includes that of placing in the control
of the vendee all that is mentioned in the contract, in conformity with the following
rules:
If the sale of real estate should be made with a statement of its area, at the rate of a
certain price for a unit of measure or number, the vendor shall be obliged to deliver to
the vendee, if the latter should demand it, all that may have been stated in the
contract; but, should this be not possible, the vendee may choose between a
proportional reduction of the price and the rescission of the contract, provided that, in
the latter case, the lack in the area be not less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable
is not of the quality specified in the contract.
The rescission, in this case, shall only take place at the will of the vendee, when the
inferior value of the thing sold exceeds one-tenth of the price agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of
its smaller area of inferior quality, he may rescind the sale.
Art. 1540. If, in the case of the preceding article, there is a greater area or number in
the immovable than that stated in the contract, the vendee may accept the area
included in the contract and reject the rest. If he accepts the whole area, he must pay
for the same at the contract rate.
Art. 1541. The provisions of the two preceding articles shall apply to judicial sales.
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a
certain sum for a unit of measure or number, there shall be no increase or decrease
of the price, although there be a greater or less area or number than that stated in the
contract.
The same rule shall be applied when two or more immovables as sold for a single
price; but if, besides mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be designated in the contract,
the vendor shall be bound to deliver all that is included within said boundaries, even
when it exceeds the area or number specified in the contract; and, should he not be
able to do so, he shall suffer a reduction in the price, in proportion to what is lacking
in the area or number, unless the contract is rescinded because the vendee does not
accede to the failure to deliver what has been stipulated.
Art. 1543. The actions arising from articles 1539 and 1542 shall prescribe in six
months, counted from the day of delivery.

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