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 judgement of a
specified person or persons.
Should such a 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.
When price considered certain

 No sale without a price;

 No sale if the price not certain or ascertainable in
money or its equivalent (like promissory notes, checks
and other mercantile instruments);
 Art. 1469 – price is considered certain if it has reference
to another thing certain;

 Some cases when price considered certain:

- a. Parties have fixed or agreed upon a definite amount;
- b. It be certain with reference to another thing certain; or
- c. The determination of the price is left to the judgment of
a specified person or persons.
Effect where price is fixed by a designated third
person

 General rule: The price fixed by the third person specified

by the parties is binding upon them;
 Exceptions:
- 1. When the third person acted in bad faith or by mistake;
- Mistake – in fixing the price, the object of the sale was not
really considered;
- Here, the court may fixed the price;
- But mere error in judgment cannot serve as a basis for
disregarding the price fixed;

- 2. When the third person disregarded the specific

instructions or procedure laid down by the parties, or the
data given him, or fixed an arbitrary price.
 S sold to B a diamond ring.
 The determination of the price was left to C whom
the parties thought was a jeweler.

 If C acted by mistake, as when he is incompetent to

know the price of the diamond ring, or in bad faith
as when he connived with S, the court may fix the
price.
Thus, the requisites for a valid price:

1. Real – The price is not simulated or fictitious;

2. Certain or Ascertainable –
 Certain – if it is expressed and agreed in terms of
specific amount or its equivalent;
 Ascertainable – if it has reference to another thing
certain; its determination is left to the judgment of
special person/s.

3. In Money or its Equivalent –

4. Manner of payment must be agreed upon –
 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.
 General rule: Mere inadequacy of price or that the
bargain was a hard one does not affect the validity
of the contract of sale; especially when both parties
made their own independent judgment;

 But the inadequacy of the price may indicate a

defect in the consent such as when fraud, mistake,
or undue influence is present;
 Here, contract of sale may be annulled (not on the
inadequacy of the price, but on vitiated consent);

 Also, when the price is so grossly inadequate or low

– to be “shocking to court’s conscience” that no
man in his right mind would accept;
 Example:

 S sold to B his 5-year old car for P500,000 not aware

that its fair market is P650,000.

 Is the sale valid?

 Yes. Gross inadequacy of the selling price does not

invalidate the contract of sale.

 No showing that the consent of S was vitiated.

 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.
 A simulated price is a fictitious price;

 Contract of sale is consensual – parties should

agree, among others, on the price;

 Thus:
- If there is meeting on the minds on the price,
sale is valid;
- If the real price is not stated in the contract,
the sale is valid but subject to reformation;
- If price is simulated, there is no meeting of the
minds – sale is void.
Effect where price simulated

(1)If the price is simulated or false, such as when vendor

really intended to transfer the thing gratuitously, then
the sale is void but the contract shall be valid as
donation.

(2)If the contract is not shown to be a donation or any

other act or contract transferring ownership because
the parties do not intend to be bound at all, the
ownership of the thing is not transferred. The contract
is void and inexistent.
 S sold to B his land worth P100,000 for only P70,000.
This contract of sale is valid although the price is
grossly inadequate.
 However, if it is shown that B induced S to sell the
land through fraud, mistake, or undue influence, the
contract may be annulled on that ground.

 If the price is simulated, B may prove another

consideration, like the liberality of S and if such
liberality is proved, then the contract is valid as a
donation;
 Or, B may prove that the act is in reality some other
contract, like barter and, therefore, the transfer of
ownership is unaffected.
 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 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.
Price on a given day at particular market

 Price is considered certain if it could be determined

with reference to another thing certain;
 “provided said amount be certain” – means when an
amount is fixed above or below the price on a given
day or in a particular exchange or market, the said
amount must be certain, otherwise, the sale is
inefficacious since the price cannot be determined.

 This article is especially applies to fungible things like

securities, grain, liquids, etc., the prices of which are
subject to fluctuations of the market.
 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.
Fixing of price by one of the contracting parties is
not allowed

Reasons:
 There can be no consent if the other party does not
agree to a price (he did not and could not previously
know);
 To be just, the price must be determined impartially by
both parties, or left to the judgment of a specified
person or persons;

 But if the price fixed by one party is accepted by the

other, the contract is deemed perfected because
there exists a true meeting of minds upon the price.
 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.
Effect of failure to determine price
1. Where contract executory - If the price cannot be
determined in accordance with Articles 1469 and 1472,
or in any other manner, the contract is without effect.
 Thus, there is no obligation on the part of the vendor
to deliver the thing and on the part of the vendee to
pay.

2. Where delivery has been made – If the thing or any

part thereof has already been delivered and
appropriated by the buyer, the latter must pay a
reasonable price therefor.
 The reasonable price or value of goods is generally
the market price at the time and place fixed by the
contract or by law for the delivery of the goods.
 Art. 1475. The contract of sale is
perfected at the moment there is a meeting
of minds upon the thing which is the object
of the contract and upon the price.
From that moment, the parties may
reciprocally demand performance, subject
to the provisions of the law governing the
form of contracts.
Perfection of contract of sale

 General rule: contracts are perfected by mere

consent;
 Contract of sale is consensual – perfected, without
the necessity of any other circumstances, from the
moment there is a meeting of minds upon the thing
which is the object of the contract and upon the
price;

 If one of the contracting parties should not comply

with what is incumbent upon him, the injured party
may sue for fulfillment or rescission with the payment
of damages in either case.
Right of owner to fix his own price

(1) The owner of a thing has the right to quote his own price,
reasonable or unreasonable. It is up to the prospective
buyer to accept or reject it. He may even impose a
condition hard to fulfill and name a price quite out of
proportion to the real value of the thing offered for sale.
(Cornejo vs. Calupitan, 87 Phil. 555 [1950])

(2) He is also well within his right to quote a small or nominal

consideration and such consideration is just a s effectual
and valuable a consideration as a larger sum stipulated or
paid. (Palacio vs. Adiosola, [C.A.] No. 7572-R, Sept. 10, 1952)
Effect of failure to pay price/absence of price

If there is a price stipulated

 Failure to pay the stipulated price after the execution of
contract does not convert the contract into one without
cause or consideration to invalidate the contract (in the
absence of contrary agreement);
 Reason: Payment of price is not an essential requisite of a
contract of sale;
 The vendor’s remedy is generally to demand specific
performance or rescission or cancellation of the sale with
damages in either case.

If there is no price stipulated

 Sale is void and non-existent since there is no cause or
consideration;
 Reason: No stipulation or meeting of the minds regarding
the purchase price, hence, there is no contract of sale.
 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 each 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 rue may be treated as
fraudulent by the buyer.
Rules governing auction sales

1. Sales of separate lots by auction are separate sales;

 Where separate lots are the subject of separate biddings,
there is a separate contract in regard to each lot;

2. Sale perfected by the fall of the hammer;

 In auction sale, the seller is merely making an invitation to
those present to make offers which they do by making
bids;
 Each bid is an offer and the contract is perfected only by
the fall of the hammer or in other customary manner;
 The bidder may retract his bid and the auctioneer may
withdraw the goods from sale any time before the
hammer falls;
3. Right of seller to bid in the auction;
 Seller or his agent may bid in an auction sale provided:
- such right was reserved;
- notice was given that the sale is subject to a right to
bid on behalf of the seller; and
- the right to bid by the seller is not prohibited by law or
stipulation.

Where no notice given of right to bid

 It shall be unlawful for the seller to bid either directly or
indirectly or for the auctioneer to employ or induce any
person to bid on behalf of the seller;
 Purpose of the notice: To prevent puffing or secret
bidding by or on behalf of the seller by people who are
not themselves bound.
 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.
Ownership of thing transferred by delivery

 General rule: It is only after delivery (actual or

constructive) of the thing sold that purchaser acquires a
real right or ownership over it.
- This is true even if the purchase price has not yet been
paid or the purchase has been made on credit.

 Exception to the rule:

- The parties may stipulate that despite the delivery, the
ownership of the thing shall remain with the seller until the
purchaser has fully paid the price.
- Thus, here, non-payment of the price, after the thing has
been delivered, prevents the transfer of ownership.
Two (2) Aspects of Delivery (Tradition)

 1. De jure delivery or the execution of the deed

of conveyance; and

 2. Delivery of the material possession.

 Art. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy
or to sell a determinate thing for a price
certain is binding upon the promisor if the
promise is supported by a consideration
distinct from the price.
3 Kinds of promise under Article 1479

1. An accepted unilateral promise to sell in which the

promise (acceptor) elects to buy;

2. An accepted unilateral promise to buy in which the

promise (acceptor) elects to sell; and

3. A bilateral promise to buy and sell reciprocally

accepted in which either of the parties chooses to
exact fulfillment.
Effect of unaccepted unilateral promise
 A unilateral promise or offer to sell or to buy a thing
which is not accepted creates no juridical effect or
legal bond.
 Such unaccepted offer is call policitation.

 If S offers or promised to sell to B his car at a stated

price and B just let the promise go by without
accepting it.
 Neither S nor B is bound by any contract.
Effect of accepted unilateral promise

 A unilateral promise to sell or to buy a determinate

thing for a price certain does not bind the promisor
even if accepted and may be withdrawn at any time.

 It is only if the promise is supported by a consideration

distinct and separate from the price that its
acceptance will give rise to a perfected contract;
 In the preceding example, even if B accepts the
promise of S (a case of an accepted unilateral promise
to sell), S is not bound to sell his car to B because there
is no promise, in turn, on the part of B to buy.

 But if the promise is covered by a consideration distinct

from the price of the car, as when B paid or promised
to pay a sum of money to S for giving him the right to
buy the car if he chooses within an agreed period at a
fixed price, its acceptance produces consent or of the
meeting of the minds.

 However, if acceptance is made before a withdrawal,

it constitutes a binding contract of sale although the
option is given without consideration. The offerer
cannot arbitrarily revoke the offer without being liable
for damages which the offeree may suffer.
Effect of bilateral promise to buy and sell
 When the promise is bilateral (one party accepts the
other’s promise to buy and the latter, the former’s
promise to sell a determinate thing for a price certain), it
has practically the same effect as a perfected contract
of since it is reciprocally demandable.
 The concurrence of both acts – offer and acceptance –
generates a binding contract of sale.

 S promised to sell his car to B and B promised to buy the

said car for P400,000. The parties are bound by their
contract so that in case one of them should not comply
with what is incumbent upon him, the other has the right
to choose between the fulfillment and the rescission of
the obligation, with payment of damages in either case.
Contract to sell

 A bilateral contract whereby the prospective seller,

while expressly reserving the ownership of the subject
property despite delivery thereof to the buyer, binds
himself to sell the said property exclusively to the
prospective buyer upon fulfillment of the condition
agreed upon, that is, the full payment of the purchase
price.

 In a contract to sell, ownership of the subject property

will not automatically transfer to the buyer upon the
fulfillment of the suspensive condition (payment of the
purchase price). The prospective seller still has to
convey title to the prospective buyer by entering into a
contract of absolute sale.
Contract to sell vs. Conditional contract of sale

 Contract to sell

 Since there is no previous sale, a third person buying

the subject property despite the fulfillment of the
suspensive condition (payment of purchase price),
cannot be deemed a buyer in bad faith;
 So, prospective buyer cannot demand conveyance
of property;
 Reason – there is no double sale;

 Title to the property is transferred to the buyer only

after registration of the sale;
Contract to sell vs. Conditional contract of sale
 Conditional contract of sale

 Upon fulfillment of the suspensive condition, the sale

becomes absolute;
 Thus, the seller’s title is affected;
 Here, there has been a prior delivery of the subject
property – and the seller’s ownership or title to the said
property is automatically transferred to the buyer;

 Consequently, the seller will no longer have any title to

transfer to any third person;

 Therefore, the second buyer of the property cannot be

considered a buyer (registrant) in good faith;
 If title is issued to the second buyer, the first buyer may
seek reconveyance of the subject property.
Meaning of Option contract
 Second (2nd) of paragraph of Article 1479 refers to what is
called as “option” in the commercial world.

 Option is a privilege (no binding obligation) existing in one

person for which he has paid a consideration which gives
him the right to buy/sell.
 Example: Certain merchandise or certain specified
property, from/to another person, if he chooses, at any
time within the agreed period at a fixed price, or under, or
in compliance with certain terms and conditions.

 Option contract is a preparatory contract separate and

distinct from the main contract itself (subject matter of the
option). It is only when the option is exercised when a sale
may be perfected;
 A contract by which the owner of property agrees with
another person that he shall have the fight to buy his
property at a fixed price within a certain time.
 Art. 1480. Any injury to or benefit from the thing
sold, after the contract has been perfected, from
the moment of the perfection of the contract to the
time of delivery, shall be governed by articles 1163
to 1165, and 1262.
This rule shall apply to the sale of fungible
things, made independently and for a single price,
or without consideration of their weight, number, or
measure.
Should fungible things to be sold for a price
fixed according to weight, number, or measure,
the risk shall not be imputed to the vendee until
they have been weighed, counted, or measured,
and delivered, unless the latter has incurred in
delay.
4 Rules on Risk of loss or deterioration

1. If the thing is lost before perfection – seller and not the one
who intends to purchase it bears the loss;

2. If the thing is lost at the time of perfection – contract is void

or inexistent.
 Legal effect – as if the object is lost before perfection of the
contract of sale;

3. If the thing is lost after perfection but before its delivery, that
is, even before the ownership is transferred to the buyer – the
risk of loss is shifted to the buyer as an exception to the rule of
res perit domino (or “property lost to the owner”);

4. If the thing is lost after delivery – buyer bears the risk of loss
following the general rule of res perit domino.
2 Rules under Article 1480

 Fungible goods – goods that are interchangeable

with one another; goods that, by nature or trade
usage, are the equivalent of any other like unit, such
as coffee or grain.

 First rule – applies to non-fungible things and fungible

things sold independently and for a single price or for
a price fixed without consideration of their weight,
number, or measure;

- Here, the risk of the thing sold passes to the buyer,

even though the thing has not yet been delivered to
him;
2 Rules under Article 1480

- Thus, if a house (sold) be destroyed wholly or partly

by fire – the loss falls upon the buyer who must pay
the price, even though he has not received the
thing;

- Seller is not liable for anything which happens

without his fraud or negligence.

- Buyer assumes the risk of loss caused by fortuitous

event (a) without the fault of the seller; and (b) no
delay, after the perfection of the contract to the
time of delivery.
 Second rule – relates to fungible things (rice, coen,
etc.) sold for a price fixed in relation to weight,
number, or measure;

- Under the third (3rd) paragraph, “the risk shall not be

imputed to the vendee until they have been
weighed, counted, or measured and delivered”;

- Paragraph 3 is an exception to the rule that vendee

bears the loss after the perfection of the contract
and before delivery;
- But the vendee assumes the risk if he has incurred in
delay in receiving the goods sold.
 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 by
description, it is not sufficient that the bulk of
goods corresponds with the sample if they
do not also correspond with the description.
The buyer shall have a reasonable
opportunity of comparing the bulk with the
description or the sample.
Sale of goods by description and/or sample
 Term bulk of the goods does not designate the greater
portion of the goods;
 It denotes the goods themselves as distinguished from
the sample and/or description with which they must
correspond.

1. Sale by sample –
 When a small quantity is exhibited by the seller as a fair
specimen of the buIk, which is not present and there is
no opportunity to inspect or examine the same;
 Parties contracted solely with reference to the sample,
with the understanding that the bulk was like it;
 Exhibition of the sample by seller was an inducement of
the sale or formed the sole basis thereof;
 In a sale by sample, the Vendor warrants that the thing
sold and to be delivered by him shall conform with the
sample in kind, character, and quality.
Sale of goods by description and/or sample
2. Sale by description –
 Occurs where a seller sells things as being of a particular
kind and buyer does not know if seller’s representations are
true or false, but relied on them as true;

 Here, the purchaser has not seen the article sold and relies
on the description given him by the vendor, or has seen the
goods but the want of identity is not apparent or
inspection;
 If the bulk of the goods delivered do not correspond with
the description, the contract may be rescinded.

3. Sale by description and sample –

 Here, the goods must satisfy all warranties appropriate to
either kind of sale;
 It is not sufficient that the bulk of the goods correspond with
the sample if they do not also correspond with the
description and vice versa.
 Art. 1482. Whenever earnest way is
given in a contract of sale, it shall be
considered as part of the price and as proof
of the perfection of the contract.

 Earnest money (“arras”) is money given by the buyer

to the seller to bind the bargain. It is actually a partial
payment of the purchase price and is considered as
proof of the perfection of the contract.
 A deposit paid (often in escrow) by the prospective
buyer (real estate) to show a good faith intention to
complete the transaction, and ordinarily forfeited if
the buyer defaults.

 Since earnest money constitutes an advance

payment, it must be deducted from the total price.
Earnest money vs. Option money

1. Earnest money is part of the purchaser price, while

option money is money given as distinct consideration
for the option contract;

2. Earnest money is given only where there is already a

sale; option money applies to a sale not yet perfected;

3. When earnest money is given, the buyer is bound to

pay the balance, while when the would-be buyer gives
option money, he is not required to buy.

 But option money may become earnest money if the

parties so agree.
 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 contract
of the parties.
Form of contract of sale
“Form of a contract”
 refers to the manner in which the contract is executed or
manifested;
 General rule: a contract may be entered into in any form (in
writing, or by word of mouth, or partly in writing and partly by
word of mouth) provided all the essential requisites for its
validity are present.
 Exception: Contracts covered by Statute of Frauds:

- 1. It must be in writing subscribed by the party charged,

otherwise the contract cannot be enforced by action;
- 2. If law requires the contract of sale be in certain form for its
validity, the required form must be observed for that
contract to valid and enforceable;
- 3. Where form is required for a contract to be valid; and
- 4. Where the form is required only for the convenience of the
parties (public instrument; registration of sale in the Registry
of Deeds).
The Statute of Frauds requires the following contracts
to be in writing, otherwise they cannot be enforced in
a court litigation:

a. Sale of personal property at a price not less than

P500.00;

b. Sale of real property or an interest therein regardless

of the price involved; and

c. Sale of property not to be performed within a year

from the date thereof regardless of the nature of
the property and the price involved.
Sale of real property or an interest therein

 When made through an agent is void unless the

agent’s authority is in writing;

 For a sale of real property to be effective against third

persons, the said sale must be registered in the Registry
of Deeds of the province or city where the property is
located;
 The sale must be in a public instrument or document
(notarized) for otherwise the registration will be refused.

 Sale of land in a private instrument is valid as between

the parties but it cannot be registered to bind or affect
third persons.
Statute of Frauds applicable only to executory
contracts
 Executory contracts (where no performance, like delivery
and payment, has as yet been made by both parties)
and not to contracts which are totally (consummated) or
partially performed.

 S orally sold to B a parcel of land. The sale is valid but it is

unenforceable because the law requires that it be in
writing to be enforceable;
 If the contract of sale is in a private writing, then it is valid
and binding but only as between the parties and not as
against third persons without notice until the sale is
registered in the Registry of Property.
 B has the right to compel S to put the contract in a public
instrument so that it can be registered to affect third
persons.
 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 recovery any
unpaid balance of the price. Any agreement to
the contrary shall be void.
Remedies of vendor in sale of personal property
payable in installments

1. Elect fulfillment upon the vendee’s failure to pay;

2. Cancel the sale, if the vendee shall have failed to pay
two or more installments; or
3. Foreclose the chattel mortgage, if one has been
constituted, if the vendee shall have failed to pay two or
more installments.

 These remedies are alternative and are not be exercised

cumulatively or successively and the election of one is a
waiver of the right to resort to the others;

 Thus, where the vendor asks the court to order the

vendee to pay the remaining unpaid sum of the
purchase price, the vendor thereby waives the other
remedies.
Right of vendor to recover unpaid balance
of purchase price

1. Remedy of specific performance

 Here, vendor has the right to recover not only the proceeds
of the sale, but the unpaid balance of the price from the
purchaser (his real and personal properties not exempt by
law from attachment or execution).

2. Remedy of cancellation
 Vendor can demand only the return of payments already
made unless there is a stipulation about forfeiture.

3. Remedy of foreclosure (chattel mortgage)

 Vendor shall have no further action against the vendee for
the recovery of any unpaid balance of the price and any
agreement to the contrary is void.
 The recovery of deficiency after foreclosure prohibited [in
order to avoid simulated sale on auction (lowest bid)].
 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.

 Lease of personal property with option to buy (by the

lessee) – considered as “sales of personalty payable in
installments”;
 Thus, the rules in in Article 1484 are equally applicable;
 Purpose: to prevent vendors from resorting to this form
of contract which, usually, is in reality of a contract of
sale or personal property payable in installments in
contravention of the provisions of Article 1484.
 B entered in a contract called “contract of lease” with S
whereby B (lessee) leased the car of S (lessor) with the following
terms:

1. That B shall pay P10,000 upon signing the contract, and on or

before the 5th day every month, P2,000 by way of rental. The
contract fixed the value of the vehicle to be P100,000;
2. That B has the option to purchase the car for the said amount
and the payments made by way of rentals shall be deducted
from the amount agreed in the option, and upon the full value
fixed being paid, the lease would terminate and title to the
leased property would be transferred to B;
3. That S would have the right to terminate the contract and
repossess the vehicle should B fail to make payments on date
specified, and in such event, the payments therefore made
should remain the property of S and not be recoverable by B.

 Here, the contract is one of sale on installments (with S as seller

and B as buyer) and not lease and is, thus, subject to the
provision of Article 1485.
 Art. 1486. In the cases referred to in 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.

 The article talks of a stipulation authorizing forfeiture of

installments or rents paid;
 In sales of personal property by instalments or leases of
personal property with option to buy, the parties may
stipulate that the installments or rents paid are not to be
returned;
 Said stipulation is valid “insofar as the same may not be
unconscionable under circumstances” otherwise the
court may order the return of a portion of the amount
paid in installments or rents.
 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.

 Vendor has the duty to pay not only the expenses for
the execution of the sale but also for the registration
of the same (general rule) in the absence of any
contrary agreement between parties (exception);

 But expenses incurred subsequent to the transfer of

title are to be borne by the buyer, unless caused by
the fault of the seller.
 Art. 1488. The expropriation of property
for public use is governed by special laws.

 Also known as power of eminent domain;

 For public use;
 The procedure is provided for in Rule 67 of the Rules
of Court;
 Expropriation must be decreed by competent
authority and for public use and upon payment of
just compensation.
Assigned Reading for Next Meeting’s Recitation:

The Maceda Law (Republic Act No. 6552);

 Focus on the:
- (a) Rationale of the law;
- (b) Coverage;
- (c) Rights (and Conditions for the exercise) of the
buyer [on Payments (Installments; Advance)
- (d) Assignments/Reinstatement;
- (e) Other rights of the buyer;